Thursday, January 08, 2009

Despite dramatic decline, it was easier for family to buy a house 10 years ago

By J.N. SBRANTI
jnsbranti@modbee.com

last updated: May 21, 2008 04:22:03 AM

Northern San Joaquin Valley home prices fell again in April but sales soared, and there are more than twice as many homes affordable for families as there were in December.

Several key housing statistics released Tuesday show how the region's dramatically changing real estate market has created winners, losers and opportunities.

The valley's home prices have been in a nose dive since December 2005, and that plunge continued in April, DataQuick Information Systems' statistics show.

Stanislaus County homes sold for a median $225,000 last month, which was $5,500 less than March. At the market peak, Stanislaus homes sold for a median $396,000. That's a 43.2 percent decline in 2½ years.

San Joaquin County prices have dropped even more. Last month, the median sales price hit $245,000, which was $20,000 less than March. San Joaquin homes peaked at $451,500, but prices have plunged 45.7 percent since.

Merced County is even worse. Its homes sold for a median $186,000 last month, which was $17,000 less than March. Merced's homes peaked at $382,750 before plummeting 51.4 percent.

A surge in foreclosures and a dearth of buyers have been blamed for deepening the region's real estate recession.

Valley home sales were sluggish throughout 2007 and much of 2006, but they picked up dramatically during April.

In Stanislaus County, for instance, 714 homes closed escrow last month. That was an increase of more than 200 compared with March 2008 or April 2007. Still, sales are far less than what they were during the real estate boom, such as April 2005, when 1,034 Stanislaus homes sold.

On the bright side, many more of the homes being sold this year are affordable to valley residents.

Just released first-quarter 2008 calculations from the National Association of Home Builders-Wells Fargo Housing Opportunity Index show that the percentage of affordable homes has more than doubled in the valley since the fourth quarter of 2007.

The new figures show median-income Stanislaus County families could afford to buy 36.2 percent of the homes sold in the county this January, February and March.

Stanislaus' affordability rates were among the lowest in the nation during the fourth quarter of 2005, when median-income families could afford only 3 percent of the homes sold.

While the real estate market downturn has increased affordability, Stanislaus families had a much easier time buying homes 10 years ago. During the first quarter of 1998, nearly 80 percent of all Stanislaus homes were affordable for median- income families.

Merced and San Joaquin counties have seen similar shifts in affordability. Median-income families can afford 28.3 percent of Merced homes and 35.5 percent of San Joaquin homes.

Nationwide, 53.8 percent of homes sold in the first quarter were affordable to families earning the national median income.

The nation's most affordable major city is Indianapolis, where median-income families could afford 90.1 percent of the homes.

The Los Angeles region continues to be the nation's least affordable place to live, with 10.5 percent of the homes priced in reach of median-income families.

For California statewide, 31 percent of homes are affordable.

Gopal Ahluwalia, vice president of research for the National Association of Home Builders, said affordability will decrease as the real estate market recovers.

"With declining home prices, lower mortgage interest rates and higher household income for 2008, affordability has improved," Ahluwalia said. "We expect the market to stabilize in the third quarter of 2008 and start picking up in 2009. With a decline in housing inventory and rising demand, home prices are likely to start moving up in 2009, thereby impacting affordability."

Home sales rose significantly in April throughout California, including the Sacramento region and Bay Area, according to DataQuick.

"The big issue here is that mortgages are becoming obtainable, which will reduce the pile of stacked-up pending escrows. It's unclear if the financing is because of policy changes or because mortgage investors are getting more interested in securities. Probably both," said Marshall Prentice, DataQuick's president.

But new home sales remain gloomy throughout the Northern San Joaquin Valley. Only 54 new houses were sold during March throughout Stanislaus County, which was less than half as many as in March 2007. New home sales declined even more in Merced and San Joaquin counties, according to the California Building Industry Association.

A complete list by ZIP code for home sales in Stanislaus,

San Joaquin, Merced and

Tuolumne counties will appear in Friday's Bee.

For more information about the housing affordability statistics, visit www.nahb.org/hoi for tables, historic data and details.

Bee staff writer J.N. Sbranti can be reached at jsbranti@modbee.com or 578-2196.

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