Home prices sliding, but number of sales rising

Realtors say figures in line with incomes

By JOHN HOLLAND
jholland@modbee.com

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Home sales in June continued the trend of recent months, with median prices dropping but the number of sales rising in the Northern San Joaquin Valley.

Stanislaus County's median fell to $201,000 last month, down 6.5 percent from May and 41.4 percent from June 2007, DataQuick Information Systems reported Friday.

The last time the figure was around $200,000 was in mid-2002, three years into a steep run-up that would peak in 2005.

Stanislaus County had 817 home sales last month, up 57.4 percent from a year earlier, as buyers found relative bargains and foreclosed homes continued to flood the market, DataQuick reported.

In Merced County, the median price slipped to $160,000 last month, 44.8 percent less than a year earlier. The number of sales rose 63.1 percent.

San Joaquin County's median was at $227,000 last month, down 42.8 percent from June 2007. The number of homes sold was up 74.3 percent.

Turlock real estate agent Larry Rumbeck said the latest report shows prices continuing to get more in line with what home buyers make.

"With the incomes we have in the valley, those are affordable (mortgage) payments," he said. He characterized the boom years as a "false economy."

Stanislaus County's median peaked at $392,000 in December 2005. The collapse since then has put many construction and real estate people out of work. Many recent buyers have faced foreclosure as their monthly payments reset and their home values dropped below their loan balances.

Rumbeck said he expects the foreclosures to play out for up to two more years.

Statewide, the median home price last month was $328,000, down 31.5 percent from June 2007, DataQuick reported.

The San Diego-based company said 35,202 homes changed hands, the lowest volume for any June in its 20 years of tracking the market.

Of the California homes sold in June, 41.9 percent were foreclosure resales, up from a revised 40.1 percent in May and 6.6 percent in June a year ago, DataQuick said.

In the San Francisco Bay Area, where the slowdown took longer to emerge, the median price last month was $485,000, off 27 percent from a year earlier, the report said.

With such a large proportion of the statewide market composed of distressed properties, DataQuick analyst John Karevoll said, the usual trends are "extremely noisy," confused by oddball sales counts and prices paid.

He said 70 percent of California housing is "on hold" and the other 30 percent is in what he called "a spectacular downward spiral."

"Foreclosed properties are dragging everything down, and it's this vortex," Karevoll said.

But one of the odd things about the market, he said, is that older neighborhoods where owners have bought and sold over many years are generally holding their values better than the newest neighborhoods, developed during the early-2000s boom.

"There's a one-to-one correlation between the age of the neighborhood and the degree to which a neighborhood has a problem," Karevoll said. "Newer neighborhoods have a problem, and older ones have much less of a problem."

Bee news services contributed to this report.

Bee staff writer John Holland can be reached at jholland@modbee.com or 578-2385.