Merced County’s roughly 37percent bump in housing prices in the past year is a sign of an improving housing market, according to some experts. However, many of the dollars responsible for that rise are coming from out of the area.
Merced, the largest city in a county that ranked in the top 10 nationwide for subprime loans, has seen its median home price rise by about 32percent since this time last year, according to DataQuick. Los Banos, a beacon for commuters for some time, has seen a bump of about 35percent in the past year, the San Diego-based real estate information service said.
Delhi’s roughly 43percent increase in home prices during the past year is the county’s highest.
Terry Ruscoe, owner of Merced Yosemite Realty in Merced, said a “vast majority” of his clients come from the Bay Area and Los Angeles. A big draw for those investors, he said, is their children attending UC Merced. “Parents come in and they want to invest in the area because the prices are so low compared to Los Angeles, Bay Area, San Jose,” he said.
Just how low? Ruscoe said investors don’t see those levels dipping again. Merced, which has a median home value of $166,000, is at about the level it was in 2002. Ruscoe said the prices will likely continue to rise because the buyer demand continues to outweigh supply. “We’ve been plagued with low inventory for about a year,” he said.
Experts said the same factors that have driven up Merced-area home prices in the past year, such as increased investor activity, low mortgage rates and little inventory, are at work across the Northern San Joaquin Valley.
Los Banos’ proximity to the Bay Area and connection to Highway 152 has made it a bedroom community for a few decades. So the low home prices have attracted buyers, according to Larry Borelli, owner of Borelli Realty Services in Los Banos. “They know that right now it’s pretty much at the bottom, so they just buy, buy, buy,” he said.
The median home price in Los Banos is $182,500, which makes it the highest in Merced County.
Los Banos continues to see few homes on the market, Borelli said, because foreclosures have dried up. At one time, Merced County had more than 11,000 homes in foreclosure. In the housing bubble of 2004 and 2005, Bay Area commuters, speculators and local buyers, many using subprime loans, pushed prices in the Northern San Joaquin Valley beyond all reason. Houses in some Valley towns sold for $800,000 or more before plummeting in value by more than half.
Many parts of the Northern San Joaquin Valley are experiencing similar interests from metropolitan buyers.
Areas such as Tracy, Manteca and Lathrop also make sense as communities where Bay Area workers can afford large suburban homes on middle-class salaries, even if it means a lengthy commute. Median home prices there are in the $250,000 to $350,000 range after soaring above $450,000 in the boom years.
Those cities are connected via the Altamont Pass to the much pricier Bay Area.