Real Estate

Home prices, sales in free fall

Home sales in the Northern San Joaquin Valley last month tumbled to their lowest levels for February in nearly a decade, and median prices also slid, a real estate research firm reported Thursday.

In Stanislaus County, the number of homes sold declined by 40.4 percent and median home prices dropped by 9.4 percent last month compared with a year earlier, according to DataQuick Information Systems.

Sales in San Joaquin County were off by 44 percent and prices by 6.7 percent, while Merced County sales plunged 54 percent and prices 14.2 percent, according to DataQuick, a real estate research company.

DataQuick analyst Andrew LePage said February sales numbers in Stanislaus and San Joaquin counties were the lowest in nine years and well below 10-year averages for the month in those counties. Those decade averages include record sales years throughout the region.

Statewide, home sales also slid last month to the lowest level for February in a decade, but the median home price climbed modestly, according to DataQuick.

In California, 31,228 houses and condominiums were sold in February, down 3.7 percent from 32,425 in January and down 21.3 percent from 39,676 in February 2006, according to DataQuick.

The state's median home price was $472,000 in February, up 2.2percent from $462,000 in January and up 3.4 percent from $456,500 in February 2006. The median price peaked at $480,000 in June.

LePage said there's an ongoing oversupply of homes and fewer buyers across the state, although the declines were higher in the valley than statewide.

He said there may be fewer buyers for two reasons. One is that many people might have jumped into the market during the frenzy of 2004 and 2005, fearful of being priced out. That leaves fewer buyers now.

The other reason, he said, is that federal regulators have tightened rules on subprime loans, making it more difficult for many people to buy a home.

Neil Weese, a sales manager with Coldwell Banker Endsley & Associates in Turlock, said buyers also seem more reluctant to get a home.

"Yes, prices have come down, but over the last few months, interest rates have gone up," Weese said. "What that does is that now people might be able to buy a home at a lesser price, but their monthly payment doesn't change all that much."

But one Modesto agent said he's seen an uptick of interest lately because prices are stabilizing.

"The price points are getting to an area where people can afford houses again," said PMZ's Dave Newman, an agent for eight years. "It's still better to be a buyer, but if you're not greedmotivated, you can sell and make profit, too."

The problem, he said, is that many Modesto-area homes changed hands in the past three years, so their limited equity makes it harder to sell them.

In Stanislaus County, the median price was up by $500 from January, when the average home sold for $354,500. The price also rose modestly since January in San Joaquin County, by about $5,000 to $405,750, but dropped in Merced County to $320,000, down $9,000.

Within Stanislaus County, sales were down in almost every city, with particularly large drops in Ceres, Salida, Riverbank and east Modesto.

In February 2005, more than 800 houses sold in Stanislaus County, and more than 700 sold in February 2006. That number dropped to 457 last month.

LePage said it's hard to forecast the next few months but noted that fewer subprime loans, a higher number of foreclosures and mortgage rate variability are factors to watch.

If mortgage rates rise, for example, or lenders became more jittery about all types of loans, that could cause more severe price drops, he said.

"There's at least as much uncertainty as there was a year ago," he said. "I think we're closer to a normal market now than two years ago, but normal has to be redefined."

Agents like Newman said the future looks better, both because inventory will balance out and because the decline in subprime loans will make purchases more stable.

Newman said that many houses on the market are the result of foreclosures by people who got subprime loans and defaulted, forcing lenders to take the homes back and put them on the market again.

"The one good thing now is that the buyers are qualified," he said, adding he recently had an offer that included $150,000 down for a Modesto house. "I think that by the end of the year, we'll have a normal market."

Weese, of Endsley & Associates, said if the number of foreclosed homes remains stable, the housing market should stabilize by midyear.

That stability means fewer people will get into real estate to make quick money, he said.

"We go through these cycles, and people take advantage of the system," said Weese, who has worked in real estate for 17 years. "It's unfortunate, but we have to have these corrections to come out of that."

The Associated Press contributed to this report.

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