WASHINGTON -- Extraordinary government efforts to stabilize the housing market are paying off nationwide, but what happens when the help runs out is anyone's guess.
Sales of existing homes surged in November to the highest level in nearly three years, spurred by federal subsidies for starter homes and a Federal Reserve push to drive down mortgage rates.
The strong figures were driven by a race to take advantage of a tax credit of up to $8,000 for first-time home buyers. The credit has been extended to the spring; the government had planned to end it Nov. 30.
About 2 million home buyers have taken advantage of the credit, the National Association of Realtors said. It expects 2.4 million more to use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record.
Sign Up and Save
Get six months of free digital access to The Modesto Bee
Overall, sales of existing homes rose 7.4 percent in November to a seasonally adjusted annual rate of 6.54 million, up from 6.09 million in October. That was far stronger than the 6.25 million forecast by economists surveyed by Thomson Reuters. Nationwide, the median sales price was $172,600 in November, down 4 percent from a year earlier, but flat from October.
But in the Northern San Joaquin Valley in November, median home prices and sales remained in a holding pattern, showing little or no improvement from October and declining from November 2008. Stanislaus County's median sales price has been stuck near $140,000 since May, according to sales statistics from MDA DataQuick. In November 2008, Stanislaus homes sold for a median price of $160,000. The county's year-over-year decline is among the highest in California.
Sales volume was down throughout the region. In Stanislaus, sales of new and existing homes and condos were 13.8 percent lower this November compared with November 2008. Sales in San Joaquin County weren't much better over the previous year, down 16.1 percent, and Merced posted a 26.1 percent sales decline.
Despite the November numbers, valley real estate experts have reported increasing sales during the past year despite some month-to-month fluctuations. Like their national counterparts, they credit that bounce to first-time home buyers and investors moving into the market to take advantage of much more affordable prices.
But any real estate recovery depends not only on taxpayer dollars but also on the health of the economy at large, which grew at a less robust pace in the third quarter than previously thought. The economy grew at a 2.2 percent annual pace from July to September, down from an initial reading of 2.8 percent, the government said Tuesday.
Experts think the economy is even stronger now than it was last quarter, but they expect it to ebb again early next year. And that's when the tax credit will wind down and the Fed plans to stop buying mortgage-backed securities, which could raise mortgage rates.
Whether the real estate rebound can continue without the help remains to be seen.
"The housing market recovery can't continue if the overall recovery in the economy doesn't persist," said Michelle Meyer, an economist with Barclays Capital.
Unemployment rose in the Northern San Joaquin Valley last month as the winter months brought a chill to hiring. Stanislaus County's jobless rate hit 17.2 percent in November. That was just shy of March's year-to-date high of 17.5 percent, according to the state Employment Development Department. Other counties in the region also reported jumps in unemployment.
The increases reflect the end of seasonal agricultural and manufacturing work. Although that traditionally happens at this time of year, the unemployment figures were worse than usual because of a drop in holiday hiring compared with previous years as businesses of all kinds try to hold down costs.
The valley economy has been in a tailspin since the housing market collapsed about four years ago. That decline triggered job losses and business reductions or closures throughout the region, with few industries being spared.
Although existing home sales have improved, new home construction and the jobs it creates is nearly at a standstill throughout the region.
In the meantime, high unemployment is causing homeowners to default on their loans in record numbers. Banks are unloading foreclosed homes, driving prices down in many areas, particularly Arizona, California, Florida and Nevada.
Many experts warn that lenders have millions of properties in the foreclosure pipeline that have yet to come on the market, suggesting prices could fall even further. Plenty of traditional sellers also are keeping their homes off the market.
"When they start thinking they can sell them, we could see a surge in homes for sale," wrote Joel Naroff, president of Naroff Economic Advisors.
Bee City Editor David W. Hill can be reached at email@example.com or 578-2336.