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Lower prices woo home buyers in Modesto area

This home on Ramsgate Drive in east Modesto was just sold by Prudential California Realty for $177,500. It spent 20 days on the market.
This home on Ramsgate Drive in east Modesto was just sold by Prudential California Realty for $177,500. It spent 20 days on the market. Modesto Bee

The clearance sale in real estate continued last month, with another jump in the number of homes sold and a continuing drop in prices.

Stanislaus County's median sale price was $179,000 in September, down 40 percent from a year earlier, MDA DataQuick reported Tuesday.

The lower prices drew plenty of buyers into the market, according to the La Jolla-based research firm. They snapped up 1,016 homes in Stanislaus County last month, almost triple the number in September 2007, the report said.

"They're taking advantage of the lower prices and low interest rates," said Jim Theis, a real estate agent for Coldwell Banker Endsley & Associates in Turlock.

He cautioned that most of the homes were sold by banks after foreclosure, and they were priced low to move fast.

In Merced and San Joaquin counties, the number of sales also soared last month compared with a year earlier. Each had a 47 percent drop in the median price, to $140,000 in Merced and $191,500 in San Joaquin.

Tuolumne County saw a tiny gain in its median price over the 12 months, up 0.8 percent to $330,000.

Statewide, home sales rose 65 percent year over year, while the median price declined 34 percent to $283,000.

The housing market is now three years into its downturn, which has brought foreclosures for many homeowners and upheaval for Wall Street investors holding the mortgages.

The median price in Stani-slaus County had reached nearly $400,000 when the market reversed.

Craig Lewis, president and chief executive officer at Prudential California Realty in Modesto, said the foreclosure wave appears to be waning. He said prices could bottom out in three or four months.

"The next 90 days is the best time to buy in the last 10 years," he said.

As of July, 49 percent of residents could afford the median-priced home in Stanislaus County, according to an index published by Wells Fargo Bank and home builders. It had plunged as low as 3 percent in 2005 at the market peak.

Lewis and Theis said most of the recent sales have been to households that were buying for the first time or had been priced out during the boom. Investors looking for rental properties have been active in lower price ranges, they said.

Chris Harrigfeld, president of California Mortgage Associates in Modesto, said the perception that there's no money out there for loans is wrong.

He said lenders are able to find mortgages for prospective buyers, but in today's tightened credit market, borrowers are likely to be required to come up with a down payment, sometimes as much as 10 percent.

"The talking heads in Washington keep saying people can't get loans, but that's totally untrue," Harrigfeld said.

During the recent turmoil on Wall Street involving investment banks and major lenders, Harrigfeld said he had many calls from clients asking if their loans were still good. "Once you've been formally approved," he said, "you can be assured the financing will come through."

Housing experts said the trend of reduced prices and increased transactions is happening around the state.

"There certainly are good opportunities now," said Gary Painter, director of research at the University of Southern California Lusk Center for Real Estate. "It's going to take another good year, year and half before you see sustained price increases."

Still, the latest figures represent homes that closed escrow in September on sales that were initiated probably as far back as July, before the U.S. financial crisis reached a boiling point.

As a result, it's unclear whether the sales trend will continue in October or whether would-be buyers will pull back amid fears of rising unemployment and constrained credit.

The Associated Press contributed to this report.

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

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