Modesto’s housing market is ‘hot.’ Here’s what that means for buyers and sellers
Boasting low inventory and high selling prices, Modesto’s housing market is one of the country’s most in-demand, according to a new survey.
Conducted by Insurify Insights and based on data from Realtor.com’s Market Hotness Index, the survey ranks Modesto as the ninth “hottest” real estate market nationally. California cities rank highly overall on the index, which takes into account median home listing prices, median days on the market and the market hotness index.
Leading the ranking is Vallejo-Fairfield, followed by Burlington, North Carolina, and Fort Wayne, Indiana. The next California market on the list is Stockton-Lodi, which ranks fifth, followed by Modesto in the ninth spot.
Taide Zamora, a Modesto-based real estate agent with PMZ, said the market trends he’s seeing underscore the findings.
“Our inventory levels are at the lowest they’ve been in a long time, and competition for homes continues,” Zamora said. “Some of the things that we’re seeing is buyers offering over asking price by quite a bit. They’re willing to make up the difference between the appraised price and accepted price. Buyers are writing a little bit more riskier terms just to get an edge over the next person.”
The fast pace of the market and the scarcity of inventory are creating a “stressful environment” for buyers, he said.
Zamora said that the current low interest rates — a result of the economic effects of the COVID-19 pandemic — are making it possible for more buyers to afford home payments, and creating more demand than there is supply. Additionally, as more and more people are working from home on a permanent basis and no longer need to commute to places like the Bay Area, regions like the Central Valley are experiencing an influx of new residents looking for affordable options.
Interest rates are beginning to creep up again, however, Zamora said, which will eventually cause the market to shift again. But he added that the current rates are still so low that he doesn’t expect much to change in 2021.
There were 191 pending sales in Modesto in Jan. 2021, compared to 172 in the same month last year. Prices, however, have risen dramatically. According to data from Trendvision, the average sold price of a home in Modesto in Jan. 2020 was $328,000. In just a year, that price has increased to $387,000. Median sales prices have increased from $320,000 in Jan. 2020 to $368,000 in 2021.
Homes spent an average of 39 days on the market in Jan. 2020. This year, that number is down to 18.
In addition to high demand, Zamora said there’s low supply across Stanislaus County. Home development is slow, and planned developments like Tivoli in Modesto aren’t expected to break ground for months.
Until then, he said, first-time buyers who don’t have the financial ability to meet increasingly competitive rates may find themselves with fewer options as more wealthy outside buyers enter into the county’s markets.
“That really is an advantage right now,” he said, “having a little bit of extra cash. As we get into the spring and summer months, it’s going to be critical for the buyers to be in the best financial position they can when they make these offers, and also in the best qualified position that they can, because that’s going to make a difference.”
This story was produced with financial support from the Stanislaus Community Foundation, along with the GroundTruth Project’s Report for America initiative. The Modesto Bee maintains full editorial control of this work.
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This story was originally published February 19, 2021 at 5:00 AM.
