Home prices and mortgage rates are enticingly low, an industry expert told a Modesto audience Thursday, but economic jitters keep many people from buying.
Leslie Appleton-Young, chief economist for the California Association of Realtors, said job losses and other factors have hindered the housing market's recovery.
"When you get an economy that's rife with fear and uncertainty, what do people do? Nothing," she told agents with Prudential California Realty during their annual meeting.
Her view was borne out in figures released Thursday on homes sales in August. Stanislaus County had 675 sales, down from 803 a year earlier, MDA DataQuick reported. The median sale price was $135,000, unchanged from August 2009.
San Joaquin County saw a drop in transactions but a gain in the median price to $165,000, the La Jolla-based real estate research firm reported.
Tuolumne County's median plunged to $179,000 from the previous year despite a sharp rise in transactions. Merced County numbers, which also have been low, were not available for August.
Growth slow nationwide
Appleton-Young said the national economy has grown slowly since the recession and has yet to replace many of the lost jobs.
That makes people hesitant to buy homes, as does uncertainty about the recent health care reform and the possibility of income tax increases next year, she said.
Compounding all this are tight standards for loan applicants and a reduction in available homes as banks try to avoid selling foreclosed houses at deep discounts.
"A lot of properties that are scheduled for auction are cancelled on the courthouse steps," Appleton-Young said, who spoke to about 220 Prudential agents for the Modesto-based company.
The Northern San Joaquin Valley has been among the regions hardest hit by the housing slump, which contributed to the near-collapse of the financial system in 2008.
The median price in Stanislaus County peaked at $396,000 in late 2005, compared with $122,000 in 1999. The median fell by about two-thirds over the next three years and has hovered around $140,000 for most of the past 21 months.
Rates near record lows
Mortgage rates, meanwhile, are at near-record lows. The average rate for 30-year fixed loans this week was 4.37 percent, mortgage buyer Freddie Mac said Thursday. Fifteen-year fixed loans dropped to 3.82 percent, the lowest since 1991.
For would-be buyers, the low prices and low interest rates could mean monthly mortgage payments of less than what they pay in rent.
But competition for homes is strong, Appleton-Young said, because of the small inventory and the ability of investors to make cash-only offers.
Prudential's president, Craig Lewis, said he has seen a decline in foreclosure sales and an increase in "traditional" sales, where the sellers still have equity in the property.
"We feel the worst is behind us," he said. "It's not going to be a fast recovery. It's going to be a slow and steady recovery."
The Associated Press contributed to this report.
Bee staff writer John Holland can be reached at firstname.lastname@example.org or 578-2385.