It’s like a teeter-totter: When Stanislaus County’s house prices go up, home affordability goes down.
Significantly fewer Stanislaus homes are affordable for median-income families this year than at any time in the past five years, just-released statistics show.
Less than 59 percent of homes sold in the county in January, February and March were affordable for the typical Stanislaus family, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
By contrast, more than 90 percent of Stanislaus homes sold in 2012 were considered affordable. That’s because most homes sold for less than $140,000 two years ago, but prices have been climbing since.
Median prices hit $200,000 in March.
That’s frustrating for aspiring home buyers such as Oakdale’s Josef Osterlund, who has been trying to purchase his first house.
But it’s great news for folks such as Danielle Penzel-Davis, who has watched her Newman home’s equity rise.
“Some people want an arm and a leg for their house,” said Osterlund, who works full time as a machine operator at Sconza Candy Co. in Oakdale. The 33-year-old single father is financially qualified to buy a $150,000 home, but he’s been searching unsuccessfully for one since last summer. “You look at a basic house around here, and they still want $170,000 to $180,000 – even if it needs a new roof.”
When affordable properties do hit the market, he said, “they get snapped up so fast it’s hard to get a bid in.”
Osterlund rents an Oakdale apartment for himself and his 15-year-old son. He said buying a condominium may be an option, but some of them have monthly homeowners association dues “that kick ’em right out of my price range.”
So now he is considering homes in some of the region’s lower-cost communities, such as Waterford, Riverbank and Don Pedro.
Exit Realty agent Renee Ledbetter said finding a $150,000 home in Oakdale two years ago “would have been a piece of cake,” but now the median asking price for homes there is $299,990. She said the average asking price for Modesto homes now is $267,000 on the MetroList multiple listing service.
“Real estate goes in cycles,” explained Ledbetter, who has been selling homes for 10 years. She said prices will come down once “homes start sitting on the market too long … and we probably are at the tip of that cooling trend.”
Stanislaus’ housing market was ice cold throughout much of the seven-year recession, and the economic hard times continue for many in the county.
UC Berkeley’s Haas Institute for a Fair and Inclusive Society released a study last week showing that 29 percent of Modesto homeowners owe more on their mortgages than their houses are worth.
Called “Underwater America: How the So-Called Housing ‘Recovery’ is Bypassing Many Communities,” that study ranks Modesto among the nation’s 100 most troubled spots for negative equity. Based on 2013 prices, it determined that Modesto home values were 49 percent less than their 2005 peak.
But home prices have jumped 25 percent since last spring.
That’s helped homeowners such as Penzel-Davis, who are “finally climbing up out of the hole and regaining equity.” She said the Newman home she and her husband bought in 2002 is “almost even” with what they paid for it 12 years ago. But a second home they purchased in 2010 has gained about $75,000 in equity.
Franco Gloria also is happy about rising home prices, having purchased her Ceres home five years ago at a relatively bargain price. “Perfect timing for me,” Gloria told The Modesto Bee in a Facebook post. “I came into a newly remodeled home with ceramic flooring throughout, granite countertops, new paint, ceiling fans new with new lighting as well. I must say I did very well.”
Gloria said she paid less than $150,000 then; this January, the house next door sold for a bit more than $200,000.
Homeowner Cori Scales Angelino tells a similar story about the house she purchased for $175,000 in Modesto’s college neighborhood. “We bought our home almost three years ago, and it’s nearly doubled in value,” Angelino said. “I know we wouldn’t be able to buy a home with the current conditions.”
Becca Souza said her family also was lucky to have purchased in Modesto when prices were lower. “We bought our home in 2011 for $85,000,” said Souza, describing it as a livable-but-not-perfect, three-bedroom, two-bath home with a big backyard. “It’s in an older neighborhood, but had we waited any longer, we probably wouldn’t be in a house. We are thankful to have a house of our own.”
Not everyone is as fortunate.
“I cannot afford the American dream of homeownership because of the prices. It’s not that I don’t make enough money; the homes are just too overpriced,” Marie Jane Gaddis said.
“I live in Modesto, but I’m thinking of moving to Southern California instead because wages are too low here in the Valley. I don’t want to have to commute to the Bay Area.”