Looking to buy a home in Modesto? New market index predicts prices are likely to drop
The Modesto metropolitan area is one of three housing markets in the nation at high risk of a price decline over the next year, according to new data.
The market risk indicator, released by CoreLogic, indicates the local market is at a 50%-75% risk of a price decline over the next 12 months. Joining Modesto in this category are Springfield, Mass., and Worcester, which is in Massachusetts and Connecticut.
The indicator also includes the Merced area as a top market at risk, though to a lesser degree than Modesto. Merced is considered at moderate risk, with a 25%-50% probability of a price decline.
Locally, real estate agents have spoken of a possible mellowing of the market.
Daniel Del Real, a broker associate with PMZ Real Estate, told The Bee that those decreases won’t immediately affect median home prices. “It’s sellers’ expectations,” he said. “Sellers’ expectations are being pulled back.”
Sellers are seeing the sale prices of other houses on the market, and have begun to lower their own asking prices as a result, or are accepting lower offers from buyers. Del Real said the market trend is more of a “price softening,” rather than a “price dropping,” as the median home prices remain stable.
There hasn’t been much change in the local median prices since April, when Modesto’s median hit $405,000. Since then, prices have increased slightly, with the October median sale price at $430,000, according to data from TrendGraphix.
Rather, prices are softening during sales themselves, as sellers accept offers below the asking price, and buyers are no longer frantically competing to outbid one another.
Median sales prices are a lagging indicator of market trends, Del Real said, and eventually will catch up to the sales being made.
Additionally, the holiday season and end-of-year market trends mean less competition from outside the area, so local buyers can get lucky in the weeks when there are fewer people making trips to Modesto to scout for homes.
Nationally, CoreLogic’s Home Price Index shows the market still was growing massively in the fall, with an 18% increase in October compared to the previous year’s figures. This marks the biggest year-over-year jump since the index was first published in 1976.
Growth is slowing, however. From September to October, the national market showed only a 1.3% gain, and overall, October could spell the end of substantial gains. The data show monthly price growth has slowed ever since it peaked in April, and the report predicts the month-over-month increase in November will be just 0.2%.
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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