Andy Krotik, Real Estate Watch: Bouncing on the bottom

In the last quarter of 2010, there were just 352 foreclosures in Merced County.

You have to go all the way back to the second quarter of 2007 to find a quarter with fewer. There were 241 that quarter. Nobody believes that foreclosures will be a thing of the past anytime soon, but most believe the astronomical numbers of 2008 and the first half of 2009 are gone.

This is despite the so-called shadow inventory that most talking heads believe is going to hit our market.

A contributing factor to a lot of foreclosures is that most loan modification programs are a disaster.

Homeowners trying to modify their loans simply grow weary from the delays, nonresponsiveness and hassle and fall into foreclosure. Foreclosures were down 51 percent in 2010 when compared with 2009. This is attributed more to the new short sale trend and not loan modifications.

Property sales

Sales, like foreclosures, declined in the last quarter of the year. After spiking in the second and third quarters, mostly due to the home buyer tax credit incentive, they ended the year sluggish at best.

Although sales were down sharply in the last quarter of the year, prices continue to be steady due to low inventory. When 2009 sales were compared with those of 2010, there was a decline of 26 percent in the volume of sales in our county.

Over asking price

It is striking how different the median list price and sales price differ by community. Homes in several communities are selling for above the asking price, but it seems to be tied to the median list. For example, homes in Winton are selling for 65 percent above the list price.

The median sales price in Winton is $47,500. Los Banos is, on average, selling homes at 1 percent above list price, but the median list price is $130,000. Dos Palos, Le Grand, Delhi and Planada typically all sell above the asking price. Merced and Atwater sell, on average, 96 percent of list price.

A few facts, figures

According to Kent Christensen, Merced County assessor, there are 85,632 legal parcels in Merced County, and 55,614 of them are some type of residential parcel. He said he believes that values are starting to edge up slightly. I agree with him. Rather than proclaim that the worst is over, I prefer to say that we are bouncing along the bottom. What the future holds, nobody knows, but we're not sure it can get much worse.

Monthly tidbit

Buyers better not be liars, at least not when buying a HUD home. Some of the culprits of the early 2000s were Bay Area investors who bought homes here and claimed they were going to occupy them in order to get a better interest rate only to use them as rentals.

There was little follow-up by lenders.

Well, try that with a Department of Housing and Urban Development home and you might get a new address -- U.S. Penitentiary Atwater. According to HUD, lying on your loan application is punishable by up to two years in jail and a $250,000 fine. HUD said it is being proactive with periodic random property checks after close of escrow.

Andy Krotik is a Realtor with 22 years' experience. You can follow him on Twitter at www.Twitter.com//AndyKrotik.