MERCED COUNTY — Its been a strong autumn for the Northern San Joaquin Valley real estate market. Home sales prices are up, foreclosures are down, apartment rents are edging higher and new home builders are returning.
Take Merced County, for example, where houses typically sold for $120,000 or less from 2009 through 2012. Home prices have soared here this year, increasing to a median $175,000 during September, according to DataQuick statistics.
San Joaquin County homes also are fetching increasingly high prices, with Septembers median price hitting $235,000. Thats a 32percent increase in one year, the highest gain in the Valley.
Stanislaus County prices also have risen significantly this year, but they dipped a bit last month to a median of $180,000. Thats still 25 percent more than the median in September 2012.
There has been a shift in the local real estate market, confirmed Chad Costa, co-owner of Re/Max Executive realty in Modesto. We went from significant month-over-month increases from the beginning of the year to a much-needed plateau in just the last month or two.
But Costa fears that home prices will soar too high again. We are moving out of a depressed market, and the last thing we need is to see price increases exceeding the average income, he explained. History has proven that what goes up must go down, especially when the increases are not in line with income and unemployment.
There arent as many homes with multiple purchase offers or cash-rich investors outbidding families now as there were earlier this year, according to Costa.
Now we are not only seeing conventional offers accepted, but in many cases, FHA and even VA offers are being accepted, Costa said. This is very encouraging to buyers that have felt discouraged for several months.
This years higher housing prices are helping reduce foreclosure rates throughout the region, a DataQuick analysis contends.
Heres why: Rising home values lower the number of homeowners who owe more on their mortgages than their homes are worth. That makes it easier for those having trouble making mortgage payments to sell their homes or refinance their loans to avoid foreclosure.
July through September of this year, 515 homes were lost to foreclosure in the Northern San Joaquin Valley. Compare that with the same months in 2008, when 8,317homes were foreclosed upon in Stanislaus, San Joaquin and Merced counties.
The stabilizing real estate market also is encouraging builders to consider opening new housing developments in the region.
In Merced, for example, developer Bernie Heyne broke ground in June on a project to build 13 new homes in the city.
While it was little more than a dozen homes, Merced real estate professionals and government officials at the time called it one more sign that the real estate market was finally starting to improve.
Heyne, who also is a real estate broker, said he bought the lots from Envision Homes of Merced. The pads for the home sites are complete, speeding up the construction process.
The 13 single-family houses will be built near Anderson Way in north Merced. The Silverleaf II subdivision is a project of his corporation, CenCal Pacific. Heyne said that he saw a lack of homes in the area at his project's price range, $215,000 to $225,000.
Any home construction would be good news for Modesto. This year, only 17 building permits for single-family homes have been issued in the city. Compare that with 2001, when Modesto issued 1,435 new-home permits.
The regions building boom, which lasted from roughly 1999 through 2006, affected more than just the market for single-family homes. It affected apartment complexes, too, and not in a good way. With mortgages so easy to get, potential renters purchased homes instead. As a result, keeping apartments full was difficult and rents fell.
Since 2006, however, more than 83,000 Northern San Joaquin Valley homeowners have lost their houses to foreclosure, and many of them returned to renting.
Despite that, apartment rents have barely budged in seven years. RealFacts, which tracks apartment rents, shows that rental rates had been nearly flat since 2006. That changed a bit during the last quarter, as average rents edged up to $788 per month. Thats a 1.3 percent increase over last year.
Whether that will continue is unclear, but real estate professionals in Merced describe the overall housing market as strong and said that they anticipate continued improvement.
Bee staff writer J.N. Sbranti can be reached at firstname.lastname@example.org or (209) 578-2196.