The number of foreclosures has continued to decline throughout the Northern San Joaquin Valley, where fluctuations in the housing market affect the economy as a whole.
This April, May and June in Merced County 79 homes were repossessed, which was 11.2 percent less than during the same months last year. Back in summer 2008, 1,639 Merced homes were lost to foreclosure, according to DataQuick.
Phillip May, president-elect of the Merced County Association of Realtors, said home values have crept up since last year, which means homeowners are more likely to stick it out rather than abandon a home that’s underwater.
At the same time, banks prefer to work with those homeowners to keep them in the home rather than to foreclose on them. “There’s just not a great urgency for them to foreclose on something when values keep going up,” May said.
Home values are on pace to continue rising, he said, though at a slower rate than this year.
Across Merced County, 232 homes were sold in May for an average price of $180,000, an increase of 25.7 percent from the same time last year, according to a report from DataQuick. The numbers show that homes in the city of Merced are worth about 18.5 percent more – at a median price of $166,000 – than in 2013.
Bernie Heyne, a home broker and real estate agent based in Ripon, said 11 of the 13 homes he broke ground on in July 2013 in Merced sold quickly, a testament to the demand for homes in the area. The two remaining are still under construction, he said, but likely won’t be on the market long.
He said he’s also broken ground on two of what will be a dozen homes near downtown Ripon. The San Joaquin County town of about 15,000 draws buyers from the Modesto and Stockton areas.
In Stanislaus County, 170 homes were lost to foreclosure this spring, which was 26.7 percent less than the spring of 2013. At the peak of the foreclosure crisis during the summer of 2008, more than 2,800 Stanislaus homes were repossessed by lenders in a three-month period.
In San Joaquin County, 203 homes were foreclosed upon this spring, which was a decline of 30.5 percent. During the summer of 2008, 3,862 San Joaquin homes were lost to foreclosure.
Since the foreclosure crisis began in 2006, mortgage defaults led to the repossession of nearly 85,000 Northern San Joaquin Valley homes.
Foreclosures statewide have returned to prerecession levels.
Building new homes can be a boost to the economy, because it provides jobs and expendable income. That’s why Los Banos is “kicking around” implementing a 35 percent discount on development fees for the first hundred homes built in the city, according to Stacy Souza-Elms, an assistant planner.
Home developers have expressed interest in the area, but the city is still waiting for the first one to bite. “Right now it’s pretty stagnant, and it’s been that way for about a year,” she said.
If the discount program is successful, she said, the number of homes to get a discount could go up to 200.
The slow recovery of the housing market is part of the reason the San Joaquin Valley has seen slow improvement on its way out of the Great Recession, said Jeffery Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton.
New building would not only supply jobs, he said, but also would increase consumer confidence and spending. Perhaps a testament to the importance of home sales, the largest portion of a consumer’s income goes to a home.
The housing market is important to local economies everywhere in the state, Michael said. The Valley’s market tends to be more visible, however, because of its volatility.
“The roller-coaster ride of real estate has been so central to the economic cycles,” he said, “we tend to pay a lot of attention to it.”