Interest rates and home values have plunged so far that some see signs of a revival of home sales and refinancing in the central San Joaquin Valley.
"The phones are ringing pretty steadily," said Michael Gilmore of The Mortgage Professionals in Fresno. "I had almost forgotten what that sounded like. That is very welcome news."
It's too early to tell whether the increased activity represents a trend, and no statistics are available to show whether the effect is real. But dropping prices are at least driving an increase in inquiries from prospective customers.
Home prices fell so precipitously in 2007 that five cities in the San Joaquin Valley, including Fresno and Modesto, recorded some of the greatest declines in property values in the country, according to a report released Thursday.
Modesto, Merced, Stockton, Fresno and Bakersfield finished in the bottom 10 of 956 regions sampled. The median price of a single-family house in the Fresno area fell 16.73% over the year ending in December, according to the First American CoreLogic Loan Performance HPI, which specializes in residential mortgage data and analysis for the mortgage industry.
Analysts were not surprised by the plunge in values last year. "If you pull out a report from 2004 and 2005, you would see that Fresno led the nation in price appreciation. What goes up fast goes down fast," said Robin Kane of RCK Organization.
Prices rose faster than wages, so values were destined to fall, he said.
The steep slide in 2007 followed a 4.35% dip in 2006. The combined decline left some families owing more than their homes were worth and fueled a rise in foreclosures.
Sales volumes also are down sharply.
Last year, 3,646 existing houses were sold in Fresno and Clovis, down 27% from 2006, Guarantee Real Estate reported.
Some see a ray of hope.
Agents at Guarantee Real Estate in Fresno are reporting more traffic at open houses and more telephone inquiries, plus more interest from investors, said Scott Leonard, the company's president.
Leonard said he believes the lower prices are attracting interest. However, he said despite the activity, his office still isn't seeing a significant boost in sales.
"We're not looking for a great turnaround in 2008, but we should have more sales than in 2007," he said.
Leonard said, however, he is seeing a "huge increase" in Federal Housing Administration loans, which are low-interest loans backed by the federal government heavily used by first-time home buyers.
In a direct correlation to interest rates that have fallen to four-year lows, lenders are reporting more refinancing applications, boosting an industry decimated by the housing downturn.
Resource Lenders, one of the region's largest mortgage lenders, had more clients "lock in" interest rates on Wednesday than on any day over the last three years, said Richard Barnes, the company's owner.
Rates fell a full percentage point in recent days, having the effect of slashing $181 a month off a $200,000 mortgage taken out a year ago at 6.5%, he said.
John Mahoney, who heads the Real Estate Institute at California State University, Fresno, said the reduction in interest rates and President Bush's economic stimulus package are setting the stage for what he believes could be a boost in sales this spring.
Mahoney said he's even hearing from builders that sales of new homes are better than expected.
"Most builders frankly are just as perplexed as anybody as to where this is going," he said.