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Where the ‘good old’ days really that good when it came to housing?

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POSTED December 31, 2011 1:26 a.m.

What does $325,000 buy you in Manteca today?

The short answer is just about any house on the market.

You could buy three homes in Powers Tract or a good sized McMansion.

That wasn’t the case seven years ago in December of 2004. Prices were starting to climb. They had climbed on average $71,933 during the previous 12 months.

A home in an older neighborhood near Manteca High at 534 Mikesell Street closed escrow in late 2004 at $337,500. And that was considered a bargain.

People were being squeezed out of the housing market left and right. And it wasn’t just people wanting to buy. Rents were climbing.

But the real frenzy was still among buyers. The steep climb triggered a panic of sorts among people - especially those working in the Northern San Joaquin Valley. By December of 2004 a home was selling in Manteca every hour of every day fueled by a stampede to buy anything under $325,000. Homes would be on the market literally for less than a day and be sold. Realtors resorted to intense networking to try and secure homes for clients who were buyers. It wasn’t unusual for agents to call listing agents twice a day to keep tabs on homes that they had found owners were preparing to market. It wasn’t commonplace but agents were reporting clients who would step into a house, make a quick tour, and then make an offer on the spot out of fear of losing out on a home again and being squeezed out of the market.

Those supposedly were the good old days.

Putting aside the economic wreckage caused by the foreclosure debacle plus the weak construction jobs sector, one can make an argument that the housing market in Manteca and the rest of the Northern San Joaquin Valley is a lot healthier in many ways than it was in 2004.

The reasons include:

•People who actually work in the valley can afford to buy decent housing in the valley. Manteca and neighboring communities are no longer - or at least not for now - serving as the de facto affordable housing solution for high-priced Bay Area communities.

•Monthly housing costs are stabilized. There are no new loans being made with balloon payments, two-year artificially low payments and such. The reason is simple. They are no longer needed in order for an average buyer to obtain a mortgage.

•Newer neighborhoods are more stable. Check out Union Ranch and Tesoro. Foreclosures are rare as are households moving in and out constantly. They are acting more like stabilized neighborhoods of yesteryear. It allows people to put down roots and helps develop a sense of strong community. Granted that’s not true in older neighborhoods ravaged by foreclosures that are worse than people constantly moving flipping homes.

•Even though there has been a surge in investors, there have been a large number of long-time Manteca renters in the past three years who for the first time ever have been able to afford to buy a house.

•The potential to return to the 1950s and early 1960s home value patterns. That means housing won’t super overheat or meltdown the general economy. Newer homes would tend to be smaller which in turn keeps prices under control.

If you got whiplash from the 60 percent plunge in housing prices, they may not seem like good times.

But if you view housing isolated from the rest of the economy, the affordability in Manteca hasn’t been this good since the mid-1980s based on the relationship between household income and housing prices.

Economists contend housing is affordable when the price of a home is 2.5 times or less the gross household income. In 2006, that ratio had reached 7.5 times household income making the use of unconventional lending practices the only way most people could buy.

Today that ratio for Manteca, Ripon, and Lathrop is under 2.5 times.

Ask people who have been able to buy a home in the past three years whether they think the housing market in 2011 for Manteca is better than 2006.

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