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$369M spent buying existing Manteca homes in last 18 months

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POSTED July 3, 2009 2:47 a.m.
Buyers – taking advantage of a market many are now calling a once-in-a-lifetime opportunity in terms of affordability – snapped up 1,765 existing homes for sale in the past 18 months.

The homes represent an overall $369 million investment in existing homes either through mortgages or cash.

Escrow closed on 600 homes so far this year through Monday. If the pace holds, 2009 will end with a record 1,202 existing homes changing hands within Manteca’s city limits.

Last year, a new mark was set with 1,165 homes selling. That compared to 402 in 2007 and 627 in 2006.

There are another 221 homes with pending deals in Manteca as of Monday.

The biggest group of buyers as indentified by real estate agents and mortgage brokers are first-time buyers either from Manteca or the Northern San Joaquin Valley followed by investors and then a small number of Bay Area buyers. It was the exact opposite just three years ago as high prices – the median reached $413,000 – effectively squeezed people who lived and worked in the Manteca area out of the market. The median price today is $178,000 for a typical resale home.

Bay Area buyers are powering a large chunk of the new home sales thanks to Del Webb at Woodbridge – the age-restricted community planned for 1,420 homes – and the adjacent Summit Collection at Union Ranch which has attracted many of the same age-group buyers who are not 100 percent happy with Del Webb’s restrictions.

The typical new home built in Manteca five years ago was just shy of 3,000 square feet.

Then at the bottom of the new housing market when 10 permits were issued in February 2008 the average size fell to 1,577 square feet.

New housing starts in May 2008 saw the average size climb up a bit to 1,760 square feet. And city building statistics from May 2009 show the typical home start in Manteca now is averaging 2,768 square feet.

While home sizes have bounced back what hasn’t are building costs. It costs $25,000 more to build an additional 1,000 square feet last month compared to the cost in May 2008. And it is only $39,000 more to build the 2,768-square-foot home last month than it did the 1,577-square-foot home in February 2008.

May to May comparisons show in 2008 the average new home cost $136,616 to build and in 2009 it cost $161,921. Those prices do not reflect between $50,000 and $65,000 per home in growth fees and connection charges or the land costs and developer cost and profit.

It reflects the overall depressed construction market where prices have dropped substantially as firms compete aggressively to keep working. The City of Manteca experienced the same thing last week in two water line projects that were expected to cost $865,000 but came in with acceptable low bids reflecting a combined cost of only $393,000.

Fifty-seven homes have broken ground in Manteca in May and June in Manteca.
It reflects an upswing in new home sales as it took builders from November to April – six months – to sell that many homes.

At the same time existing home sales are holding steady - despite a three-quarters percent bump in interest rates- thanks in part to a backlog of 216 pending sales. Most loans are locked in once there is an accepted offer on a home.

The bulk of the new home construction is taking place in Union Ranch East as well as Del Webb at Woodbridge north of Lathrop Road and Tesoro in southwest Manteca. Florsheim Homes has virtually cornered the $249,990 to $310,000 new home market with their Valley Park and Valley Blossom collection southwest of Airport Way and the Highway 120 Bypass. While Florsheim is aiming for buyers who are frustrated with trying to duke it out on the foreclosure market for a deal, the other builders are aiming at the move-up market of qualified buyers that  is starting to grow stronger with each passing month.
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