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Housing: Is SJ County now at bottom?
SOURCES: US Census Bureau, county population estimates and UOP Business Forecasting Center - photo by Courtesy Ebhardt School of Business, UOP
The day of great deals are numbered.

Just like any over economic movement, The Great Recession accompanied by liar loans that created the mortgage meltdown, must someday come to an end.

A study by the Ebhardt School of Business at the University of Pacific noted that sometime in 2009 population growth exceeded housing growth in San Joaquin County. The last time that happened was in 1996. Three years later home builders aren’t able to keep up demand and it helped revive the resale market where median prices had been stagnant since 1991 after housing prices dropped 10 percent from 1989 to 1991.

The data is part of a study on foreclosures. Its relevance to the Manteca market has everything to do with people who are trying to gauge when the market will bottom and when it will raise so they can make the right move. First of all, the study makes it clear there are a lot of mixed signals out there and that the standard indicators - housing starts and such - aren’t very reliable given the current mixture of economic conditions.

Other expectations outlined in the study include:

•Short sales will continue to rise and should become more prevalent than bank owned sales over the next two years.

•Uncertainty about the behavior of borrowers with seriously underwater mortgages where loan balances greatly exceeds the current market value of the home that can still afford to make the payments is a wild card in the housing recovery.

•Standard market indicators such as building permit activity, market absorption of available inventory and such are proving to be unreliable indicators of the housing market.

•Financial problems will continue to drive the county housing market for the next one to three years.

•A full-blown recovery in the new housing market will take place over the next five to 10 years accompanied with modest sustainable increases in home values.

Two things that are also fairly solid are that housing prices have leveled and ultimately housing inventory will lag housing demand.

The report does talk about the “shadow” inventory, supposedly the ton of foreclosures the banks are keeping off the market. It dispels that as largely a myth noting the real reason for a back-log of homes that have entered into default not being foreclosed on and sold are that banks are working more with borrowers either to modify loans or make short sales work.

The study predicts eventually short sales and not foreclosures will dominate the market. That would definitely be a plus.

Such efforts have more than doubled the length of the foreclosure process for those that ultimately are taken back by the bank and resold. In reality, the banks are simply holding onto them but are trying to make things work. However, if those efforts aren’t fairly successful there could be a ton more foreclosures in 2011 through San Joaquin County.

For now, the rate of foreclosures has dropped off significantly from the peak in July 2008 as have the notices of default.

Perhaps the more telling data from a buyer’s perspective is what happened between 2000 and 2010 when median home prices in San Joaquin County ballooned from $140,000 up to almost $450,000 and then dropped down to $162,000 by the start of 2010. Based on 28 percent inflation over the same time period home prices today should be at $179,000. Instead they reflect a 15 percent growth to $162,000.

That is one way of saying home prices for such properties are around 13 percent undervalued on average. It means prices will be going up and then perhaps stalling for a period of time.

You can wait to buy but you probably won’t save any more money of consequence.

By all indications we are at a bumpy bottom and not simply a straight-line affair.

That will eventually change and we will be starting the long climb upward once again in housing values.

The pendulum is getting ready to swing back in the other direction in term of housing process. In other words, there is no longer an advantage to the buyer to keep waiting if they state driven first and foremost by saving money.