Here’s an eye-opener: Housing prices in California are expected to surge 11.5 percent in 2012.
That’s 11.5 percent upward.
And then in 2013 prices are expected to jump another 10 percent. By the time 2017 rolls around a 52.5 percent increase of prices over today’s levels are anticipated to put median housing prices statewide at $440,000.
That bold forecast is made by the same panel of UCLA economists who were the first to predict the housing bubble would burst while others dismissed it as just doomsday talk.
It makes sense. Given that prices have dropped by close to 60 percent since 2006 in markets like Manteca. That drop in many cases made homes less expensive than not just their replacement cost but also the value of the land and - even more rigid in terms of fixed costs - the price of extending essential infrastructure such as water and sewer lines.
In short, housing prices today are not just below market. They are - in many cases - way below what market conditions should determine as a fair price given fixed costs.
The economists, though, anticipate housing sales to remain relatively flat with transactions between 3 and 5 percent of the overall inventory with most activity taking place between 2013 and 2015. That’s because it is going to continue to be tough to secure mortgage loans given new underwriting standards.
They also think it will take 10 years or more for prices to return to 2006 levels.
The big question is if this projection rings true when will it really start taking place in the Northern San Joaquin Valley market?
The same adage that was true before the housing bubble burst and in the years after will hold true: The Northern San Joaquin Valley will follow the Bay Area’s lead.
In places like Manteca, Tracy, Lathrop, and Ripon it usually has been a six to nine months delay before trends reach here. Go farther south toward Turlock, east toward Oakdale, and north toward Stockton and Lodi you can add several more months at least to the lag time.
The Bay Area is seeing some improvements in the housing markets although it is still tempered by foreclosures just like everywhere else. But they are also seeing movements in job creation.
All of this - especially with the difficulty of obtaining a loan - is all the more reason if you think you’d like to own a home you need to give it more than just serious thought. If you’ve had a steady job you need to consider the fact you may have to repair your credit, save up money for a down payment or go through a long drawn out process to secure a loan. Equally important is that affordability in Manteca and nearby communities is at an all-time high.
When the needle starts moving upwards again in prices, each shift will cut people out of the housing market.
Whether the UCLA economists have it nailed again in terms of the timeline and the size of the movements is questionable.
One thing is for sure: Prices will start rebounding sooner or later.