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The new Manteca numbers game
A new floor for housing prices being established
$750,000 is now $300,000 • HOME : 720 Vasconcellos Ave., five bedrooms with three bathrooms in 4,336 square feet • SOLD : Closed escrow on Aug. 27 for $300,000 • HEIGHT OF MARKET : Similar homes sold for $650,000 to $750,000 three to four years ago. • NOTES : Located in East Manteca near Joshua Cowell School. Heritage Ranch has the distinction of three Manteca real estate records – the largest tract homes ever built in Manteca at 4,336 square foot, the highest square footage price per new tract home ever built in Manteca, and the highest selling price ever of a tract home - existing or new – in Manteca at $750,000.
Now that it is clear the tsunami known as the mortgage meltdown has swept through the Manteca housing market it is safe to start thinking about long-term recovery.

Yes, there are at least two more waves of foreclosures coming – depending upon who you talk with at banks – but they will not have the same shocking and devastating impact that the big wave did.

A better analogy for anyone who has lived through California earthquakes might be to characterize the massive damage to value that was done as “The Big One” and what we are now experiencing as aftershocks. They can still knock down prices but as the shocks ease up, there are areas of stability emerging.

As in any disaster, the impacts on housing values are uneven. You can go from tract homes pushing 50 years in Powers Tract and note drop offs in values of 66 percent and then go by the Land of the McMansions – Heritage Ranch near Joshua Cowell School – and see drop offs at around 40 percent over the last three to four years.

It flies in the face of conventional real estate wisdom that the lowest priced homes drop last and then go back up first in value. It makes sense normally as the lower priced homes are the ones that more buyers can afford.

What happened, though, is the same forces that created the bubble with people buying homes they couldn’t afford that in turn helped send prices soaring have now sent affordability back to the Stone Age in terms of Manteca real estate.

That is a good thing since back three years ago median home prices in Manteca were 7.5 times the median household income. Affordability is considered when the median value is at 2.5 times the median household income. Now Manteca is below 2.5 times in terms of home prices compared to income.

That has made bigger and newer houses more affordable for more people. It has had the effect of shoring up prices by preventing farther backward slides in the upper lower and medium housing markets in terms of value.

Lower prices homes that are in livable condition are rebounding in most cases but not as fast. That’s not the way it usually works. As a note of caution here, rebounding means stabilizing or enjoying a bit of a gain. Most folks read the word “rebounding” and think “vroom, vroom” in term so market condition. Given what has happened sputtering is now a healthy sign.

Conventional wisdom has gone out the window for now which helps explain why prices are all over the board in Manteca. There are so many variables – all cash offers, bank’s asset department managers, and appraisal rules needed for loans that have tightened up considerably – real estate agents almost feel like they’re playing craps at times.

Keep in mind, though, that if you have the income to purchase a home in today’s market and you can do so it isn’t a gamble.

Prices will stabilize and eventually go up. Even if you are confident of your employment you may have a reservation or two but just keep in mind rents right now are depressed slightly due to the glut of rentals form investors buying foreclosed homes. Keep in mind the 300 plus new homes that are still selling each year in Manteca are not workforce or affordable housing. The inventory of such housing isn’t growing one iota in new construction. It ultimately will have a big upward impact on the lower priced homes right now whether it is in five years or 10 years.