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2009 income, 2000 house prices
HOME1 4-27-09
HIME ROMERO/The Bulletin Many existing homes in Manteca are now selling at 2000 prices levels.
Managing editor of the
Manteca (Calif.) Bulletin
The calendar says it is April 2009.
Housing prices say it is early 2000.
The drop in median prices of existing homes – 34.7 percent since the market’s historic peak of $429,000 in 2005 – has brought Manteca the highest level of affordability in almost 40 years. Median selling prices of existing homes is now at $179,900. That means despite unemployment hovering at 14.4 percent, almost three quarters of the Manteca households can afford to buy homes at today’s prices. That’s up nearly seven-fold from the peak of prices in 2005 when an average house sold for almost seven times an average household’s annual income.
The lower prices triggered by foreclosures allowed Manteca to set a record last year for existing home sales with 1,165 homes changing hands. The pace isn’t letting up this year as Manteca is on target to see 1,278 existing homes sold in 2009.
“The only time we were busier was during the period of refis in 2005,” said Deborah Romero of Ability Mortgage.
Today’s prices triggered into large gains in affordability as income is at 2009 levels while median prices are at 2000 levels.
Increased buyer activity is eating into inventory despite the continuing onslaught of foreclosures and short sales. There were 225 homes available in Manteca as of April 20. That is down just over 40 percent from the first of 2009 when there were 376 homes available. It has dropped a staggering 65 percent from the peak of the housing glut in September 2007 when there were 651 unsold previously owned homes in Manteca.
Still, Romero and real estate agents tell of renters who simply say they are going to wait to see if prices drop further.
That, according to Romero, may not be a wise move.
“It is doubtful you’re going to see a home selling for $150,000 drop (much more than) $10,000 if that,” Romero said. “By waiting you run the real risk of not finding the home you want.”
At the least Romero said renters who have ever toyed with the idea of owning should check with a mortgage officer to see what their status is in terms of qualifying for a home. They may find that they have simple things to do to clean up their credit whether it is paying an old bill or setting up a secured credit card.
“You really need to talk to a professional as they’re the only ones that can give you answers you need,” Romero said.
She noted a loan officer would be able to tell if an old debt for medical bills is liable to be dismissed by the FHA as having no bearing on your current ability to pay a mortgage.
At today’s loan rates, every $100,000 borrowed costs $537 a month in principal and interest over 30 years on a fixed rate loan. That compares to $484 a month for $90,000.
“This is a good time to buy,” Romero said. “You want to catch the elevator on the way down than on the way up. Eventually prices will go back up so you can’t really lose in the long run.”
Romero noted the risk of another bubble sustained by unrealistic loans is something that won’t happen again anytime soon assuring buyers that home prices will be stable and sustainable when they do recover.

To contact Dennis Wyatt, e-mail