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Earth moves this spring
Buying & renting at rare equilibrium
Florsheim Homes CEO Joe Anfuso, right, talks about the Manteca housing market as Brian Lange listens. - photo by HIME ROMERO
The first real sign that the housing recovery is on its way in Manteca will be heard sometime after the tule fog dissipates and the almond blossoms have sprinkled the green grass with a blanket of white and pink flakes.

That’s when the sound of huge earth moving equipment will fill the spring air southeast of the Airport Way and 120 Bypass interchange to mark the first time in nearly five years a non-age restricted residential developer has been able to create new lots by putting in the streets, sewer and water lines, and other infrastructure.

Florsheim Homes - which is marking the grand opening of two new models at Valley Blossom this weekend with 25 of 36 available homes already sold - is planning on putting in the infrastructure for another 44 lots.

It doesn’t mean, though, that the housing market is out of the woods even though Manteca has scored three straight years with 300 plus new homes built and sold annually while larger neighboring cities such as Stockton have only done a fourth of that amount. In 2009, Manteca built and sold 304 new homes while Modesto managed to sell just eight new homes.

What it does mean that builders such as Florsheim Homes are now able to compete with the foreclosure market that has effectively driven prices down the median resale housing price in Manteca 57 percent from the peak of $413,000 in 2006 until it hit bottom in 2009 at $178,000. The median resale price rebounded by $7,000 in 2010 to reach $185,000.

New homes start at prices lower than resale median
That means builders such as Florsheim Homes that have figured out how to give people what they are looking for with a bit of pizzazz but not the overkill of the boom market are effectively luring potential foreclosure buyers into new home purchases. Valley Blossom, as an example, has its 1,286 square-foot home with three bedrooms and 2.5 bathrooms starting at $169,900 or $15,100 below the median price of an existing home in Manteca.

That hasn’t happened in at least 30 years - if ever - are the median price of existing homes being lower than the lowest priced new home on the market in Manteca.

But what is more striking to Florsheim Homes Chief Executive officer Joe Anfuso is the fact that renting and buying - even purchasing a new home in some cases - is at equilibrium.

“It is a rare occurrence,” Anfuso said.

That median price resale home at $185,000 using a FHA loan with a 3.5 percent down payment will cost just a little over $1,200 a month with property taxes and insurance included for a 30-year fixed rate loan.

That is just about what a 1,411 square foot home with three bedrooms and two bathrooms closed escrow for $180,000 last week in the 1400 block of Diamond Oak Way in the California Classics neighborhood in East Manteca.

Similar-sized homes in Manteca with three bedroom and two bathrooms are now renting for between $1,200 and $1,325 a month.

Anfuso is still more than cautious when talking about the prospects for 2011 being a marked improvement over 2010 although he sees signs of stabilization. That shouldn’t be mistaken for a return to normalcy as defined by the housing market from 1997 to 2005.

“We’re experiencing more and more people who can afford to add upgrades,” Anfuso said. “That wasn’t happening a year ago.”

At the same time Florsheim Homes is working on razor thin margins. Other builders - especially those publically traded companies driven by other forces - are focused on cash flow. In the case of Manteca they have lowered the prices of their homes - usually larger than Valley Blossom and still more expensive - in a bid to pull out the money that has been stranded in the ground for close to five years. That typically translates into $52,000 plus per finished lot based on a City of Manteca survey of developers making it wise in the case of some firms to sell homes at a loss so they can retrieve the money they had previously invested in land and infrastructure.

Another good sign is the standing inventory of spec homes being built by developers without being sold first. A windshield inventory indicated there were about 30 in Manteca this past week. That compares to close to 90 two years ago.

Buildable lots in Manteca almost down to 500 level
Bill Filios of AKF Homes has noted the firm is holding their own with the Summit Collection in Union Ranch East. AKF has been steadily selling homes. Unlike other builders they weren’t caught with a lot of money stranded in the ground due to a move by a firm that had bought some of their paper lots, finished them and couldn’t handle the payment obligation when the market dropped prompting them to return the lots with improvements in the ground.

Meanwhile, Pulte Homes’ Del Webb at Woodbridge started work on creating additional lots late last year for the age-restricted community. From 2007 to 2010 Del Webb at Woodbridge accounted for almost 25 percent of the 900 plus new homes that were built in Manteca. Buyers need to have at least one person in the household who is 55 years or older.

Builders such as AKF, Machado, and Raymus Homes are working to bring projects forward to the point they are ready for earth moving so that when the housing market improves enough that they can secure financing and start creating more lots.

That could happen sometime in the next 18 months.

Manteca’s inventory of improved lots that are buildable has dropped from 942 down to almost 500 in the last 18 months thanks to the annual absorption of 300 plus lots for new homes. It typically takes six months to get land improved to the point homes can be built.