It didn’t take long for homes in Manteca to sell at the dawn of 2005.
A prime example was a three bedroom, one bathroom home with 850 square feet with no garage on narrow Goodale Lane. It is located barely a stone’s throw west of the railroad tracks between Yosemite Avenue and Center Street.
The home ended up selling for $310,000 in March of 2005.
The Goodale Lane home built in the 1940s was the poster house for the Manteca market four year ago and it still is today.
Less than three years after it sold for $310,000 the home was in foreclosure and back on the market for $189,000 in February of this year. It was sold but not for $189,000. It closed escrow for under $150,000 sliding in value downward under the weight of more than 1,000 foreclosures.
History won’t treat 2008 too kindly when it comes to the housing market and the nearly 1,200 existing homes that are projected to have closed escrow this year when 5 p.m. rolls around on Wednesday. Just over 1,000 of them came back on the market as the result of foreclosures or short sales.
That, however, is only half the story. This year marks the first time in at least 30 years — if not longer — that buyers of existing homes in Manteca were almost all exclusively local or valley residents with the bulk being first-time buyers and investors.
Sales were at a dismal five a week until mid-February when sales started taking off. That’s when the median prices were at just above 5.3 times the median household income. Mortgage packages with 3 percent down using FHA loans meant it cost almost the same to buy as it did to rent in Manteca.
Economists consider home prices at 2.5 times the median income of an area as being affordable. In individual cases, if a household had $62,000 in income the affordable level with minimum impact on other living expenses for a house purchase would be $155,000. If the household income was $100,000, then the 2.5 factor would make a $250,000 or less home affordable for that buyer. Anything above that starts to put a strain on the ability to juggle the mortgage and other living expenses.
When home prices peaked at $429,000 in 2005 when the Goodale Lane home was sold for $310,000, the median price was almost 7 times Manteca’s median household income of $62,000.
Median prices are expected to end up at under $229,000 for 2008 when the year draws to a close. That reflects median home values at 3.7 times the median household income. The median price at the end of 2007 was $345,000
Prices will have ended up dropping $116,000 from Jan. 1, 2008 to Dec. 31, 2008. Compare that to 1995 when the median resale price of a home in Manteca was $125,900.
As far as new homes go, Manteca is expected to end the year with less than 240 new single-family housing starts.
Most Realtors are convinced that the market has pretty much bottomed out. However, that doesn’t mean all segments of the market have stopped falling. Prices on the bottom end are so low that homes under $120,000 in reasonable condition rarely last more than several days on the market. Larger homes — such as the so-called McMansions – are expected to continue to drop although not necessarily significantly
As real estate agents such as Tom Wilson have noted, you won’t be able to identify the bottom of the market until three months or so after it has passed.
They also believe prices will start stabilizing sometime between mid-year and late 2009. But before that can happen, the backlog of foreclosures has to be cleared up.
There are 412 homes on the Multiple Listing Service in Manteca as of Friday. Low interest rates may help keep some homes off foreclosure watch as adjustable loans won’t trigger a bump in the rates on mortgages.
Inventory hit a record high 651 homes in September 2007 reflecting a supply of 21.7 months based on the market’s absorption rate at the time.
The 412 homes now available represent a 3.3-month supply based on the current monthly sales pace.
New home builders are playing a wait and see game. The 2008 new home sales was at about a third of the volume that was considered healthy. Developers who had originally planned to break ground on infrastructure for new subdivisions in mid-2008 are waiting for the existing home market to tighten up which in turn would allow them to get more for their homes.
Currently, they can’t compete with the foreclosure pricing that is making 2008 a record year for existing home sales.