Buyers revel in bounty of home choices

Declining prices mean more Valley residents can afford to buy a house.

By J.N. SBRANTI
The Modesto Bee

Valley home sales prices plunged to a six-year low in July.

Buyers are thrilled.

And they should be: The dramatic drop in home values has created tremendous buying opportunities. Statistics released Tuesday show the Valley's home affordability hasn't been this good since the summer of 2000.

This spring, median-income families could afford about half the homes sold in Merced, Stanislaus and San Joaquin counties.

Compare that with three years ago, when the Valley's families could afford only about 3 percent of the homes sold.

That's the upside of the housing downturn.

The downside is that house prices keep declining: July's median sales price plummeted to $155,000 in Merced County. That's less than half what houses were selling for in December 2005, according to DataQuick Information Systems.

San Joaquin County's median sales price fell to $220,500 in July. Stanislaus County's median fell to $190,000.

Laura Moran is overjoyed prices have plummeted so far.

After years of living with in-laws and in rental homes, she and her husband, Dario Moran, bought their first home in June. They paid $210,000 for the three-bedroom, two-bath Modesto house that was valued at more than $350,000 three years ago.

Mortgage lenders foreclosed on the property this spring, and the Morans bought it from the bank.

"At first we were a little afraid to buy because the market (is unstable). But there's so many great buys out there, especially the foreclosures," said Laura Moran, 27.

Their mortgage payments are fixed for 30 years, so she's not worried if the home's value slips a little more. "We're planning on living here a long time."

Paying a mortgage now can be cheaper than renting.

That's what Christen and Phillip Sterling discovered two months ago when they purchased a two-bedroom condo. They paid about $97,500 for the place, which had sold for $220,000 in 2005.

"We were paying more in rent than we're paying now for both our mortgage and our homeowners association dues," said Christen Sterling, 25. She's taking college courses and plans to become a nurse. When that happens, the Sterlings may try to buy a larger home.

"Then we'll be able to rent out this place for more than the cost of our payments," she said. "So it's a good investment."

Kevin Cotner, 32, also did the math before he decided to buy in Stanislaus County. He grew up in Ceres and his wife is from Modesto, but they've been renting in Brentwood near his job.

Now that prices have dropped so much, they're buying a Ceres house for $200,000. They expect to close escrow within a month, and are thrilled to be moving closer to family members.

Though he'll have to commute 50 miles to work, Cotner said "the tax write-off (for mortgage interest) will almost save me as much as it will cost in gas money to drive back and forth."

Finding an affordable house, however, still isn't easy because good buys attract lots of competition.

Cotner was one of 17 bidders for that Ceres house, and he had toured more than 50 homes before finding the right buy.

Bargain hunters are keeping real estate agents hopping throughout the Valley. Sales this July compared with last July were up 105 percent in Merced, 155 percent in Stanislaus and 129 percent in San Joaquin counties.

Marlissa and Nick Martell bid on five homes before they were able to buy their Manteca house this month.

"We're ecstatic!" said Marlissa Martell. The 31-year-old mother of three and her husband have been renting for more than a decade.

Home prices were beyond their reach until recently. She said they're so happy to finally be paying down a mortgage rather than paying rent.

"It's like we're paying ourselves."