Monday, March 21, 2005

Stockton, Calif.-Area Agents Say Home Prices Appear to Have Stopped Jumping

By Bruce Spence

The Record, Stockton, Calif.

RISMEDIA, March 21 – (KRT) – After more than several years of annual home sales price increases in the 25 to 40 percent range, many real-estate brokers and agents in San Joaquin County, Calif., are starting to believe that those heady market days are over.

"We're now starting to see decreases in listing prices so to me that's an indication of this thing flattening out," said Michael Collins, of Century 21 Collins in Stockton. "I believe we're done with the 30 percent (annual) appreciation."

And multiple offers have stopped, mostly, he said.

No one is saying the "B" word -- bubble, where prices in an overheated market plummet. But it feels as if existing-home sales prices, which hit a median of $369,000 last month countywide, have stopped jumping, brokers and agents say.

According to sales figures from Coldwell Banker Grupe-TrendGraphix monthly reports, based on Multiple Listing Service data, the median sales price -- half sold for more, half for less -- of existing homes countywide rose steadily, from $265,000 in January 2004 to $365,000 last December.

That $365,000 held for January and edged up to $369,000 last month.

In Stockton, December's median sales price rose to a high of $320,000 only to slip and hold at $315,000 in January and February.

"It feels like it's slowing down," said Hal Lurtsema, broker with Prudential California Realty in Stockton. "I think some people trying to trade up just aren't qualifying. It comes to a point with our local people that you just can't afford a property."

Beck Realtors agent Jim Kitzke said he's still very busy and selling, but it's nonetheless a changed marketplace. He's not seeing many over-full-price offers, which had been commonplace.

"I haven't seen anything going backward," he said. "But the market has reached a peak, and I believe it's going settle down now. Things might back up a tiny bit, but I don't think the floor is going to fall out from underneath us."

Things had to slow down eventually, he said.

"It was getting ridiculous when you could sell a house for $250,000 or $260,000 that was almost totally a knock-down," he said. "It just got to the point where people weren't going to pay any more."

Others say they haven't sensed any change in the marketplace.

"It's the same old same old," said Bob Riggs, of Riggs & Associates, GMAC Real Estate, in Stockton. "Interest rates are still a positive thing. As long as the rates are still low, I don't think the market is going to suffer at all."

The sales market remains active, he said, with anything priced under $500,000 still garnering multiple offers, generally.

The TrendGraphix numbers pointing to an end to sharp sales-price escalations over the last three months also show that properties are pulling in full asking price.

For example, Stockton properties since last August have sold on average at full asking prices -- and moved at 99 percent of asking prices in five of the eight months before that full-price run.

Also, Stockton properties sold in 34 days last month at full asking price on average, according to TrendGraphix.

Art Godi, of Art Godi Realtors in Stockton, said he doesn't see a potential bubble or price deflation because there are too many pressures pushing prices up: interest rates remain good, the growing immigrant population wants to buy into the American dream of owning a home, and the supply of homes on the market isn't strong enough to meet demand -- nor is it likely to.

A major run in home prices in San Joaquin County began before the start of this millennium fed primarily by Bay Area buyers who couldn't afford to buy homes there because of soaring prices but viewed Valley homes as relative bargains.

At least a couple of times during that run, brokers and agents have proclaimed the sharp sales-price escalations as over after a couple of level months only to see sales prices start jumping again.

Collins sees a couple of dynamics in the current market. First, more people, even those "moving up" to bigger, better homes, are having trouble qualifying for loans. Although local first-time buyers typically were knocked out of the market many months ago, move-up buyers were still active.

Now his firm is starting to see families staying put and investing in remodeling, he said.

Second, appraisals are starting to come up short, he said.

Appraisers have said over the past several years that prices were climbing so fast that they had trouble setting a home's valuation based on recent comparable sales in the area.

Now, Collins said, some of the appraisals conclude that the sales prices were higher than the market value of the property, in effect knocking out a loan or at least subjecting the sales deal to renegotiation.

"We've seen that on several occasions."

Collins said the market "still feels good to me -- we're still getting lots of buyers coming in, though there aren't as many sellers as we'd like."

It's just that 2 to 3 percent annual home-valuation appreciation could become the norm, instead of 20 to 30 percent or more, he said.

His firm had a record year in 2004, and he said he expects a good run through the summer. After that, he said, it depends on interest rates.

"It doesn't scare me at all," Collins said. "It would bother me a lot if we were going to have a big nose dive, but I don't think that's going to happen."

Meanwhile, Bay Area home prices jumped nearly percent last month, moving to a record median of $549,000, up from $534,000 in January, and up 20.1 percent from $457,000 in February 2004, according to DataQuick Information Systems, a real-estate information service in La Jolla.

Prices are going up at their fastest pace their in 4 years, the firm reported.

The local sales price movement, or lack thereof, seems surprising in light of the Bay Area action, Collins said.

"You know what they say, if it looks like a duck and walks like a duck. But who knows? Maybe it's not a duck."

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