Homes for sale pile up in far-flung communities
www0.mercurycenter.com
Homes for sale pile up in far-flung communities
slowdown reflects wide impact
of valley's sluggish economy
BY SUE MCALLISTER
Mercury News
Though they live a good two-hour drive from Silicon Valley, Manteca residents Carlos and Tracey Jorge know the valley's faltering economy is largely to blame for the fact that their neat gray-blue house with brickwork accents has been for sale for more than two months.
Homes are selling more slowly than last year in Tracy, Manteca, Hollister, Salinas, Gilroy and other towns where many residents commute to Silicon Valley jobs. The number of existing homes for sale has more than tripled in some cities compared with last year at this time, and many sellers have lowered their asking prices. Realty agents can sit alone all afternoon at weekend open houses.
The change in real estate sales underscores how connected the Silicon Valley and these cities have become. Jobs in the valley drive both housing markets. Last year about 24,000 commuters traveled daily to Santa Clara County from the Central Valley counties of San Joaquin, Merced and Stanislaus, and about 9,700 came in from Monterey and San Benito counties.
In Manteca, the Jorges have dropped their price twice, and now have their three-bedroom, cul-de-sac house listed at $209,999. They'd planned to be living in Nevada by this time, in a new house near Tracey Jorge's family.
``We're so eager to sell, I can't even tell you,'' she said. ``We'd just like someone to make an offer, and we'll work with them.''
When the Bay Area real estate market began to deflate in February, homeowners and real estate agents in far-flung commuter cities realized it was only a matter of time before they felt the impact. That time is now.
Hollister agents say the market started changing back in February, while some in Tracy say things were still going strong all the way through the end of March. But no matter when the turning point came, it's clear the real estate market has changed in buyers' favor.
Many factors
Just like in Bay Area cities, the supply of for-sale homes is up for several reasons:
Spring and summer are traditionally when most owners decide to sell.
Because homes are selling more slowly, old inventory piles up.
Some homeowners have put their homes on the market just to see whether they could still get the price they could have fetched in last year's super-hot market. (The answer: No.)
And some of the reasons that homes aren't selling in the outlying cities are the same as those in the Bay Area -- buyers nervous about the economy are waiting to buy, and those who are looking in earnest have many more homes to look at, and are therefore taking longer to make offers.
In Tracy, for example, there are just over 400 houses and condominiums for sale, compared with 214 at the end of March and 130 at the end of June 2000.
In the Central Valley, even new home developments are getting less foot traffic than they used to, though sales are still relatively strong, said Steve Smiley of the Meyers Group, which does market research for home builders.
`Still a bargain'
``It's still a bargain'' compared to core Bay Area neighborhoods, he said, so plenty of buyers are still interested.
While the median prices of new and existing homes sold are mostly higher than last spring, prices dropped from March to April this year -- and they may continue to drop if the number of homes for sale keeps growing and home sellers cut prices to attract buyers.
With Bay Area home prices softening, more people will be able to buy who might otherwise have looked farther out, noted Cynthia Kroll, regional economist at the Fisher Center for Real Estate and Urban Economics at the University of California-Berkeley.
Yama Marifat is one of those who might now be able to squeeze into a Bay Area home.
Marifat bought a new four-bedroom home in Tracy last summer for $350,000, and moved in December. But he soon realized he couldn't tolerate the commute to his Fremont engineering job -- two hours each way, and longer in the rain.
Marifat, 27, moved in with his parents in Fremont, and put the Tracy house on the market in April at $425,000. He has since dropped the price to $399,000.
He thinks that if he can sell the house, he should be able to afford to buy a town house in Fremont or San Jose.
``I'm not at the point that I'm nervous or I need to sell,'' Marifat said. But he realizes that the recent economic slump and news of layoffs have scared off some would-be home buyers.
However, Annette Goldberg and her husband, Larry, are taking advantage of the lower San Jose prices to move back from Salinas. They bought their first home there two years ago and commuted to Silicon Valley. The three-bedroom house they bought in South San Jose had been on the market for a few months and the price had dropped by $30,000.
``The house in San Jose, it's much more than we ever thought we'd be able to get here,'' said Goldberg, 29, an administrative assistant at Kaiser Permanente.
Their Salinas home sold in a month. Goldberg said there are as many as 10 other families in her neighborhood who are trying to sell and move closer to the bay.
For residents who want to move farther out, slower Bay Area home sales can crimp their plans.
When Amani Norling and her husband put their three-bedroom Manteca home on the market in April, they quickly got an offer from a couple who planned to sell their Fremont home and move to the Central Valley. But after several weeks, that couple said they couldn't sell their house and canceled the deal.
The Norlings dropped the price on their rancher with the pink roses and red geraniums in the front yard from about $255,000 to $250,000. Later, they went to $240,000. Amani Norling and her real estate agent, Cheryl McFall of ReMax, held open houses every weekend.
Then two weeks ago, the Norlings finally got -- and accepted -- an offer at their asking price of $240,000.
The family has already bought a new house in nearby Ripon, with more space for the three children and in-law quarters for Amani Norling's mother.
As in the Bay Area, buyers suddenly feel like they can make the rules. For example, buyers in Gilroy and Morgan Hill now can successfully ask sellers to make repairs and accept offers that are contingent on the sale of the buyer's home, which wasn't true last year, said Susan Jacobsen of Starritt Realtors in Gilroy. ``It's a real opportune time for buyers to do some heavy negotiating,'' Jacobsen said.
Price drops rise
Tracy agent Leesa Ward of Ward Real Estate said one week in May saw 96 price reductions in Tracy alone.
``It's still not a bad market,'' Ward said, seated in the lobby of her offices, a remodeled old Wells Fargo building in downtown Tracy. ``But I think everybody's been spoiled by asking and receiving whatever they want.''
Chris Blum, an agent with Seven Oaks Properties in Morgan Hill, listed a three-bedroom house in Hollister for $399,000 in February. But it's since been reduced to $369,000.
``We've been in contract twice and it's fallen through because of the buyers not being able to sell their homes,'' Blum said. And the competition from other sellers has gotten tougher: Blum said when she first listed the house, there were six other comparable homes for sale in Hollister, and by June there were 40. In May, sales in Hollister were down more than 50 percent compared to last year, she said.
For the outlying cities, the X factor is how long Silicon Valley's economic troubles might affect their home sales. In the recession of the early '90s, real estate in the Central Valley, for example, didn't recover as quickly as in Bay Area cities, Kroll said.
``It's pretty much in the last three years that they started getting this very strong demand out there again,'' she said |
