Home sales

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From the Modbee
Last year was dismal for new home builders, and this year is expected to be worse.
The
construction industry has collapsed throughout the Northern San Joaquin
Valley, with builders going bankrupt, delaying developments or simply
quitting.
The reason: virtually no new home sales.
With
banks selling foreclosed houses at bargain prices, unemployment rates
soaring and mortgage lending standards tightening, most builders say
they can't lower prices far enough to attract buyers.
So most of them have stopped building, causing home construction to shrink to the lowest levels in more than 50 years.
Here are the facts:
Only 97 residential building permits were issued in Modesto last year,
which was about 7 percent of normal. During the past 40 years, the city
has averaged about 1,300 permits annually.
Stanislaus
County's single-family home building permits plunged about 90 percent
in 2008 compared with the 2005 building boom peak. Just 464 permits
were issued last year, and builders predict there will be only 430 this
year.
At the current sales rate, there are enough
developed lots to last nine years. Stanislaus, Merced and San Joaquin
county builders have spent millions on streets, curbs, gutters and
grading for 13,000 lots that are sitting empty in unfinished
subdivisions.
About 820 completed new houses were
vacant and waiting for buyers in the three counties as of December, and
about 500 others were under construction. Back during the boom,
builders had 5,500 homes under construction at once and practically
everything they finished sold immediately.
New home
sale prices fell to a median $245,500 for those that closed escrow in
Stanislaus during December. That was nearly 44 percent below the
$435,250 median new home sales price in December 2006.
"You
can't lose that kind of revenue and still have a profit," said Joseph
Anfuso, who runs Florsheim Homes, which has been building in the valley
for 25 years. "Now we're just working to pay our bills and stay
cash-flow neutral. Profit is out the window."
Florsheim
sold "a couple" homes in January at its two remaining Manteca
developments, and Anfuso said his starting prices have dropped to
$240,000.
"To survive, you have to pare back your
expenses, cut down advertising, let your employees go and ride it out,"
Anfuso said. During the past two years, he's reduced his staff from 55
to 11. Florsheim also drastically scaled back its developments. "We got
out of Turlock, Ceres and Lathrop, and we mothballed our Modesto
project."
Demand for new homes faded

Demand
for new homes faded as the real estate market in the region collapsed
in late 2005 amid a glut of subprime loans. As foreclosures soared,
credit tightened and the economy weakened, the new home market dried up.
Now
every builder is struggling to survive, said Sharon Hope, the Hanley
Wood Market Intelligence research specialist for the Northern San
Joaquin Valley.
"Everyone that's keeping their head
above water has had to change their product line, reduce the square
footage of their homes and go back to basics," Hope said.
Big,
expensive tract houses aren't selling, she said, particularly because
large home loans are very hard to get, even for those with good credit.

Hanley Wood, which provides research for the building
industry, lists 94 unfinished subdivisions in Stanislaus, 75 in Merced
and 121 in San Joaquin.
But Hope said many of those
developments have been repossessed by lenders or abandoned by builders.
She said some still have model homes, but they're rarely open.