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2009 income, 2001 house prices here
The calendar says it's May 2009.

Housing prices say it's 2001.

The drop in median prices of existing homes since the market's historic peak in 2005 has brought Ceres the highest level of affordability in almost four decades. Median selling prices of existing homes is now at $131,500. That means despite a high unemployment rate, many more Ceres households can afford to buy homes at today's prices. That's up dramatically from the peak of prices in 2005 when an average house sold for almost seven times an average household's annual income.

Real estate activity is bustling, said PMZ Real Estate's Eric Ingwerson, whose been in the business since 1981.

"The demand is high, the inventory is shrinking so if you are considering buying a home, do it," said Ingwerson.

The Ceres office has been very busy with buyers, said Ingwerson. Demand for homes is especially great for first-time home buyers and buyers who were priced out of the market when prices went sky-high four years ago.

Inventory is shrinking from six months ago, he said. That's probably because bank-owned repos aren't as plentiful as they once were. Fannie Mae and Freddie Mac lending institutions are holding back on releasing homes because of tougher federal requirements to save homeowners from losing homes to foreclosure. Fannie Mae says another huge release will be occurring but nobody has seen it.

As of May 1, the regional Metro Listing Service (MLS) showed 314 new listing, 325 solds, 390 pendings and 718 expired listings. Also as of Friday, there were 285 homes listed for sale in the Ceres and South Modesto area; of those 166 homes are located east of the freeway. They ranged from a low of $21,000 to a high of $329,000.

Between March 15 and April 30, 101 homes sold in Ceres (east of 99) with a median sales price of $131,500.

Ingwerson and other real estate agents tell of renters who simply say they are going to wait to see if prices drop further. That, according to Ingwerson, may not be a wise move. He anticipates prices will increase in the next 18 months.

Too many buyers chasing too few bank-owned repossessed homes means a competitive marketplace. Those with cash can trump those who have to borrow.

"Buy," Ingwerson said. "And the only reason why I think some people are still sitting on the fence and they don't want to make the decision to buy is they seem to think there could be a release of a lot of homes by Fannie Mae. I just don't know if that's actually going to happen."

Ingwerson noted that when repossessed homes are released, they typically go for more than the asking price. "Most of these homes sell for more than asking price but the values are still not rising. I believe the reason for that is they're just priced so very low when they come on the market."

For example, a bank-owned three-bedroom, 1,240-sq.-ft. home on Canyon Drive in Ceres was recently listed for $79,950 but sold for $125,000.

"This buyer obtained this home in a great area for less than the median price but still had to bid $45,000 more than asking price to get it," said Ingwerson.

Most of the bank owned homes have multiple offers on 90 percent of them, said Ingwerson. "I have a set of clients that have been pre-qualified up to $200,000 but they ... would like to stay no higher than $100,000. I have written at least 12 offers for them and they have not been awarded a house yet. We've been beat on every deal. It's very, very competitive."

Now is also the time for those with equity-rich homes to sell in order move up into larger or newer homes, he said.

"Perfect time to do it," he said. "Prices and interest are both low. If you want to obtain a larger home, the perfect time to do it is right now. Why? Because it's cheap. Your property tax is going to be less (than what it was two years ago). Naturally you're going to sell your home for a lot less than what it was worth three or four years ago but you're also going to pay way less. All things are relative."

Interest rates are hovering around five percent on FHA loans. Buyers need to have a FICA credit score of around 620 to get in with 3.5 percent down and cover closing costs.

"If you can get a seller to participate in the closing costs you can get into a home extremely reasonable," said Ingwerson.

He recommends that renters who have ever toyed with the idea of owning should check with a mortgage officer to see what their status is in terms of qualifying for a home. They may find that they have simple things to do to clean up their credit whether it is paying an old bill or setting up a secured credit card.

"I would recommend if you're a first-time home buyer or an investor that needs to finance, go get pre-qualified and get a pre-qualification letter before you ever start looking," he said.

At today's loan rates, every $100,000 borrowed costs $537 a month in principal and interest over 30 years on a fixed rate loan. That compares to $484 a month for $90,000.