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Ceres housing market crawling
Selling houses is getting hard despite rising inventory and falling prices
Housing stock Tuscany
Housing stock in Ceres is increasing with such projects as Tuscany Village subdivision here but real estate sales are stalling and prices of homes falling. - photo by JEFF BENZIGER/ Courier file photo

A Trendgraphix report published on Monday shows the Ceres housing market looks a lot different than it did nine months ago. Currently there are 44 active single family homes just in the 95307, up from only eight homes in January - an increase of over 460 percent. Meanwhile, the number of sold homes has decreased by 23 percent and pending homes are down by 25 percent during the same time frame.

Despite the increase in inventory, home sales have slowed to a crawl. Many buyers have been forced to vacate the buying pool as rising interest rates continue driving mortgage payments up.

“Rates are fluctuating so much and the market is changing so fast,” said Brandi Elgen, branch manager for Synergy One Lending in Modesto. “One day interest rates will go up 0.5 percent and then two days later they’re up a full percent. It’s very difficult for buyers who are barely making the cut for

a mortgage. When rates go up, borrowers change their minds because now it’s pushed them beyond their budget.”

As a result, borrowers who must stay below a certain debt-to-income ratio have lost their mortgage eligibility altogether, some canceling escrows and causing sellers to put their homes back on the market – in most cases with price reductions.

Eric Ingwerson, manager of PMZ Real Estate’s Ceres office and a 39-year veteran in the industry, listed a three-bedroom, two-bath home, with over 1,750 square feet on August 17 for $474,500. After two price reductions, he hasn’t seen an offer at $449,950.

“The market is softening, definitely,” he said. “Prices are falling, definitely. And it’s definitely directly related to the doubling of interest rates. The federal government didn’t learn very much from the ‘80s and now they’re doing it again. In my opinion, it’s become a buyer’s market.”

Clarissa Azevedo, a real estate agent with EXIT Realty Consultants, is facing similar scenarios. She said her four listings are sitting with little activity. 

“I generally encourage my sellers to price aggressively and listings fly off the handle,” said Azevedo. “Now, we’re looking at possible price reductions.”

The market seems to be a catch-22 for both buyers and sellers. Historically, prices drop significantly when you have an over-supply of housing and sellers are distressed, but this doesn’t seem to be the case. Inventory today isn’t abundant and sellers have equity.

“Buyers and sellers are equally struggling with the market,” said Cindy Williams, a loan officer with Synergy One Lending. “Some buyers purchased homes to work remotely and now their employers are telling them they have to come back to work. They bought when rates were at all-time lows during the pandemic and now they’re trapped. If they sell, they’ll have to buy at higher rates.”

Kris Klair, broker/owner of EXIT Realty Consultants, agrees the market is softening and shifting towards a more neutral market.

“The market is correcting itself to pre-pandemic levels,” said Klair. “Housing prices skyrocketed to amazing heights in 2020 and 2021, and people were over-paying for houses because they wanted more space to work remotely from home or build a home gym because they couldn’t go out. Now, life is back to normal for the most part. The same goes for the housing market, it’s going back to normal.”

Klair suggests to his agents to look at pre-pandemic prices when doing valuations for sellers “because those are the prices we’re starting to go back to at this point.”

The Trendgraphix report shows approximately two months of inventory for the Ceres market.

Demand in real estate is commonly judged by months of inventory based on closed sales. A buyer’s market equals six or more months of inventory. A seller’s market equates to less than three months of inventory. A neutral market equals three to six months of inventory.

So what does months of inventory mean? Months of inventory takes into account the number of homes for sale on the market with recently sold homes and reflects the number of months it would take to sell all homes currently on the market. You can calculate months of inventory by dividing the total number of homes for sale over the number of homes sold in one month.

Elgen said, since January, her company has seen a decline in loan applications by 60-65 percent. Of the buyers she’s still getting pre-approved, she’s working to lock their loans the minute she gets

the contract. If interest rates drop by the time documents hit the closing table, borrowers have an opportunity to buy down the rate.

“Some of my buyers don’t care what they pay for the house, as long as the monthly mortgage fits within their budget,” said Azevedo. “Even a slight rate hike can increase a mortgage by $200 a month, knocking a buyer out of the market.”

Elgen and Williams agree.

“We tell our buyers, if you can afford the payment you need to get a house,” said Williams. “Rents are only going to continue up. If you’re a first-time homeowner just keep in mind it may not be your forever home, but it’s a start.”

Today, the average price per square foot in Ceres remains fairly comparable to last January ($261 per square foot), with an increase of only 2.3 percent overall. June saw home prices peak at $341 per square foot, but prices quickly declined in July to $281 per square foot. August prices hovered around $267 per square foot.

“Remember, you’re not married to the rate, those will go up and down, but over time you will build equity for yourself, not for someone else,” added Elgen. “And don’t be afraid that you will never be able to afford a house - markets always change.”

When asked if they thought a crash was imminent, the consensus among these experts was a resounding “no.”

“In my opinion, no we’re not going to see a crash,” said Ingwerson. “I don’t think pricing will fall that far, not like what we saw in 2008. But I feel sellers think it’s a year ago, and buyer’s think it’s a year from now.”

Renee Ledbetter is executive director of the Ceres Chamber of Commerce, a freelance writer & former journalist, and a licensed real estate agent, who frequently writes on business and real estate.