The $101,000 home vs. $176,250 home
A house with three bedrooms and two bathrooms in 1,467 square feet at 1194 Pestana Avenue directly across from Diamond Oaks Park in East Manteca closed escrow last month for $101,000.
The median resale price of a home today in Manteca is $176,250.
The last time the median was that low was in 1999.
Even so, a large chunk of the Manteca the market is acting like it is 1991.
A spot check of closed escrows shows some startling “dips” in terms of what some three bedroom and two bathroom homes are selling for versus the rest of the market. And – surprisingly – it has nothing to do with location.
One of the homes at 310 Charles Avenue in Central Manteca near Doctors Hospital consisting of 1,504 square feet closed escrow for $135,000 on Aug. 4. That is just $900 under what the median price was in 1991 when that style of production home that started rolling out in the 1970s was still popular although most had expanded by 1991 to 1,800 square feet. Just a block away a two bedroom one bathroom custom home built in 1953 sold for $125,000 that year.
A home with six more square feet than the Charles Avenue home that is located at 1490 Junewood Court in North Manteca sold for $169,000 on Aug. 14. Floor plan wise, the biggest difference was the secondary bathroom wasn’t a half bath as it is on Charles Avenue.
If that wasn’t enough to confuse you, consider the 1,467 square foot home at 1194 Pestana Avenue directly across from Diamond Oaks Park that closed escrow on July 31. It was built in the early 1990s when the base model of the same square footage sold for $119,000. The selling price this time around was $101,000.
What gives? Why is the market – which is definitely bottom line driven in most cases – have so many wild variables in what properties finally sell for when escrow closes?
In a world where things like a swimming pool or even a remodeled kitchen adds nothing to value, it’s the basic things that hammer prices assuming everything is in OK shape. If there are two full bathrooms as opposed to two with one being just a toilet and sink you immediately get a lot of interest. If the home is two bedrooms and one bathroom, the problem is the three bedroom and two bathroom homes are so aggressively priced now that even people who don’t need more the two bedrooms and one bathroom are going after the three bedroom and two bathrooms. Before, higher prices prompted them to focus on securing just what they needed not what they wanted.
If someone has ripped out the air conditioning and heating system, the home can’t go FHA unless the bank or whoever got; left holding the bag puts in new units in place.
It explains why many newer homes those are structurally sound and in good locations are fetching as much as $40,000 less than their counterparts in older parts of town.
The reason is simple. Few – if any – commercial lenders will also finance the purchase of such a house. That leaves it to buyers who end up spending $10,000 to $15,000 and then turn around and try to flip the house for what it is worth in today’s market. For less than two weeks work doing things such as painting, replacing cabinets, minor cosmetic repairs, and putting in place a heating and cooling system it isn’t unusual these days for such investors to walk away with $15,000 in a month or so after buying the home. And then, more often than not, the homes are flipped to buyers with either an FHA loan or have a conventional loan.
Depending upon who you talk to, there is a theory that the backlog of foreclosures – and there are a number still in Manteca – that are taking forever to reach the market either has to do with the banks being overwhelmed or a desire not to collapse prices any further by just flooding the market with resale homes.
