River Islands at Lathrop sold 40 homes in January.
It’s an about face from previous months in much of last year where new home sales dropped down to as low as 20 following several years where 50 home sales plus a month was the norm.
And while a number of the River Islands builders have adjusted prices roughly 10 percent on average, River Islands CEO Susan Dell’Osso sees that as a healthy development and not a repeat of 2008.
“This is more of a market correction,” Dell’Osso noted “Prices went up 25 percent during the pandemic.”
Dell’Osso noted price adjustments reflect that the supply chain is improving. She pointed out that is a good thing as it brings the market somewhat back to normal status.
River Islands — and other new home builders in the South County — are still benefitting from a trend that started in the pandemic — the hybrid workplace.
That means a job that allows employees to work from home several days a week not only reduces commute time and expenses but allows workers to enjoy the lifestyle that moving out of the Bay Area can afford their families.
Dell’Osso said two other factors are also helping home sales bounce back.
*Jumbo loans — for what is believed the to be the first time ever — had fixed rates that are lower than 30-year conventional mortgages.
*Buyers are going into deals with their eyes wide open.
While it helps that loans for homes exceeding the FHA threshold of $726,200 are at rates roughly one percent below a conventional 30-year loan, buyers who are now in the market for a new home are doing so more with a firm grasp of what it involves. That has resulted in a plunge in the number of people cancelling contacts after three months.
Unlike in 2008, buyers today are putting 20 percent down, have employment that qualifies them for mortgages that they secure, and view home ownership in the long range and what it does to stabilize their household rather than flipping it for a big gain and moving on.
What is happening in River Islands is reflected in the overall South County new home market as well.
While demand has lessened in Manteca, Lathrop, Tracy and Mountain House it is still fairly strong
Manteca, as an example, issued permits to build 875 new single family homes in 2022.
That’s 30 percent higher than the 677 home starts in 2021
And based on tracking back to 1990, the 875 housing starts in Manteca was the second highest behind 2000 when 1,074 permits were issued for single family homes. Last year bumped 2002 down to the third spot with 803.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
