Tuesday, February 07, 2006

From 15 Minutes to 4 Months: Even Red-Hot Merced Cools

The Modesto Bee reports on the Merced housing market (considered by one source as the second most overvalued market in the nation by 77%), home of the new UC campus:

With a shortage of available land in Modesto and its surrounding areas, more and more of them are eyeing the Merced area as the next big thing. Over the past few years, Merced has seen the number of builders and developers jump from a modest five to a whopping 26, according to Guy Maxwell, president of Merced-based Maxwell Homes and president of the Merced chapter of the Building Industry Association of Central California. "There has been a ton of new building and development in town, and we've had a tremendous influx of homebuyers," he says.

One downside to all of the new construction is that - as is the case in much of the state - the housing market has started to cool. "A year ago, you could sell a house in 15 minutes. Now, it might sit for four months," says Maxwell, whose company builds tract homes for first-time buyers as well as rental apartment communities...

Not all of Merced's new homebuyers are planning on living in the homes they are purchasing. Some buyers are leaving them empty while others are renting them out, according to Maxwell. A lot of them are looking at the homes as long-term investments and are banking on the racetrack receiving approval and the university's expected growth in the coming years. "That steady, consistent growth is attractive to investors and buyers," Maxwell says.

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