'Give Me a Break. What Did You Think Was Going to Happen?'

From the Modesto Bee:

Owning a home no longer puts you on the fast track to riches. After six years of rapid appreciation, home prices in the Northern San Joaquin Valley have started to sputter. Sales prices are up one month, down the next. And the length of time it takes to sell a house has slowed...

Now, houses are languishing on the market, often for months. Sales volume fell 36 percent in June in Stanislaus County compared with last year. "Seller expectations need to change fast," warned John Nelson, Modesto branch manager for ComUnity Lending, a mortgage bank that funds home loans. "Too many sellers still remember how their neighbors made a bundle selling homes last August..."

A typical $300,000 loan now costs $2,200 a month, once principal, interest, taxes and insurance costs are included for a 30-year-fixed mortgage, Nelson said. That's simply too much for most first-time buyers to pay, which means homeowners who want to move into bigger houses are struggling to sell their houses, he said. The solution? Nelson advocates dropping all home prices by 10 percent to make them more affordable...

Lewis said demand is still there for homes, but buyers won't buy what they can't afford. He said sales are off so much that times are getting tough for real estate agents. Last Friday, ReMax of Oakdale shut its doors. "We were given no notice," said Tom Van Ruiten, who was one of eight agents at the ReMax office.

Van Ruiten has been selling real estate for more than 25 years and has seen market downturns before. He recalled the early 1980s, when buyers had to accept mortgages with interest rates as high as 21 percent. So the current market slump doesn't surprise him. "With home prices going up 20 percent a year and wages going up 3 percent a year, what did you think was going to happen?" Van Ruiten asked. "Give me a break."