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The San Joaquin Valley offers affordable housing prices.  Its median housing price is nearly one-half of the state average.  Still, the housing boom was most profound across all Valley communities.  With 73,223 units sold, the median price climbed $72,000 or 32.7% from $225,200 in 2004 to $297,200 in 2005.

The counties of Tulare, Kern, and Merced had the largest percentage appreciation rates, while Merced, San Joaquin, and Stanislaus recorded the highest dollar gains.  In the meantime, Kern, San Joaquin, and Stanislaus had the largest number of home sales.

In Fresno County, the median sales price of 13,703 homes jumped 23.8% from $210,000 in 2004 to $260,000 in 2005.  Kern County experienced an unprecedented housing boom with 17,667 units sold at an average price of $235,000.  This price was $65,000 or 38.2% higher than that of one year earlier.  Likewise, Madera County had 2,275 homes sold at an average price of $287,000, which was an increase of $72,000 or 33.4% percent higher over the previous year.  The median housing price in Merced County increased $89,500 or 37.5% to arrive at $328,000.  The County of San Joaquin had 14,220 units sold at an average price of $400,000, which was $88,000 or 28.2% higher than that of the previous year.  In Stanislaus County, 11,618 units were sold.  The county’s median price jumped $78,750 or 28.9% to reach $315,250.  Similarly, Tulare County had 6,138 units sold at an average price of $219,000, which was 38.6% higher than that of one year earlier.

 
      
There are several positive and negative factors that contributed to the housing boom in the San Joaquin Valley.  Some of the factors contributing to the rise in demand for housing are:

• Rapid growth of population
• Increased number of first time home buyers
• Affordable cost of living
• Continued influx of “housing migrants” from coastal California and “housing   commuters” from   southern California
• Improved business relocation, job creation, and income growth
• More competitive transaction and closing costs

Some of the factors that raise the cost of homeownership or reduce the housing demand include:

• Increased construction costs of labor and materials
• Reduced availability of land for residential development
• Increased cost of expanding the urban infrastructure
• Environmental considerations such as loss of farmland, air quality, and urban   congestion
• Higher interest rates on mortgage loans
• Rising monthly mortgage payments for adjustable-rate mortgage loans
• Possibility of limitation on the deductibility of mortgage interest payment from  federal income tax liability
• Greater property tax liability and the arrangement that the Alternative Minimum Tax  form denies property taxes

The latter factors have caused the Valley’s housing market to experience a considerable slow-down. There are signs across the region that the Valley’s red-hot housing market has lost some of its steam:
  
• The inventory of homes for sale has climbed
• The number of foreclosures has increased
• Multiple offers are becoming the exception rather than the rule
• For sale properties are staying on the market longer
• More buyers are making offers below the list price
• Some builders are providing incentives to buyers

Our expectations for 2006 are that housing prices will stabilize at reasonable appreciation rates of about 10%, reflecting more expensive construction costs.

Source: California Association of Realtors, www.car.org