Florsheim News

By: Dennis Wyatt
Managing Editor

They're circling and picking off what some are calling the "steals of the century."

• A Cherry Lane condo that sold for $170,000 just 18 months ago just sold again this month but this time for $99,900.

• A 1,118-square-foot Spruce Lane half-plex - similar to a unit that sold two years ago for $255,000 closed escrow at $139,000.

• A 1,092-square-foot three-bedroom, two bathroom home at 412 S. Willow Street just sold for $139,000. You have to go back seven years to find a similar home that sold in Manteca at that price.

"The vultures are circling," said Joe Anfuso, president of Florsheim Homes, on Monday. "That's why I know this is the bottom of the market."

Anfuso was referring to the glut of investors who are picking off bank foreclosures that are priced so aggressively that they can almost immediately get a positive cash flow especially with rents starting to inch up in the Manteca market. More often than not, there are multiple offers on such properties.

Anfuso appears today in an interview on CNBC giving his take once again on the California housing market.

Although he'll caution his view is based on trends he is seeing plus historic cycles as well as the economy, Anfuso said he's "sticking with my guns" that the housing market will start to show signs of recovery in the third or fourth quarter of this year.

Reasons why we're at

bottom or near it

Anfuso isn't forecasting any big bounce imprecise. He sees a repeat of 1991 to 1996 - the last time the market recovered - when prices stabilized with modest annual gains right around the inflation rate. It took five years the last time for prices to start heating up. He expects this time will be no different.

His outlook isn't based on optimism as much as it is on indicators and conditions that he insists you can't ignore.

• There are now a record 172 pending sales in Manteca. That's three times the rate at any point in 2006 and double what it was when the market was hot.

• California has 36 million residents with an economy with an annual output of $1.6 trillion that is 30 percent larger than the last housing slowdown.

• There is still an annual housing shortfall of 200,000 units in California.

Anfuso said one shouldn't dismiss signs such as the investors he characterized as "vultures" noting they're buying because it makes a lot of sense. And by investors he doesn't mean those looking to flip but to build a stable of retail homes from which they can have a positive income flow.

"They (the investors) are the ones who are deciding the bottom of the market, nobody else," Anfuso noted.

Real estate agents say investors account for between 50 to 60 percent of the current sales.

The balance are primarily first-time buyers with almost all coming from Manteca or the Northern San Joaquin Valley.

Florsheim Homes at their two new Manteca neighborhoods off Woodward Avenue west of Airport Way are seeing almost 100 percent local buyers. They are price driven and are almost all using FHA loans.

"They want to come away knowing they've kicked you for the best possible deal," Anfuso said. "Everything is price driven today."

Florsheim guarantees

price for all of 2008

Anfuso, realizing hesitant buyers were worried prices would drop after they bought, convinced his bosses to roll out a guarantee for any buyer of a new Florsheim Home: If they buy anytime in 2008 and the base price of the model drops before Dec. 31, Florsheim Homes will send them a check for the difference.

Florsheim's sales traffic is double December and actual home sales have doubled to two a month with many of the buyers being actual Manteca residents - unusual for a new home development - they are getting a solid number of first-time buyers from Tracy as well.

Valley Park - with homes ranging from $279,990 to $365,900 - and Valley Blossom with homes starting at $274,900 - were designed specifically for the starter home market.

Anfuso said Florsheim was a bit ahead of the curve which is why they are seeing steady sales.

"A lot of our buyers have tried out the foreclosure market where about 80 percent of the sales are today and came back here because they like the value," Anfuso said. "They know what they're getting - something new with guarantees."

Anfuso said many people don't understand that once the backed up inventory of foreclosed homes are gone and the developers' backlog of empty lots are gone, price squeezes are going to return.

"It's getting harder and harder to create residential lots in California," Anfuso said. "That is going to be reflected in prices (down the road.)

Anfuso noted that unlike previous housing downturns, this one is not being driven by the economy but because houses are losing value due to the sub-prime mortgage crisis. He noted people need to remember it is a home first and an investment second adding that you can't sleep in your stock portfolio.

He also said retailers who have to look long range and depend upon roof-tops to grow the businesses are investing in almost 1.1 million square feet of more retail space in Manteca for a 40 percent jump.

"The growth is coming," Anfuso said.

Anfuso also noted the federal government is doing everything in its power to stabilize the housing market.