First-time home buyers get busy

Wendy Taylor, a resident of Petaluma for more than 40 years, recently decided that it was time to stop renting, and instead buy her own home.

“I had been saving up money for a down-payment, and finally found a way to make a deal work. The low interest rate and tax breaks made it possible,” said Taylor, an elementary-school teacher.

Taylor's short-sale offer on a west-side home has been approved by the seller, but the buying process has just begun.

“Now, it goes to the bank for negotiations,” she said.

Taylor, like many local first-time buyers, is taking advantage of unusually low home prices as she tries to purchase the house.

Houses on the west side of Petaluma now generally are selling for $450,000 to $475,000, while homes on the east side are being purchased for around $375,000, say local Realtors.

The lower-priced homes are attracting the most activity.

“There is an enormous amount of first-time buyers, and the frenzy is in the under-$400,000 range,” said Todd Mendoza, manager of Coldwell Banker in Petaluma. “There isn't much activity for homes above $500,000, but some interest still is there.”

“More people are buying low- or mid-priced homes, but there haven't been as many buyers in the last two months because the tax credit has gone away,” added Clark Rosen, a broker associate for Coldwell Banker in Petaluma.

The U.S. Congress approved an $8,000 tax credit for first-time home-buyers who make qualified purchases with a binding sales contract in place on or before April 30 that closes by Sept. 30.

The number of homes currently for sale in Petaluma, around 200, is less than the usual 250 to 300, said Timo Rivetti, a broker/associate with Keller Williams Realty in Petaluma.

Many homes that have gone through foreclosure and been seized by lending banks have not been put up for sale.

“Homes seem to dribble on the market. People at the banks may be smart about not releasing some homes for sale right away,” Rosen said.

The number of home foreclosures in Petaluma has been slowing down and more foreclosures now are being canceled. Rivetti feels that the slowdown is due to banks not wanting to keep the homes as real estate-owned properties, and instead moving to short sales, in collaboration with local agents. This enables them to avoid the costly absorption of homes and negotiating with owners the amounts of money involved with sales, he said.

More homes were purchased on both the east and west sides of Petaluma in March 2010 than in March 2009.

Buyers purchased 58 homes in west Petaluma in the first quarter of 2010, up 71 percent from the same period in 2009, according to Rick Laws, manager of Coldwell Banker in Santa Rosa.

The increase is partially due to more sellers trimming prices and buyers wanting to purchase homes before interest rates rise.

“Certainly, there's been more activity,” Rivetti said. “With the low interest rate, it's a good time to buy.”

The housing scene has seen an upswing in multiple offers to buy homes, but the situation remains a “buyers' market.”

“Absolutely, and sellers need to understand that,” Rivetti said. “But sellers will get market value for homes that are in good condition and priced well, although they won't sell for the prices people were getting three or four years ago.”

Several local Realtors said that they feel that the Petaluma real estate market has been escaping from a period of extreme instability, but that challenges remain for buyers and sellers.

“Everybody got caught up in consumer confidence. Now, the craziness has gone out of the market — buyers and sellers are a lot more educated,” Rivetti said. “The challenge now is dealing with the banks. They've gone from loose to strict guidelines.”

The median value of a single-family home in Petaluma skyrocketed from $375,000 in 2001 to more than $600,000 in 2006.

“One of the biggest factors was the ease with which people could get financing without having any cash,” Rosen said.

“Banks were providing loans to people who shouldn't have been able to buy a house,” Rivetti added.

Since then, the median value had been steadily declining, and fell below $400,000 in 2009 before bouncing above the mark this year.

One two-bedroom townhouse in Petaluma listed for $495,000 sold in three weeks in 2006. The home went into foreclosure last year, and sold for $320,000, Rivetti said.

Rivetti is optimistic that the Petaluma housing market will continue to improve.

“I think that we've hit bottom, and are coming up,” he said.

“We're in a long stabilization process, but what gives me hope is that there is no glut of homes for sale, and practically nothing is being built,” Rosen added. “Over the long term, scarcity is the most important factor.”

Some Realtors said they feel that Petaluma's attractiveness will help the housing market to recover.

“The desirability helps,” Mendoza said. “This is one of the few small towns in Northern California that has a downtown, and a closer proximity to San Francisco than cities such as Santa Rosa and Rohnert Park. You see people interacting and walking around. Petaluma has a cohesiveness, and people from all walks of life.”

(Contact Dan Johnson at dan.johnson@arguscourier.com)