The West Side housing market continued to slide as the year went on, with foreclosures on the rise and home prices dropping markedly from the record highs seen at the peak of the construction boom and buying frenzy.

Most real estate professionals do not foresee the market bouncing back any time in the immediate future, but several told Mattos Newspapers last week they do not believe home prices will fall much lower.

For now, it is a buyer’s market.

Inventories are high, and the flood of foreclosures on the market have served to drag down market values across the board.

Many buyers, local agents said recently, are specifically looking for properties in foreclosure.

“We have had a little activity at our office, but it is night and day compared to last year,” said Sean McNaughton at Westside Associates. “Many of the people who are buying now are investors taking advantage of the lower prices.”

The market, said Bill Mattos at Rico, Pfitzer, Pires & Associates Real Estate in Gustine, has “absolutely” continued to slow in the last half of 2007.

“With the prices that banks and lending institutions are setting to try to move foreclosed properties, it is a whole new market,” Mattos commented. “The neighborhood depreciation catches everybody.”

And, he cautioned, there may be more trouble ahead before the market stabilizes.

Many of the high-risk, adjustable rate mortgages people used to get into homes at the height of the market will begin to reset to higher interest rates in the coming year, Mattos predicted.

Those who gambled on the housing market continuing to climb are finding themselves strapped with a payment they cannot afford, and a house that is not worth nearly as much as they paid for it just two years earlier.

With increasing frequency, said Joanna Lafler at Lafler Real Estate in Gustine, those sellers are hoping their lenders allow them to sell the home for less than they owe – a short sale.

“The sellers are trying to do short sales, but there are a lot of criteria for acceptance. Many of them are not approved,” Lafler said. “They are declined on the basis of insufficient hardship, or that the price offered by the buyer is not in line with what they view as the appraised value of the property.”

Home prices have dropped dramatically, Lafler said.

A home that two years ago would have brought $325,000 or so may now sell somewhere in the mid-200,000 range, she said by way of example.

“There are 11 homes in Gustine listed for under $200,000,” Mattos said. “A year ago, you didn’t see a home for under $200,000.”

But even as prices have plunged, the inventory of homes for sale has climbed.

As of last week, Lafler said, 138 listings were on the Newman market with just 15 pending sales. Thirty-eight homes were on the market in Gustine, with three pending sales.

At Stephens & Borrelli in Newman, John Borrelli said he does not believe market prices will fall much lower than the current level.

Some investors are beginning to emerge, taking advantage of the lower prices, but Borrelli does not believe the market will truly rebound until 2009.

“I think our market is pretty close to the bottom, but it will be a year and a half (before it rebounds),” he commented.

For those in the market to buy, the real estate professionals agreed, prices are inviting.

“There are a lot of opportunities out there,” Borrelli said. “The interest rates are good, there are good loans that qualified people can get into and there is a large inventory of homes available.”

McNaughton and Mattos agreed that prices will continue to settle somewhat until the market rights itself.

“It might go down a little more, but I think we’re approaching the bottom of the market,” McNaughton commented. “It is going to get where people are just going to hang on and wait out the market.”

Lafler suggested that the foreclosure volumes will be a key factor in driving both the price levels and the duration of the market slump.

“If the foreclosure volume were decreasing I would say it is about to come to a halt, but I don’t see that happening,” she commented.

The number of public notices on foreclosures speaks volumes about the severity of the situation, Lafler added.

“It is tragic and sad,” she reflected. “It really is.”