by William Cracraft

For about the cost of a Jaguar luxury sedan Paul Belleci bought a new three-bedroom, two-bath, air conditioned home in Stockton. He put about seven percent down including closing costs and pays $801 per month on his $90,000 home.

He was commuting from Los Gatos to his sales territory which included the Central Valley and decided to move to save his sanity, he said. “The traffic was nasty.” Belleci, 35, bought the 1061 square foot home by himself. “Two years ago, if you told me I would be owning my own house I’d say you were stoned. I didn’t think my credit was ever going to be good enough to buy a house.” He is not alone. “The Central Valley market is largely an opportunity for first time buyers who are priced out of the Bay Area and look upon the Modesto or Central Valley market as a way to get in,” said Debra Bernard, owner of Bernard Marketing Associates in Walnut Creek

In Stockton, an eighty mile commute from the Peninsula, there are 31 floor plans being offered now by six builders offering multiple options on each. Sizes range from 800 to 2100 square feet. Prices are from $69,950 in a commutable location in Stockton to $131,990 in Ceres on the far side of Modesto.

For $69,950, the lowest priced home surveyed, buyers get a surprising list of standard amenities in a three bedroom 1 bath by Florsheim Builders in their Terra Nova community. Front yard landscaping and a fenced backyard surround the three bedroom wood and stucco home with double garage. There are vaulted ceilings in the living area and master bedroom, finished wood kitchen cabinets, a range and dishwasher.

The bathroom, with double sinks, opens on to the master bedroom and hallway. There are little details of convenience like pot ledges, a TV niche, icemaker hookup and a garbage disposal. “I got a series of upgrades that put about $7000 or $8000 on to the house,” said Belleci of his Terra Nova home. “I’ve got hardwood floors, really nice carpets, bathtubs and showers in both bathrooms, vaulted ceilings in the living room and master bedroom. I have tons of closet space, what I could use is some extra cabinet space in my kitchen,” he added.

One of the reasons for a broad list of options is to keep the basic house price low to qualify a lot of people, said Bernard. Giving home buyers options to upgrade gets people into the home and “lets them customized it as their pocketbook allows them to,” she said. The three bedroom, two bath with a family room at around 1275 square feet is the most popular choice and buyers can expect to pay $85,000 to $110,000, “Location is going to make the big difference in prices,” Bernard said.

Homes on the far side of Stockton or the Altamont Pass are less desirable because of the extended commute. Gary Ryness, owner of a new homes marketing company, also priced the most popular homes as selling for $80,000 and $110,000. “You’ve seen the ads about houses are offered as low as $69,950,” said Ryness, “but generally those houses are less than 1000 square feet and they also tend to be plotted seldom.”

Plotting is how the builder decides how many of each size house he is going to build, and they plot a very small number of the tiny houses, he added. “When you go out to these places that advertise a $69,950, try to find one. They are, as they are called in retail, the loss-leader. It’s the home that brings you into the development, it isn’t the one you are going to buy.” Robert Florsheim, who owns Florsheim Homes with his brother David, said their marketing company tells them what the mix of floor plans should be in a given community.

“Then we have an architect lay it out, plot the houses on each lot, then we build when they get loan approval.” “Most people wanted that third bedroom, so for a little bit more money per month they get it,” said Bonnie Sharkey, marketing manager for Kaufman & Broad, California’s biggest home builder. Of 103 homes in their Stockton community, only a dozen were two bedroom, two bath minimums for $77,000.

Will Deusterman of San Carlos is waiting for his home in the Terra Nova community to be built. “I like the whole floor plan,” he said. “This particular place is a slab on grade, well insulated. I’ve basically bought it at minimum in terms of very few improvements. For me this is an ideal situation. What I am buying is really truly a shell.”

Deusterman’s 1085 square foot house will be built on an oversized 7400 square foot lot on a cul-de-sac in Florsheim’s Terra Nova community. “I tried my damndest to pick it apart and find something wrong with it and I couldn’t,” he said. “I like the way it looks at the sun, the exposure. I happen to like to garden a little bit. Everything about it is perfect. It’s just exactly what I would like in a tract.”

A general contractor, Deusterman is impressed with the work he’s seen. “I’m a union carpenter and I’ve seen how slabs are put together from here to Santa Cruz, and I don’t believe this to be a union job, but I have never seen better slab work in my life. These people don’t drop it and run. Overall, I can’t fault it.”

Two of Florsheim’s homes recently won building association MAME (Marketing and Merchandising Excellence) awards for best architectural design in detached single family homes in the Under-1800 and 1801-2300 square foot categories. The homes are in the Harmony Ranch community in Delhi, below Modesto, and are designed by the same firm Florsheim used on the Terra Nova community.

According to Bernard, basics customers look for are a tile roof, front yard landscaping, fenced back yard and brand-name appliances. All are readily available for under $100,000, she added. Builders often upgrade the models making it necessary to confirm details in negotiations. Ryness recommended buyers ask about fireplaces, dishwashers, counter tops and roofs. “You get something, but it may be different than what you’re expecting,” he said.

Sharkey said buyers are primarily concerned about qualifying to purchase a new home. Once they’re assured they can qualify, whether commuting or local, they look for location. “They want to know that they are in a good area, that the schools are good schools, if they have children,” she said.

“The starter buyer is a monthly payment buyer,” Ryness said. “It’s all about how much a month and how many dollars do I have to come up with to get into this thing. Consequently the buyer will make sacrifices and will make compromises to get into what they perceive to be a good opportunity.” To qualify for a $110,000 home a couple needs a combined income of $40,000, said Sharkey.

“Down payments for first time buyers are around 3 or 4 percent of the selling price.” Ryness agreed. “With some of these creative FHA and VHA programs you can get in for very low cash. Certainly in the 3 percent or less range,” said Ryness. “I think there is a lot of opportunity. There are some wonderful values that are out there, but it comes at a price. The price is the commute and the cost of gasoline, which nobody controls.”

Deusterman, who is often on the road at job sites anyway, said gas price increases don’t bother him. He measures travel costs against the value of the home. “If you took this home and plunked it in Hayward, it would cost $180,000. If you put it in Shoreview in San Mateo, it would cost $280,000. If you put it up in the San Carlos Hills it would cost $380,000,” he said.

Commuter density varies depending on exact location, said Bernard, “On the west side of Modesto you can get as high as 64 percent of the buyers commuting back. More typical though, in north and east Modesto and parts of Stockton you might find a third (commuting).” Florsheim, whose company has built about 1500 homes over the years, agreed.

“It depends which town you’re in and also the location in the town.” In Florsheim’s Terra Nova community, in Stockton, 35 percent of the people commute, he said. Ryness said the market in the Central Valley is a function of the market in the Bay Area. “Especially when you talk about places like Tracy & Stockton, you are drawing from the Bay Area population centers and to induce people to come out you have to have a good value,” he said.

“Sales in the Central Valley this year are better than they were last year.” In this period last year builders averaged one house sale every two weeks. This year they are selling a house every nine days, according to Bernard’s office. Negotiation on price is the norm, said Bernard, though both Florsheim and Sharkey said they do not negotiate on price.

“It depends on the builder. If your product is not that strong, or you’re not in a great location then you’ll negotiate,” said Bernard. Ryness said he found it “highly unlikely that no negotiating takes place on home deals. If you come to me and my house is $99,000, but I have a special of the week, have I negotiated or not? It is a very rare transaction in California where there isn’t some kind of bargaining.”

The smart buyer asks, and depending on market conditions and time of the month, they might get something, Ryness said. Items for negotiation might include closing costs or added amenities. California law mandates some home warranties, but in many cases they depend on the builder, said Bernard.

A lot of builders have a good after-sale service program. “They don’t just drop them off,” she said. “Once they’ve sold the house if the buyer has a problem, they go fix it. They pretty much stay in touch with them.” Reputable companies warranty the houses structure up to ten years, but check agreements carefully.

Belleci, who has been in his home for eight months, said he likes the way the house is insulated so when he comes home it’s nice and cool. “I like to play golf and it’s close to the golf course so that’s perfect for me. My neighbors are real swell. I got my garden in.”

Deusterman, whose house hasn’t been started yet, is already planning improvements. “I will have concrete put in the back corner. I want to put a gazebo pad back there and possibly a hot tub. I’m really excited about it.”