Wednesday, November 30, 2011

Idaho Home Sales JUMP!

Idaho home sales up 33.9% in the 3rd Quarter over last year!

The National Association of Realtors recently released their 2011 3rd Quarter Housing Report. In the report, they showed that combined sales of single family homes, condos and co-ops increased in EVERY state as compared to the 3rd quarter of last year. Here are the state-by-state numbers.  

The next time someone says houses aren’t selling, ask them which state they live in and show them the chart.


Tuesday, November 29, 2011

Great Value On This New Nampa Bank Owned Listing!

I finally got the go ahead to get this bank owned property on the market. It has a great location is Brandt's Landing  in north Nampa with easy access to shopping and the interstate, with well maintained neighbors. It features a sunken living room with decorative arched room dividers beneath the vaulted ceiling.  Laminate wood floors run from the entry through the eating area, kitchen and halls. Sits on a corner lot with fenced back yard. Needs some TLC but could easily be a showplace. For more information give me a call 208.602.0055 or go to my website LowesFlatFee.com.


Monday, November 28, 2011

More GOOD NEWS Idaho's Jobless Rate Falls!

October’s jobless rate dropped two-tenths of a point. The seasonally adjusted rate was 8.8 percent, the lowest in nearly two years. It was the second consecutive month that Idaho’s unemployment rate was below the nation’s.

Employers kept payrolls higher than usual for October, the Department of Labor said. It’s a strong sign for the state’s workforce, which suffered a record 9.7 percent unemployment rate earlier this year. The Idaho jobless rate fell six-tenths of a point in the last three months.

About 2,300 more Idahoans had jobs in October than in September — the second-largest one-month jump in five years, the department said. About 692,700 people worked last month. About 66,400 didn’t — more than 23,000 of whom collected $22.6 million in jobless benefits.

Don’t chalk it up to job creation. Almost all the 14,400 new hires in October filled vacancies.

Idaho and the Treasure Valley are recovering, Boise economist John Church said Friday at a Boise Metro Chamber of Commerce forum. True recovery will be slow; the recession killed 23,200 nonagricultural jobs in the Valley, or 51,500 statewide, he said.


Sunday, November 27, 2011

Boise makes TOP TEN Turnaround List!

  • 1116phoenix Top Ten Turnaround Towns: Midwest/West Edition

Today I am sharing a part of Realtor.com’s Top 10 Turnaround Town Report–a group of markets showing the greatest promise for growth and price appreciation despite the national economic situation.

Though the list was dominated by six Florida markets, the Midwest and West also had a strong showing on the report. The four additional markets include Phoenix, Mesa, AZ, Boise City, ID, Fort Wayne, IN, and Ann Arbor, MI.

Why did these four metros make this list? Not only did these markets have lower unemployment rates year-over-year in the third quarter of 2011, but also showed median list price appreciation and lower inventory counts and median age of inventory.

Here’s why each Midwest/West market made our top 10:

Phoenix, Mesa, AZ: Like many Florida markets, Phoenix-Mesa foreclosure activity hit high levels during the housing downturn. Now, foreclosures there have decreased 25 percent compared to the second quarter, and are down 40 percent compared to third quarter 2010. Ranked 4th on the turnaround list, inventory is also down close to 48 percent, while median age of inventory decreased more than 23 percent, according to Realtor.com’s October 2011 Real Estate Trend Data report.

Boise City, ID: Number eight on the turnaround report, Boise has seen a year-over-year inventory count decrease of more than 40 percent, according to Realtor.com October real estate data. Also, the market has experienced a median list price increase of more than 14 percent, and a more than 23 percent drop in median age of inventory. Further, new foreclosures counts have decreased since January.

Fort Wayne, IN: In Fort Wayne, ranked 9th on the turnaround report, foreclosures have decreased more than 13 percent in the third quarter of 2010 to just 183 units. Also, the total of newly listed foreclosures fell 19 percent compared to last year. Prices of foreclosure homes are up 6.5 percent here, compared to other cities’ overall 2.7 percent price decline, due to strong demand and falling supply.

Ann Arbor, MI: With prices up and inventory down, the No. 10-ranked Ann Arbor fills the last spot on the turnaround report. According to Realtor.com’s October data, median list prices increased more than 8 percent year-over-year, while total inventory is down almost 25 percent. Home sale prices are also steadily increasing, and rose 4.4 percent for the year. The supply of homes is now considered balanced, with a months’ supply at 6.8 percent, a decrease of 11 percent.

Realtor.com’s Top Ten Turnaround Town Report is compiled using a formula based on price appreciation, changes in inventory, median age of inventory, searches by Realtor.com visitors, and unemployment data.


The Price is the Same, but the COST is Less!

There is more and more research coming out showing that it makes great financial sense to purchase a home today . Whether it be rent vs. buy ratios, income-to-price ratios or income-to-mortgage payment ratios, purchasing a home right now is a bargain compared to historic norms. Now we want to look at the COST of a home today compared to pre-peak prices.

According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 1Q PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling.

In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? On a home purchased for $250,000, here is the difference in monthly cost:

That means you save $285.30 a month, $3,423.60 a year and $102,708 over the life of a 30 year mortgage! You buy the home for the same PRICE but the COST is over $100,000 less.

Bottom Line

This is why so many financial advisors are saying that this may be one of the greatest times in history to purchase a home.


Saturday, November 26, 2011

Appreciation vs. Depreciation

A informative graphic on how appreciation and depreciation has done nationally in the real estate value arena.


Friday, November 25, 2011

How Much Should You Put As Downpayment?

From the folks at KCM Blog, a discussion on the amount of down payment you should consider when buying a house.

Like most questions, the answer is “it depends”. Today, I thought I’d give you some things to consider.

Let’s begin the discussion with loans that don’t require Mortgage Insurance. The suggestion is to borrow as much as you can afford. As an example, borrowing $310,000, as opposed to $300,000, will increase your mortgage payment by about $51 at 4.5%. Recognize that by doing so, you will have $10,000 in the bank. It is my experience that it is easier to find $50 more every month than it is to save $10,000. Even if you had the discipline to set aside the $50 monthly, it would take you 200 months to re-accumulate the $10,000 in principal (longer with lost interest).

Understand too, that the interest paid on the extra money borrowed is tax-deductible. In a 25% tax bracket the $51 additional has a real cost of about $38!


Having the $10,000 liquid has other potential advantages as well:

  1. If rates go up in the future, you could potentially make more interest than you are spending.

  2. If you can avoid using credit cards for furniture, home improvements, etc., you can save a bundle on those non-tax deductible interest rate costs.

  3. In a world where home values have declined, the more you borrow, the less you have at risk. You transfer the risk of the future value of the home to the lender.

Now, many borrowers today will need some sort of Mortgage Insurance, whether it’s a Conventional Loan with less than 20% down or an FHA Mortgage. These borrowers should sit with their loan officer and run the numbers because the cost of the Mortgage Insurance can vary based on loan-to-value and other factors. Examine the costs and the relative benefits.


Thursday, November 24, 2011

Thanksgiving Day 2011

On this Thanksgiving Day I pause to express my thankfulness to my Heavenly Father for my life, my darling wife, my children and spouses and the grandchildren. My family has richly blessed my life. I am also so very grateful for the plenty I enjoy, this free and glorious land along with the sacrifices of so many that ensured those freedoms. I am also thankful for this Treasure Valley for the peace and prosperity it provides. I am so eternally grateful for my Heavenly Father and his gospel.

I, like many I believe, often get so caught up in what I don't have and the difficulties that life often throws my way, that I do take the time to adequately recognize and thank God for the abundant blessings that are mine.

I am also thankful for friends, clients and associates. Happy Thanksgiving to you all!

Wednesday, November 23, 2011

Short Sales Fall from Grace

As the Nampa-Boise real estate market continues to struggle with short sales, I thought about how some things have changed.

Do you remember all the short sale rider signs on the real estate signs in all the neighborhoods? It was used as an attraction for buyers, with the assumption that a good deal could be had. Now in reviewing listings I see in bold print the following words shouting: NOT A SHORT SALE! So what has changed?

Is it YEA a short sale, or short sale, NO WAY!?!

The answer? It depends. Can short sales still be good values? Yes, they can, not automatically so however.  Can they be a frustrating experience of unknown duration and outcome? Yes, they can, also not automatically so. Under almost all short sale conditions it is not as smooth of transaction as a traditional non short sale purchase. Values can be had both in and out of the short sale scenario. I have had many buyers begin their search stating: I don't want to look at short sales, only after seeing some of the prices change their tune.

The key is finding the right property for you at the best price that fits your budget as well as time and emotional restraints. Using a experienced agent can help in navigating both the perils and positives of short sales,  and help in finding the overall best deal for you. That deal may be in the form of a short sale, bank repo or from a traditional seller. There is not an direction that fits all buyers, give me a call for your personal consultation. Roger @ 208/602-0055 OR roger@lowesflatfee.com.

Tuesday, November 22, 2011

Options Discussed for Underwater Idaho Home Owners.

Nearly 11 million homeowners are underwater — meaning they owe more on their mortgage than the property is worth — according to the most recent data from CoreLogic. For those homeowners, there are no easy answers. Should they keep paying and hope the market improves? Try for a loan modification? Cut their losses and walk away?

Gerri Detweiler, personal-finance expert for Credit.com, explains the pros and cons of several options.

1. Stay and pay. People feel attached to their homes, so Detweiler says their first impulse is often to stay put and keep sending in mortgage checks, even if it doesn't make financial sense in the long run. "Is it realistic for you for a while?" she asks. "Not just the next few months, but can you afford to stay and pay for the next several years? You may still be underwater at that point." Maintenance fees are another consideration. For instance, if you know you'll need a new roof or the heating system is on its way out, those repairs can add up. Of course, if the value of your home has declined, you may be able to get it reassessed and pay lower property taxes.

2. Refinance. A traditional refinance may not be an option for homeowners with negative equity. But those with loans owned by Fannie Mae or Freddie Mac who have not made late payments in the past six months and have no more than one late payment in the past 12 months may qualify for a refinance under the Home Affordable Refinance Program, which was recently extended through the end of 2013. If your loan hasn't been sold to Freddie or Fannie, Detweiler says you may be able to work directly with your lender on a refinance. Your credit score should not be affected if you refinance, although you could still lose your home if your situation changes and you can't afford the mortgage payments.

4. Short sale. If your lender agrees to a short sale, you're allowed to sell your house for less than you owe on the mortgage. "One couple I interviewed got … $120,000 wiped out by their lenders," Detweiler says. "Depending on where you live and your financial circumstances, there are some amazingly good deals. But you could be one of the unlucky ones who has a lender who doesn't want to play ball." Before you close on a short sale, be sure to consult a tax professional, who can explain if you will owe any taxes on the forgiven debt, and a real-estate lawyer with experience in short sales to make sure the agreement relieves you of the deficiency.

5. Foreclosure or walking away."Walking away from your mortgage is essentially the same as foreclosure," Detweiler says. "It's one of the most serious items on your credit report, in the same category with bankruptcy and repossessions." But the impact on your credit score shouldn't be the only consideration, Detweiler says. "Focus on 'How am I gonna come out of this financially?'" If you do decide to walk away, your biggest challenge could be getting the bank to take back the house. "The bank doesn't actually foreclose on that, so you're still legally responsible," Detweiler says. "The city may bill for trash pickup; you could be on the hook for insurance issues that arise." She suggests staying on the property as long as possible to make sure it's properly maintained leading up to the foreclosure.

6. Bankruptcy. Filing for bankruptcy won't erase mortgage debt. "What you're doing in a bankruptcy is you're trying to give yourself a reprieve," Detweiler says. Eliminating other debts could free up money to cover your mortgage, and a Chapter 13 bankruptcy could allow you to catch up on payments for five years without interest. But it doesn't allow you to stop paying the mortgage altogether. "In some areas of the country, you are able to wipe out a second loan that has become unsecured because the value of your property has dropped," Detweiler says. "Unfortunately, our current bankruptcy codes let borrowers negotiate any kind of debt but mortgages."

Whether you're planning to stay and pay or you're considering bankruptcy, Detweiler stresses that it's a good idea to consult an attorney early on. "Don't make that your last resort," she says. "Specifically, a bankruptcy attorney could help you decide if you can afford to stay in your home."


Monday, November 21, 2011

How a financial pro lost his house.

I read this story on MSN, relating one man's story of his struggle with near financial ruin. It is longer than I normally include here but it is so close to many people's experiences and struggles that I felt it worthwhile.

NEW YORK — ONE night a few years ago, when the value of our home had collapsed, our debt was out of control and my financial planning business was shaky, I went to take out the trash.

There was this enormous window that looked right in on the kitchen table, and through it I could see my wife, Cori, and our four children eating dinner. It was dark outside, so they couldn’t see me, and I just stood there looking at them.

After a while, I pulled up a bucket and I sat on it, just watching my children eat. I found myself wishing that I could get back there, connected to the simple ordinary stuff of my family’s life. And as I sat and watched, filled with longing and guilt, two questions kept arising:

How did I get here?

And how am I going to get out of this?

There are many stories these days of people who lost their financial bearings during the housing boom and the crisis that followed, but my story is a bit different from most.

The thing that few people know, though, is that I learned a lot of this from experience. I made a bunch of mistakes, the very same ones that I now go around warning people to avoid.I’m a financial adviser. I get paid to help people make smart financial choices, and I speak and write aboutpersonal finance issues for this publication and others. My first book comes out in January, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money” (Portfolio, a Penguin imprint).

So this is the story of how I lost my home, the profound ethical questions that arose along the way, and what my wife and I learned from the mistakes that led us to that point. It made me better at what I do, but it wasn’t much fun getting there.

Like most financial stories, this one is personal. It starts with me getting into the financial services industry more or less by accident. I answered an ad in 1995 that I thought was for a job related to “security” (as in security guard) but was in fact related to “securities.” That’s how little I knew about the stock market. A few months later I found myself working a phone at a Fidelity Investments call center.

Things went well, and by 1999 I was a Merrill Lynch financial adviser and a certified financial planner. By then, we also owned a house in Salt Lake City. We’d bought it two years earlier, with a $25,000 down payment.

A few years later, an opportunity arose to form a partnership with a successful Merrill adviser in Las Vegas. The place was on our top 10 list of never-move-to cities because we had always associated it with the Strip. But Cori and I were looking for an opportunity to have an experience somewhere else, and we met some great people when we visited the city. I took the job, and we moved down there.

That was May 2003. Housing prices were already crazy, so we rented. But our neighborhood had zero character and lots of cookie-cutter houses. Within a few weeks, we were looking for a place to buy.

A gold Jaguar
I felt we could afford around $350,000. We called a real estate agent named Mitch, who had signs on all the bus stops: Talk to Mitch! He picked us up in a gold Jaguar, and suddenly we were looking at houses that listed at $500,000 or more.

It felt a little crazy to be shopping for houses that cost half a million dollars, but my income was growing rapidly. Everywhere I looked, people were being rewarded for buying as much house as they could possibly afford, and then some. There was this excitement in the air, almost like static. I started to think that if I didn’t buy a house right then, I would never be able to afford one.

At moments during our house hunt, I felt in my gut that something wasn’t right. We’d go to open houses for $400,000 homes and see lines of couples in their late 20s — younger than we were — waiting to get inside. I kept wondering where all the money was coming from. How did all these people make so much?

But prices just kept rising, and when people kept buying, that made it seem safer. I knew from my work as a financial adviser that following the crowd could be costly. But like everyone else, I felt safer in a crowd.

We didn’t find anything we liked with Mitch, but one day in September 2003 Cori spotted a for-sale-by-owner sign in a really nice neighborhood. We ended up buying the house and paid the asking price of $575,000. (When we tried to negotiate on price, the owners were amused; it just wasn’t that kind of market.)

We borrowed 100 percent of the purchase price. In fact, I was told I could borrow even more if I wanted. I had perfect credit and a solid income that was growing. But even so, when the lender approved us at 100 percent, it was more than I had expected. I remember thinking something like “Wow. I guess if they’re willing to lend it to us it must be O.K.”

I should have known better. No matter how well things are going, borrowing 100 percent of the purchase price of a home is not a good idea. I shouldn’t have relied on someone else to make that calculation, let alone the guy who was making money putting me in the loan. I was a financial adviser, and I never sat down to figure out what it would take to make this work. I just wanted to believe him. And it was so easy to believe he had been right, at least at first. We loved living there. The children went to an awesome public school, and we made some great friends. I could ride my bike to Red Rocks, the wilderness area outside of town. And for a time, the real estate market erased any doubt I may have had. It just kept going up.

One evening in 2006 comes to mind. My sister-in-law was thinking of moving to Las Vegas, and a real estate agent told me about an open house for a new Toll Brothers community. This wasn’t a come-by-for-cookies type of open house; it was held at a Las Vegas hotel ballroom. I arrived to find a line that led down a flight of stairs and out of the front door. Before I got to the front of the line, they stopped admitting people. Then people rushed the door, like it was a rock concert.

Borrowing more

The market’s continued strength meant we could borrow even more. It was easy. In late 2004, a year after buying the house, we refinanced our mortgage with World Savings Bank, which later ended up in the hands of Wells Fargo, using one of the pick-a-payment loans that let you choose your own payment each month.

We picked the lowest possible payment, the one that added to our balance each month instead of subtracting from it. And we added a line of credit with Wells Fargo.

The extra borrowing power was important, because while my income was growing rapidly it wasn’t enough to support all our expenses. Around that time, I left Merrill Lynch to become an independent financial adviser, so it was easy enough to convince ourselves that we were borrowing to pay for the start-up costs.

There was some truth to that, but we were also borrowing against the house to finance our lifestyle. The line between business expenses and personal ones is sometimes hard to draw when you run your own business, and during those heady times it seemed even harder. But in hindsight it is clear that we were spending more than we should have on things like recreational gear and family trips for ourselves and our four children.

It was extravagant, but it seemed modest compared to what some of our neighbors were doing. Our house was the smallest model in the neighborhood (though at 3,500 square feet it was hardly tiny), and we drove a Chevy and a VW. Cori and I and some of our friends had a lot of conversations comparing our spending habits to those around us. How can so-and-so afford a boat? How are people buying new trucks and four-wheelers and 5,000-square-foot homes? Do they know something we don’t know?

At times, it seemed as if maybe they did. I knew a builder of custom homes who urged me to buy one of his houses for close to $2 million. I told him there were at least a million reasons why I couldn’t do that. He looked at me like I just didn’t get it. He assured me the house was appraised for $200,000 more than the asking price, and that after I lived there I could take out a line of credit to live on while the house went up even further.

The crazy thing is, he was right. The place eventually sold for more than $3 million. When I heard that, I felt a little silly that we hadn’t taken that risk.

As for our spending, we told each other that we’d catch up later, as my income and the value of our home continued to rise. As late as February 2006, a comparable home in our neighborhood sold for $998,000. We made the classic mistake of projecting recent trends — even extreme ones — into the future.

But slowly — and then increasingly — we began to have a different kind of conversation, “When are we going to stop and just get on top of this?” The solution was always making more money, not cutting back. The fact is, it’s much easier to set a goal of making more money in the future than it is to buckle down and cut back today.

We never really worried that things would go to pieces the way they ultimately did. But then came the collapse in the stock market. I had clients calling in tears and breaking down in my office. People who had never worried about their portfolios were calling me from their vacations. It was like talking people in off a ledge virtually every day, maybe three times a day, for maybe 90 days in a row.

The range of potential outcomes had gotten so broad in people’s minds that it now included the end of the world. What they wanted and needed more than anything was reassurance that things would be O.K. and that they should stick with the investment plans we had created together. Providing that reassurance had been my job for 10 years or more, but this was the first time that I really wondered if my advice was right.

It was my job to assist them, but I found it incredibly stressful. It didn’t help that we were in increasingly dire straits ourselves. My income fell about 20 percent because my take-home pay depended on the amount of money I managed. At the same time, our cost for health insurance and property taxes kept increasing, and the payment on our mortgage reset higher as well.

By then, housing prices in Las Vegas were falling quickly, and the bank had cut off our home equity line of credit. We quickly got rid of a car and stopped taking trips. I moved into a smaller workspace and cut back on my administrative and marketing costs. Even so, we found ourselves using credit cards as emergency stopgaps.

Then, the sickness set in. The pain would start in my stomach, and then I’d spend six hours vomiting. It happened once, then three months later it happened again, then one month later it happened yet again. Eventually, it was happening every couple of weeks. The doctors couldn’t find a physical cause.

Right around that time, it became clear that we might need to get back to Utah, where 90 percent of my (still nervous) clients lived. We spent the summer of 2009 living in my in-laws’ basement in Salt Lake City, while I tried to stabilize my financial planning business. By that fall, I was convinced we had to move back permanently to save the business. But that meant we faced the question of what to do about the house.

By then, we owed over $200,000 more than our original loan balance.

Borrowing that much had seemed to make sense when the value of the home was still rising substantially every year, taking our net worth higher with it. But at that point, there was no way we could sell the home for anywhere near what we owed. Some of my friends were already doing short sales, where the bank agrees to let you sell the house for less than your loan balance. I was also aware you had to be three months behind in your payments before the bank would talk to you about the possibility.

At first, I dismissed the idea of a short sale. Late that summer, I sat down with a really close friend in Las Vegas, someone I looked up to. He cut to the heart of the matter right away: Why, he wanted to know, were we still making the payments?

You pay your debts
Because I have a moral obligation, I said. You pay your debts.

He proceeded to explain that I didn’t have a moral obligation to the bank. I had a moral obligation to my family. I had a contractual obligation to the bank, along with a clear moral obligation to be honest in my dealings. What he was asking was this: Which is more important? Your contractual obligation to the bank or your obligation to your family to preserve your ability to make a living?

I had never thought of it that way. But it made sense. I summed it up to myself like this: I have a contractual obligation to the bank (as well as a moral obligation not to skirt the consequences of breaking it: losing my house and wrecking my credit score). But my moral obligation to my family trumps the contractual obligation to the bank.

Cori and I thought about this for months, but we finally decided to let the house go and stop making payments so we could pursue a mortgage modification or a short sale. The fact was, we didn’t have a choice. We simply couldn’t afford it.

I remained troubled by the ethical implications of what I was doing, but I soon started seeing some of my friend’s arguments echoed in the work of Brent T. White, a law professor at the University of Arizona. He and others were arguing that homeowners should act more like companies — taking into account legal and economic reasons for stopping a regular payment rather than “perceived moral obligations.”

That was reassuring in the dead of night while I sat in front of the computer trying to make sense of the world financial markets and my own personal situation. I remember being relieved at discovering a way to frame my decision.

But we didn’t know what would happen in the harsh light of day, and we were scared to death. Would we be kicked out of our house? What would the neighbors think? What would the children think? We worried about the stress on our relationship and even the survival of our marriage. I felt like a complete failure.

We looked into a mortgage modification, thinking it might let us keep the house and rent it out after we moved. But the offer from Wells Fargo, which owned our loans by then, was too modest. That meant we could either walk away from the house or work with the bank to do an orderly short sale.

A bank representative came to the house and met with us. He was such a nice guy. Cori had treated it like an open house, and the place was spotless. The guy said he’d never met anyone more qualified for their short sale program.

Somehow, even in that horrid market, we sold the home for $531,000. That was in late August 2010. In exchange, the lender released us from both our first and second mortgages. Today, Zillow estimates the home’s value at $505,000.

We were pretty low when we packed up to leave. We hadn’t told anyone about the short sale — not family and only one or two friends. But we sensed that people knew anyway.

We borrowed a truck from a friend who owns a wood mill to move our belongings. Back in Utah, we found a house to rent— much to my relief and after months of being terrified that we’d never be able to find a landlord willing to take a chance on us. I had to tell the owner what had happened. He looked at our personal references and let us lease the house anyway.

We love where we live now. Still, there are consequences. We lost our home. It’s not clear when we’ll be in a position to become homeowners again.

But the worst thing was my sense of complete failure and powerlessness when I realized that things were out of control and that it was my fault. These days, there is still a sense of genuine regret that I screwed up and hurt myself and other people. I still worry about what others think of my behavior, which is one reason I haven’t shared this story with many people until recently.

We have a friend who is under water on his mortgage even though he has lived within his means and done everything right. He’s sticking with his mortgage for as long as he can.

Someone recently asked me what I’d say to people like him. I guess I’m saying it now. As I was writing this article, I pulled behind a truck with a bumper sticker, “Honk if I’m paying your mortgage.”

I thought about that for a while. I guess one of the ideas behind that bumper sticker is that people like Cori and me who couldn’t afford to pay off our mortgages are to blame for the financial crisis and the bank bailouts that followed. This isn’t the place to explain the causes of the economic slump, and I’m not the guy to do it.

Questions linger
Still, the questions linger. As I ponder all this — and I think about it a lot — it occurs to me that we are a nation of risk-takers. Some of us were overoptimistic; some were ignorant; some were deluded; some were greedy; some just had bad timing. We erred to different degrees. Our experiences varied; each story is different. Now you know mine.

The experience has changed just about everything about how I do financial planning and the advice I give in public. For one thing, I am less quick to judge other people’s financial behavior. I’m also more inclined to take into account personal factors that determine how people behave around money.

I have a friend who is going through a tough time financially. He has a high income, but is burdened by debt from a few real estate deals that went south. He continues to take fairly expensive ski trips. That would seem irresponsible in his situation, and maybe they are.

But I now realize that it is not that simple. Maybe those trips are keeping the guy alive, or saving his marriage or keeping him sane enough to work.

I have another good friend who borrowed against his house to pay for a therapist. Unless you were walking in his shoes you might think that was stupid, but it saved his life and changed his career. It ended up being one of the best investments he ever made.

The process of making financial decisions is about more than building a spreadsheet to calculate the answer, because life rarely fits cleanly into a spreadsheet. Our decisions often appear irrational until we understand the whole story.

I’ve also learned some things about risk. Risk is an arbitrary concept, until you experience it. And I’ve noticed myself focusing more on the consequences of something going wrong than just the probability of that happening. As a result, I tend to urge my clients to make decisions that err on the side of caution.

As for Cori and me, things are much better now. Moving back to Utah clearly was the right choice. The business is doing well, and we’ve managed to pay down most of our debt. It would be easy to say that we’ve learned our lesson, that we’ll never screw up again.

But it’s not that simple. At times I’m absolutely clear about what makes sense. Then ordinary life choices arise, and things can get cloudy. Should our children play sports that cost money? What kind of family vacation is O.K.? How much is enough?

We’re still working on that last one. But we are asking the question, repeatedly. And the temptation to overspend, to go for it, to tell ourselves that things will work out in the long run, is tempered by a feeling that something big is at stake.

All I have to do to remind myself of that is to remember what it felt like to stand outside the kitchen window two years ago, looking in on my life, and thinking I might not get it back.

This story, "How a Financial Pro Lost His House," originally appeared in The New York Times. Carl Richards’s book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money,” will be released on Jan. 3.


Saturday, November 19, 2011

Have you ever been to Huston? Huston,Idaho?

I have often driven on highway 55 west of Nampa towards Marsing, and just a bit before the highway makes the turn through the Sunny Slope area, I pass a small looking building sharing a driveway and parking with a farm house. On this building was the large sign stating  US Post Office Huston Idaho 83630. At the risk of alienating all the residents, or make that resident, of Huston, I send an open letter to the US Postal Service that perhaps this might be a place to start on their post office closing mission.

Good grief there is no town, no reason that I can see for having a post office out here amidst the farm ground.

I decided to stop in and purchase some stamps I was needing, and I was curious as to what the interior of this tiny post office looked like. Unfortunately, I came at lunchtime so the counter was closed, the postmaster presumably next door having her lunch.

I did snap a picture of the of the entire bank of post office boxes, perhaps more numerous than I expected.

I was then curious about this mysterious town of Huston, I had noticed previously the remains of Huston School, located about 1 mile north of the post office.


There is not a great deal of the school still standing, the exterior brick walls, minus the roof and interior walls.So now my interest was peaked as to this place called Huston. I had driven a number of times by a small cluster of houses and perhaps what had been a store but had never turned down through the four short streets that comprised what I now assume was the Huston town site. I am not sure why the post office moved 1/2 mile down the road, perhaps for the traffic of highway 55 or maybe more likely it went to where the post master lived.

Here is what the fading sign states is the Deerflat Merc. Next to it stands a building that may also have been some kind of commercial building at some time.


In front of it was parked this cute Huston fire truck.


All in all, there appeared to be approximately 15 houses clustered in this small former town.

So now I can say I too have been to Huston. I guess it is true what they say, everything really IS bigger in Texas!



Thursday, November 17, 2011

October PTC Index-Great News!

Pioneer Title Company compiles and publishes this PTC index monthly, it provides a concise way of judging the Ada and Canyon County combined real estate market's vibrancy. It is the highest it has been since June of 2009.

Based on a custom weighted algorithm, it combines nine critical measurements of the real estate market into a single, useful number: the PTC Index. To give you some perspective, when the market was at its most active point in 2005, the PTC Index average would have been 225. In January of 2010 we reached a low of 28. Though times have changed, the need for this data is greater than ever.

October 2011

Building Permits116
New Home Sales91
Existing Home Sales688
Average Sales Price138973.5
Financial-Bond Market(10-yr Treasury)2.15
Days on Market77
Distressed(Short Sales and REO)3248
Notices of Default421
PTC Index132

For reference sake, last month was 120 with a year ago at 121, with the interceding months all having lower numbers.

October brought great news overall within the Treasure Valley real estate market! Notably, refinances were up nearly 32% compared to September most within Ada County. Across the county line, Canyon County experienced a gain of 50% in new home sales while Ada's numbers (79) remained flat. Building permits made a cumulative gain of 10% in the valley with existing home sales falling slightly by roughly 4% from the month prior. Days on market, distressed properties (short sales and REO) fell slightly from 84 to 77 and 3,442 to 3,248, respectively. As expected, Notices of default were the rise, up nearly 30% from September possible due to the fruition of bank-owned, shadow inventories. We expect a sustain uptick in refinances in the coming months with new legislation aimed at helping consumers with underwater mortgages.


October Take My Breath Away Winner.

Here is a manufactured home on foundation in Caldwell that made my head snap and look as I drove by, so it is the October winner.

Wednesday, November 16, 2011

Idaho Home Sellers-Incentives or Price?

I sometimes see various incentives to sell a house, perhaps a car or vacation and I have sellers ask if they should think about doing something similar.  Occasionally, I have sellers ask whether to offer a higher commission to a buyer's agent. My response has always been no, let's just price it correctly for today's market and not worry about the other fluff. In reading a MSN article my thoughts are validated.

Home sellers in markets around the country these days are sometimes eager enough to get their property sold that they will offer buyers a BMW, a personal watercraft or even a pet to sweeten the deal. Real-estate agents say that while these enticements create buzz, buyers today are more attracted by the right asking price than a gimmick.

"We're in a price war and a beauty contest," says Tony Vehon, broker and owner of Weichert Realtors — Lake Realty in Gold Canyon, Ariz. "Every home has to be priced right and look perfect. After that, a special incentive might drive traffic, especially if you offer something that grabs attention, something a little beyond the norm."

Over-the-top incentives
Vehon says one of his agents worked with a seller of a high-end house in a vacation-home area.

"The client decided to make the home move-in ready, selling it with brand-new furniture, linens and kitchen gadgets and even a car in the garage," Vehon says. "The house sold, but the people who bought it didn't actually want the car. They asked for a credit on the price instead."

Orhan Tolu, broker for Century 21 Realty Alliance in San Francisco and San Mateo, Calif., says that in high-end homes, buying new furniture for the listing or giving buyers a gift card for $2,000 or $3,000 at an interior design studio can attract attention.

"In order to create some news, the sellers sometimes throw in a Mercedes or a boat if the home sits on waterfront property," Tolu says.

Martha Thorn, a sales agent with The Thorn Collection at Coldwell Banker Residential Brokerage near Tampa, Fla., says sellers in her area have offered personal watercraft along with a property, and one offered a custom-made fishing cart to buyers.

"The house was a $4.9 million mansion on a bluff overlooking the water, and the homeowner had someone make an electric cart that looked a bit like a cross between a wheelbarrow and a lawn mower that made it easy to get fishing equipment from the house to the water," Thorn says.

Not all incentives go along with high-end property. Thorn says one seller included season tickets to the Tampa Bay Buccaneers' football games on a home priced at less than $200,000.

"The buyers were thrilled with the tickets, but that certainly wasn't the reason they bought the house," Thorn says. "The most important thing is always the price."

Linda O'Koniewski, broker/owner of Re/Max Heritage in Melrose, Mass., says she has heard of sellers offering a cat or a dog along with their home.

"The sellers see it as an enticement, but I've never actually seen someone successfully pass on their pet to a buyer," she says.

Seller incentives that work
O'Koniewski says that besides having a home priced to sell and perfectly staged, cash is usually the most effective seller incentive.

"An offer to pay condo fees for a year or so will definitely create some buzz, and at least get a buyer to take a second look at a property," O'Koniewski says.

"Another option is for the sellers to offer their own financing," Tolu says. "Most sellers cannot offer this, but sometimes someone who is retiring and has a lot of equity in their home will be willing to offer financing because they get a decent return on their money."

Price is key

O'Koniewski says sellers need to realize that, "no amount of marketing will make a dent if the price is not right. If you are not competitive on the price, you cannot sell your house."

Beyond price, O'Koniewski says sellers should have great photos online and a truthful description of the property.

Vehon says sellers should focus on identifying the appropriate price for their property first, and then work on curb appeal and staging.

"Sometimes clients won't even get out of the car if the house doesn't look good from the outside," Vehon says. "Buyers need a reason to take the next step and go inside the house."

Once inside, buyers expect to see a home in excellent condition that has been staged to show off its advantages, Vehon says.

"The most important thing to remember is that if a house is priced correctly, it can even get multiple offers," Thorn says.


Tuesday, November 15, 2011

October Brings Fall Colors and Continued Strengthening in Housing

Marc Lebowitz of the Ada County Association of Realtors brings his monthly round up of Ada County real estate sales  and inventory statistics.

2011 October sales were 520 in Ada County, an increase of 12.7% over October 2010.

October sales YTD are 5,271; up 7.64% over 2010 YTD. In July of 2011, we exceeded YTD 2010 sales for the first time in 2011. In August we improved to +6.1%. In September our increase was 7.2%. Now we have increased again.

October sales decreased 9% from September 2011′s 568. Historically, October sales decrease from September.

Of our total sales in October… 45% were distressed….up 4% from September 2011. In January 2011, 57% of our sales were distressed.

For homes sold in October, the average number of “Days on Market” was 75. This is essentially unchanged from last month. Down from 90 days last year this time and down from 93 days in January 2011.

Pending sales at the end of October were 812; a decrease of 5% from the end of September. Looking back at pending sales from March 2011 to October 2011, we see an average near 900 at the end of each month. The percentage of pending sales in distress increased 2% from September, totaling 49% overall. We are now at six consecutive months below 50%.

At the end of September, we had 11% more sales pending than at the end of October 2010.

October median home price increased 3% from September. Overall median price was $152,500; up 1.7% from October 2010. This is the first month showing an increase over the same month/previous year.

New Homes median price for October 2011 was $247,900; an 18% increase from September 2011. Year-to-date new homes median is up 22% over 2010 to $215,000.

The number of houses available continues to decrease. At the end of October our total active inventory was 2,260 homes. This is down 5% from September and 29% less than last year at this time.

At the same time, the percentage of distressed active inventory decreased slightly from September to 34%. We have been hovering between 33% and 36% since May. We remain well below the 40% levels set last spring….when we were on the increase.

In Ada County we have 4 months of inventory on hand…historically this number defines a strong “seller’s market”. The price category in shortest supply is <$100,000 with 2.5 months available. This is closely followed by the $100,000 to $119,000 with 2.5 months and $200,000 to $249,000 with 5 months. Consumption of inventory is expanding to all price ranges. In the price ranges from $250,000 to $499,000 we have about 6 months of available inventory.


Monday, November 14, 2011

Boise-Nampa Buyers, Are you on the Fence?

Buying a home is always an important decision, and a decision one should never take lightly. There are a number of reasons that in general it is a good time to buy. You still must always carefully evaluate your personal situation but the following provides some valid considerations that may indicate it is time for you to get off the fence!

I am always available for any questions or whatever insights I can provide. Also I have super lenders to answer your questions. Just give me a call or shoot an e-mail.

The following is furnished by KCM Blog.

On Monday, we gave you the links to four different articles that came to the same conclusion: it’s time to buy a home. Today, we want to take a closer look at one of the sources, the JP Morgan’s Market Insights report. Right from the beginning, the paper identifies the greatest challenge in today’s housing market: consumer emotion. They attempt to overcome that emotion with logical reasons why now is the time to buy a home. They break it down to the following.

Price-to-Income Ratio

One measure of housing values is the ratio of personal income to home prices. The report explains where we are today:
“Since 1966, the median price of an existing single family home in the U.S. has varied between 150% and 251% of personal income per household. However, roughly three-quarters of the time it has been in a relatively narrow band between 185% and 230%. In September 2011, the ratio was just 153%, implying that to get back to an average price to income ratio, home prices would have to rise by about 27%.”

Current Mortgage Interest Rates

With current 30 year mortgage rates, housing payments are at historic lows as compared to personal income.
“During the week of October 7, Freddie Mac reported that mortgage rates had fallen to an average annual level of 3.94%. Assuming the use of a fixed rate mortgage with 20% down, this would make the median mortgage payment on a single family existing home just 6.9% of per household personal income, compared with an average of 14.4% since 1966.”

Monthly Rent vs. Monthly Mortgage Payment

Is it less expensive to own a home or rent a home? The answer to this question helps families make the decision whether or not to buy a home. The report explains:
“By the third quarter of this year, we estimate that the implied median mortgage payment had fallen to just 78% of the median asking rent…”

Bottom Line

The paper comes to the conclusion that now is the time to buy.
“The numbers on housing have an important message for American families today, and particularly younger families setting out on life’s great adventure: Five years ago, at the peak of the home-buying euphoria, it was emphatically a time to rent. Today, when home ownership is depreciated more than ever before, the numbers tell us it is a time to buy.”


Saturday, November 12, 2011

Americans Still Believe in the Value of Homeownership

Last week, Fannie Mae released their National Housing Survey for the third quarter of 2011. They survey the American public on a multitude of questions concerning today’s housing market. Each quarter, we like to pull out some of the findings we deem most interesting. Here they are for the most recent report:

Most Important Reasons to Buy a Home

The study shows that the four major reasons a person buys a home have nothing to do with money. The top four reasons, in order, are:

  • It means having a good place to raise children and provide them with a good education

  • You have a physical structure where you and your family feel safe

  • It allows you to have more space for your family

  • It gives you control of what you do with your living space (renovations and updates)

When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. There is no doubt that families must justify a home purchase from a financial point of view today. However, the reasons they actually buy are the same reasons our parents and grandparents purchased their home – to create a better lifestyle for their families.

The Home as an Investment

Though most people purchase a home for non-financial reasons, everyone realizes there is a money component to homeownership. Here is what they said on this issue:

  • 64% of the general population (and 69% of homeowners) believe that homeownership is a ‘safe’ investment.

  • 55% believe that homeownership has more potential as an investment than any other traditional asset class.

  • 68% think that now is a good time to buy a home

Rent vs. Buy

We are always interested in the difference people see in renting vs. owning.

  • 63% of renters have aspirations to someday own their own home

  • 70% of renters think that owning is superior to renting

  • 96% of homeowners see homeownership as a positive experience (4% see it as a negative experience) while 83% of renters see renting as a positive experience (15% see it as a negative experience)

  • 97% of homeowners live in a single family residence while 53% of renters live in a multi-unit building

Bottom Line

Even in these difficult times, Americans still realize the value of homeownership both from a financial and social standpoint.


Thursday, November 10, 2011

WOW-Mortgage rates below 4%!

WASHINGTON — The average rate on the 30-year fixed mortgage fell below 4 percent for just the second time in history.

Freddie Mac said Thursday the rate on the 30-year fixed loan fell to 3.99 percent, down from 4 percent last week. Five weeks ago, it dropped to a record low of 3.94 percent, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage fell last week to 3.30 percent from 3.31 percent. Five weeks ago, it too hit a record low of 3.26 percent.

Mortgage rates track the yield on 10-year Treasury note, which fell this week as investors shifted money into safer Treasurys amid fears Europe's debt crisis could worsen.

Low mortgage rates have down little to boost home sales. Rates have been below 5 percent for all but two weeks this year. Yet home sales are on pace to be the lowest in 14 years.

High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year fixed mortgage was unchanged at 0.7. The average fee on the 15-year fixed loan rose from 0.7 to 0.8.

The average rate on the five-year adjustable loan rose to 2.98 percent from 2.96 percent, which had been a record low. The average rate on the one-year adjustable loan increased to 2.95 percent from 2.88 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average fees on the five-year and one-year adjustable loans were both unchanged at 0.6.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

If you are thinking about buying, think hard with interest rates AND prices this low, this may be your time!


Title Insurance, what is it?

In speaking with buyers and seller of real estate, I often explain about title insurance, and how it is not homeowners insurance. I just read a post that gives a good overview of insurances in general that I felt could be informative for many people.

  • Homeowner’s Insurance covers the replacement cost of the home and is required by lenders to ensure that their collateral (the home) will be replaced in case of damage. The amount of the policy need not include the value of the land. There are variables in cost by company and by the amount of the deductible.  Many people include riders to their homeowner’s policy for personal property (like jewelry) or get discounts because they tie it to their auto policies, etc. Recognize also that policies vary for owner occupied homes to second homes to vacation homes to investment properties.

  • Flood Insurance is mandated by the Federal Government if your property is located in a Flood Zone. Flood Insurance Premiums are used to assist FEMA in rebuilding areas affected by flooding (like from a hurricane). Traditionally, “acts of God” have been excluded from many insurance policies. That was what forced the Flood Maps and mandatory coverages. (I imagine there is Tornado and Earthquake Insurance Policies as well, in areas where they are more likely.)

  • Title Insurance is usually split into two policies – an Owner’s Policy and a Lender’s Policy. Both basically insure the same thing- that the owner of record is the rightful owner and that the liens of record (mortgages, for example) are the ones that everyone has agreed to. The title company searches the public records and certifies the title and the liens. Often, they clear prior liens and handle the transfer of ownership from seller to buyer with the County Clerk. Additionally, they provide information about real estate taxes, judgment and bankruptcy searches, and Certificates of Occupancy and Building Permits.

  • Life and Disability Insurances are something to consider when you own a home. What if the worst case scenario happens? Depending on your age and health, the cost can be worth it. There are many types of life insurance (term vs. universal life insurance, for example) that can accomplish different goals from paying off your mortgage to planning for retirement. A strong life insurance professional is as important as a strong accountant. Cheapest is rarely best. Financially, many are covered in case of death but get crushed at times of disability. Investigate the cost….it usually makes good sense.

I expect today’s piece to get you thinking about what you must have and what you might consider for insurance. Just scratching the surface. Go get the recommendation of a professional. Check out cost, sure…but don’t lose sight of the concept of protecting your assets and your family.


Wednesday, November 9, 2011

Ada & Canyon Counties Sales Numbers!

The amount of homes sold are up in both Ada and Canyon counties over the same period last year.  Ada County is up 6.2% over the first 10 months of 2010, while Canyon County is up 7.4%.

The average monthly sold price has held somewhat steady over the past year in Ada County, now standing at about $175,000,  October 2010 showed average of $173,000. The months between showed a high of $183,000 and low of $$157,000.

In Canyon County, while there has also been some up and down variances, but October's average sold price was $98,000 down from $111,000 in October 2010.

Another interesting note, the sales ratio in both counties have been climbing, the sold price is getting closer to the listed price. Both counties are close to 95%. I think two things are in play here: 1) sellers are getting more realistic in general, 2) distresses sales (bank owned and short sales) are sometimes underpriced resulting in sales prices higher than asking.


Wednesday, November 2, 2011

Will the 30 Year Mortgage Disappear?

The federal government is reconsidering their involvement in the home mortgage process. They plan to still ‘guarantee’ certain mortgages. However, they appear to be redefining what they consider a ‘qualified purchaser’. They are discussing stricter lending guidelines in four different areas:

  1. The type of mortgage

  2. The minimum down payment

  3. The debt ratios of the buyer

  4. The FICO score of the purchaser

Today, we want to look at #1.

It appears that there is at least conversation about eliminating the 30 year fixed rate mortgage which has been a staple in this country’s housing industry for some time. Some in government want to duplicate the mortgage process of other countries. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout but the interest rate is renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.

Would the same happen in this country? Last week, Housing Wire quoted Janis Bowdler, senior policy analyst at the National Council of La Raza:
“Without some form of Fannie Mae and Freddie Mac, replacements to support these popular loans, many first time borrowers will be shut out.

“Without that guarantee lenders would not offer 30-year fixed-rate mortgages, at least not at rates the average person could afford. Yes, some would be available but not for the average family but for those with a large amount of inherited wealth they can put to a large down payment.”

Why Is This Important?

You probably want to set your housing expense at the lowest number possible for the longest time possible. This may be the appropriate time to lock-in your long term housing expense as three things seem possible, if not likely, in the future:

  • Mortgage rates will increase from current historic lows

  • The 30 year fixed rate mortgage may disappear

  • Rents will return to historic norms of 3% annual increases

Bottom Line

If you want to purchase a home of your own but are waiting to see where prices will go, consider what you could be giving up while you wait.


Tuesday, November 1, 2011

Boise-Nampa Metro Area PTC Index

I am a bit late publishing the PTC Index for September but it is still good information and I will be more prompt on getting October's report out. The following is provided by Pioneer Title Company

Several Treasure Valley housing indices slowed in September, retreating from some of the gains made during the summer while still remaining stronger than earlier in the year. Notable improvements were made in refinances, which rose 7.8% in September to their highest one-month total in 6 months. Additionally, the number of distressed homes on the market declined 1.6% to its lowest number this year and 18.6% below last September's total. Building permits rose slightly, up 3% from last month, but new and existing home sales fell 19.8% and 7.1% respectively, following the surge in new home sales we saw in August. Average sales price also fell 4.1%, and the length of time homes remained on the market increased by 2 days, to 84 days valley-wide.

September 2011

Building Permits104
New Home Sales85
Existing Home Sales715
Average Sales Price136795
Financial-Bond Market(10-yr Treasury)1.98
Days on Market84
Distressed(Short Sales and REO)3442
Notices of Default298
PTC Index120

The PTC Index utilizes a proprietary algorithm that weighs nine key real estate variables. These variables, though widely available, have not been easily collected in a single location. The PTC Index changes that.

These numbers are for Ada and Canyon County.

For reference last month's was 119, a year ago came in at 103. Other points, the highest index was February of 2008 with an index of 218, lowest January 2010 at 28.