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.

 

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.

 

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 Permits	104
New Home Sales	85
Existing Home Sales	715
Refinance	556
Average Sales Price	136795
Financial-Bond Market(10-yr Treasury)	1.98
Days on Market	84
Distressed(Short Sales and REO)	3442
Notices of Default	298
PTC Index	120

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.

 

It is spooky how low Nampa home prices have gone!

Although this Nampa house is not really spooky it is in need of updates and it brings home to me how low prices have fallen in Canyon County.



It is located on Midland Blvd, has 3 bedrooms, 1 bath with two extra deep single car garages. Priced at only $39,900!

Pop over to my website for more information on this home and all the spooky low priced homes. www.lowesflatfee.com

National Housing Market Update

From the National Association of Realtors comes the following information. Of course all real estate is local as they say, but national trends affect us as well. I provide local trends as well, so you may look under the statistics category for past postings and tune back in often for new updates.

October 2011  Market Update Despite some pessimism pertaining to the global and domestic economies, the U.S. housing sector continues to show promising signs of stability and growth. Low levels of new home construction and gaining sales volume fueled by an inventory of affordable housing since Richard Nixon was president have reduced the number of homes on the market. This means home prices may begin to appreciate again. While there are many factors that can be barriers to buying a home, such as the tightening of mortgage lending rules by banks, consumer confidence in the job market is among one of the top obstacles to home ownership. In the 2011 Housing Pulse Survey conducted by the National Association of Realtors, 80% of respondents cited job security as their primary concern when deciding to buy. For only the fourth time since the beginning of 2010, home sales in August were up both year-over-year and month-over-month, posting an 18.6% gain from last year, with first-time home buyers accounting for nearly a third of all homes purchased.  These indications of strength in the housing market may help to add to consumer confidence, which is an integral part of sustained growth. Even though there is still a long road to recovery ahead of us, there are opportunities to be had for both home buyers and sellers.   Home Sales in millions August home sales were up 18.6% year-to-year, posting a 7.7% increase in sales activity over July despite Hurricane Irene, which struck the Eastern seaboard and New England regions at the end of the month. As a result of the hurricane, the Northeast experienced the smallest increase in sales. At the same time, persisting restrictions among banks affecting home lending are having the greatest constraint on sales levels. NAR Chief Economist Lawrence Yun stated, "The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy."           Home Price in thousands Homes prices were down, with a 5.1% drop in August compared to a year ago. The national median price for homes in August was $168,300, with distressed properties, foreclosures, and short sales still accounting for 31% of sales. The buyer's market for residential property continues, as favorable prices, and record low interest rates offer the most affordable conditions for purchasing a home in the last 40 years.             Inventory- Month's Supply in months The supply of homes measured in months on the market at their current pace of sales fell 10.5% in the month of August, to an 8.5 month supply of inventory, down from a 9.5-month supply in July. With homes being more affordable than they have been in a generation and the lowest levels of new home construction since World War II, this inventory is projected to continue to fall, which will eventually result in the appreciation of home prices and a move toward a balanced market.           Source: National Association of Realtors

 

Which comes first, the mortgage or the house?

I get calls all the time from folks who want to look a house that I have listed for sale but they have not even spoken to a loan officer. It really is getting the proverbial cart before the horse. I am including a great article from KCM Blog about this subject.

And when you are ready to drive your cart give me a call or shout me an email, I can provide you names of some great loan people.

Most people get it backwards. They shop for a home, THEN, they try to structure the financing for it. They make the emotional decision of buying the home of their dreams, THEN, try to apply logic in how they pay for it. Many even go “online” and play with what is affordable by underwriting standards without TRULY considering their future.

I am always fascinated by mortgage underwriting “standards” when they don’t even take into account some very large variables that affect an applicant’s cash flow, and thereby, their ability to repay the loan or maintain a lifestyle they want:

 

• Are you single or a family of six? Costs for food and clothing alone are very different.


• Do you live in a state that requires State Income Tax or not? Another significant part of the equation.


• How often do you like to eat out or vacation? Are you willing to sacrifice these things for a bigger or nicer home?

Falling in love with a home without considering the REAL impact on your lifestyle is a recipe for unhappiness….either in re-adjusting to a “lesser” home or disappointment over the lack of vacations or nights out.

My advice is to first work on your financing. Go the logic route. Find out what you can afford from a lender’s underwriting perspective, but then, spend some time considering the the cash flow realities of your choice. Work with your loan officer to make wise choices.

Additionally, your loan officer should be advising you on ways to properly represent and transfer your assets, how to explain and document your income, as well as, assisting you in methods to get your optimal credit score. This counsel can be invaluable in smoothing out some of the bumps in the mortgage process, besides giving you the best chance to get the most aggressive pricing available.

To me, the choice is crystal clear…the mortgage before the house!

Boise, do you want to rent or own?

With all the difficulty the housing market has taken here is a little graphic from Forbes.com that compares renting and owning and it's effect on wealth.

And let us not forget interest rates at or below 4%. AMAZING!!!

InfoGraphic