Boise, Great Place to Raise a Family!

Did you see the latest ranking from Forbes magazine?  Boise was ranked 2nd best city in the country to raise a family. (Of the 100 largest metro areas)

The lower costs and less crime was mentioned along with BSU's Broncos!

We are listed 64th in cost of living, 44th in housing affordability, 29th in owning homes, 5th in level of crime and #1 in education.

If you are curious, we are just behind Grand Rapids, Michigan and ahead of Provo, UT.

 

Idaho Sellers-Reasons to Sell Now

I have had people asking me about whether to sell now or try and wait until spring, which traditionally is the best time to sell. No one solution fits everyone but here are some reasons to consider selling now.

We have a large amount of serious buyers still looking to buy, I have had 5 offers on 5 different properties across my desk in the last 3 days.  More serious buyers are looking whereas the looky-loos have moved on to other things.

Our inventory levels are way down, it is easier to attract attention.

There will never be a better time to move up, sure you can wait until you can receive more for your home but then the home you would like to purchase will have increased in price as well. And with these unbelievably low interest rates, strike while you can.

And it may just be the time to move on with your life. Whatever is the reason you have to want to sell, it is often worth more for your family, health or happiness than waiting around for a higher selling price.

5 Reasons to Buy NOW

Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying:

Supply Is Shrinking

With inventory declining in many regions, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy.

Price Increases Are on the Horizon

Prices will bounce along the bottom this winter. However, projections call for appreciation after that. Several studies and surveys call for price increases over the next few years starting in 2013. One such surveyshows that prices will increase over 10% by 2016.

Rents Are Skyrocketing

Rents historically increase by 3.2% on an annual basis. A study issued earlier this year projects rent increases of 4% for the next two years. Trulia recently reported that rents this year have actually shot up by 5.4%.

Interest Rates Are at Historic Lows

Federal Reserve Chairman Ben Bernanke has kept interest rates low in an effort to stimulate a lethargic economy. He understands that low rates will help housing and housing is a key to bringing back the economy. As the economy approves, the need to keep rates low will no longer exist. The 30-year-mortgage rate before the financial crisis was 6.57% (August 2007).

Buy Low, Sell High

We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’. It’s time to buy.

Strategic Defaults? Right or Wrong?

I have discussed this issue previously and here is another look.

Strategic defaults may be the next challenge to a housing recovery. Investopedia defines ‘strategic default’: “A deliberate default by a borrower. As the name implies, a strategic default is done as a financial strategy and not involuntarily. Strategic defaults are commonly employed by mortgage holders of residential and commercial property who have analyzed the costs and benefits of defaulting rather than continuing to make payments and found it more beneficial to default.” A new foreclosure is created every time a seller voluntarily decides to stop making their mortgage payment. Obviously, an increase in foreclosures puts downward pressure on the values of other homes in the community. We believe there are several reasons this could be another headwind to any recovery in housing. There Are 11.4 Million Homes in Negative Equity According to CoreLogic’s most recent Negative Equity Report, there are over 11.4 million homes where the value of the home is less than the value of the mortgage(s) on that home, a situation know as negative equity or being ‘underwater’. Negative Equity Is the Primary Reason Baby Boomers Default According to a survey by web site You Walk Away, 68% of baby boomers who walked away from their homes (strategic default) listed ‘property value’ as the main reason. 88% of the defaulters did not access any of their retirement savings before walking away and 97% would advise family members in the same predicament to also default. The Moral Objection to Not Default is Diminishing In the past, homeowners felt a moral obligation to repay their debts. That is beginning to change. Dr. Andrew Jennings, chief analytics officer at FICO explains: “After five years of a brutal housing market, many people now view their homes more objectively and with less sentimentality. Regardless of legal or ethical issues around strategic defaults, lenders must account for this risk when they evaluate mortgage applications in declining markets. Many homeowners who find themselves upside down on mortgages in the future are likely to consider strategic default as an acceptable exit strategy.” Prices Could Soften Again Over the Next 6 Months As we reported Monday, many experts feel that prices might falter again before they finally stabilize in 2013. Every time prices fall more homes fall deeper into negative equity. The CoreLogic report mentioned above also states that 2.3 million homes had less than 5 percent equity, referred to as near-negative equity. We will continue to keep our fingers on the pulse of this issue to monitor whether or not it begins to slow the momentum the housing recovery is currently experiencing.

 

 

Smootville-What a Hoot!

I was driving out on Locust road south of Lake Lowell looking at a new acre lot subdivision for a client and I came across this animated display called Smootville. It is really quite clever from the dogs tail wagging, one person pumping water and another hoeing the flowers.  I do not know if this is a seasonal display or year around but it is worth a look.

Will Our Appreciation Stop? Or Reverse?

I am including an article from KCM blog quoting experts stating that we may see some declines nationally in values in the coming few months as seasonal adjustments. If you read yesterday's article Mr Lebowitz's prediction for Ada County for the rest of the year was single digit sales increase and double digit median price increase. I do not believe we will see any negative price movement in our area. It may slow, but I do not see declines in our near future.

An important item covered in this report that even if some declines are experienced, it is simply a seasonal issue and not a greater "sign of impending doom."

There has been a lot of excitement about home prices over the last few months. Though we agree that the housing industry is in a full out recovery, we also believe that there will still be price volatility over the next several months. We must realize home sales are seasonal and that fact impacts prices.

Lawrence Yun, Chief Economist for National Association of Realtors, explains that the inventory of lower priced homes has been constrained leading to the rise in median home prices:

“Fewer sales in the lower price ranges are contributing to stronger increases in the median price, but all of the home price measures now are showing positive movement and that is building confidence in the market.”

Celia Chen, housing analyst at Moody’s Analytics projects that this positive price movement may not be sustained over the next few months as more distressed properties enter the market:

“Housing is about to turn from being a drag on the broader economy to being a driver…House prices will remain the laggard, perhaps dipping a little before hitting a sustained and solid pace of appreciation next year…The distress pipeline casts a shadow over the outlook. Indeed, the CoreLogic price index gained strongly between late 2009 and the second quarter of 2010, when foreclosure moratoriums were in place, before losing nearly all of the gains once the distress share of sales picked up again.”

The RPX Report suggests that price declines in the next few months could erase any gains we have seen this year:

“The gains of the first half of 2012 could be short lived. They were the result of seasonal factors and REO disposition strategies that could reverse in the fall. The unusually rapid price appreciation could give way to equally rapid declines in the second half of the year.”

Calculated Risk probably did the best job of explaining the situation reporting:

“Home price indexes will show month-to-month declines later this year. This should come as no surprise and will not be a sign of impending doom… There is a clear seasonal pattern. In recent years the seasonal pattern has been exaggerated by the large number of foreclosures – foreclosures tend to be fairly steady all year, but conventional sales are stronger in the spring and early summer and weaker in the fall and winter. This leads to more downward pressure from foreclosures in the fall and winter.”

Again, Calculated Risk explains that this “will not be a sign of impending doom”. It is instead the normal seasonality we have seen in home prices over the last several years.

 

 

Ada County Real Estate Continues Recovery

by Marc Lebowitz, RCE, CAE Executive Director Ada County Association of REALTORS Sales in August were 2012 were 706 in Ada County, an increase of 15.14% compared to August 2011.   Year-to-date sales are 4,684; 10.5% over the first eight months of 2011. Dollar volume for August was up 30.44% to $148Mil. For the year we are at $923Mil. New homes sold in August increased 57% over new homes sold in August of 2011!!…and are up 65% YTD. Historically, August sales increase by 3% over July. August 2012 sales increased by 11% over July 2012. Of our total sales in August… 21% were distressed (148 total sales)….down 3% from July 2012. In August 2011, 44% of our sales were distressed.  In January 56% of distressed properties were REOs and 44% were short sales.  In August the ratio was 67% short sales (99 total sales) and 33% REOs (49 total sales). This is five consecutive months with short sales being the larger percentage of distressed properties sold. Pending sales at the end of August were 1,113; down 9% from the end of July. In general pending sales in May are the highest of the year; and June the second highest.  The percentage of pending sales in distress increased 1% from July, totaling 27% overall. There has been very little fluctuation in this number since May 2012 when we first went below 30%. A year ago we were averaging close to 50% of pendings in distress; but have decreased steadily since January.  Of Pending sales in distress, short sales outnumbered REO’s 3 to 1. At the end of August, we had 26% more sales pending than at the end of August 2011. August median home price was $180,399; up 16% from August 2011. Median home price is up 30% since January of this year and above $150,000 for seven months running.  We continue to outpace our national recovery; according to NAR’s most recent report. New Homes median price for August was $224,777; down 4% from August 2011. The number of houses available increased slightly for the fifth consecutive month. At the end of August our total active inventory was 2,170 homes. This is up .5% from July and 12% less than last year at this time. At the same time, the percentage of distressed active inventory held at 24%. This is the lowest number we’ve seen in several years. We have been hovering between 33% and 36% for the last year. We remain well below the 40% levels set last spring….when we were on the increase. With an inventory increasing and the percentage of distressed inventory decreasing; median home price will continue to strengthen. Of our Distressed Inventory 89% is Short Sales (436 homes) and only 11% is REO (57 homes); nearly unchanged from last month. We didn’t increase available inventory very much.  We added five homes in the $200,000 to $250,000 and eight homes in the $400,000 to $500,000 price ranges…and…we added 6 homes in the $1,000,000+! All other price points had a decreases in available inventory. The number of available new homes increased in the price ranges of $160,000 to $200,000 by a total of 11 homes. In Ada County we now have less than 3.3 months of inventory on hand. The price category in shortest supply is <$119,000 with 2.6 months. In the range of $120,000 to $159,999 we have 2.4 months. All price points up to $400,000 have less than 4 month’s supply. We have benefited for nearly two years from inventory levels much lower than national average. Multiple offers are much more prevalent; now becoming the norm. Based on August sold data, our most desirable price point is $120,000 to $160,000 which was 25% of total sales. The next largest price point sold is $160,000 to $200,000 at 19.7% of all sales. I’m still going to stick with my conservative forecast for the rest of the year; single digit sales increase and double digit median price increase.