Market Trends
Real estate is a dynamic market that reflects local, regional and national economic changes. The professionals at Windermere Real Estate-Capital Group, Inc. follow the trends that affect Idaho. From the number and value of homes sold in your neighborhood, to the latest ideas on selling your home or buying your dream home, you’ll find it here.
Check back often for the latest in what’s happening and how it may affect your home buying, selling and financing options.
Latest News
February 23rd, 2010
North End Trends – What a GREAT place to live!!!
Boise’s “North End” is one of this city’s most desirable locations to live. With immediate access to the vast foothills trail system, just blocks from Boise’s downtown metropolitan corridor, host of organic shopping hot-spot the “Co-Op” and a neighborhood filled with historical architecture and eclectic character, who wouldn’t want to live here. I am a resident of the North End and I happily take advantage of our unique neighborhood on a daily basis. As a real estate professional, I am fortunate that my business so often includes transactions within the neighborhood that I reside. I have included below a graph which exhibits the last 15 months of sales activity in the North End. This graph demonstrates relatively stable indicators of listed and sold properties.
It was this time last year(January/February 2009) that sales showed a tendency to rise, as did inventory. The notable difference to me, is that January of 2010 reflects approximately 20% fewer homes on the market and nearly double the amount of Pending sales. It is this trend which best demonstrates stability, as inventory decreases and sales increase. If you would like more information about statistics in the North End or the greater Boise area, please contact me with your inquiry…I will be happy to provide more detailed information.
February 17th, 2010
How Is The Treasure Valley Real Estate Market?
Over the past 15 months the number of homes for sale has decreased, interest rates are at 20 year lows, and demand from buyers has increased. This is what we like to see! Close to 800 homes a month were selling in Ada and Canyon Counties through the summer and into the fall (that’s good!). Sales did seem to fall off a cliff in December and January, but there are two good reasons - the normal seasonal slowdown and the extension of the first time home buyer tax credit.
We should continue to see solid recovery into 2010. A lot of that recovery will depend on local job creation and consumer confidence. Below are the area 2009 sold homes stats by city.
Source: Intermountain Multiple Listing Service
January 8th, 2010
Market Report For January 2010
Information from Idaho Data Providers
Idaho Data Providers Market Report - January 2010
· Complete Foreclosure Numbers for 2009
· 2010 Starting With A Record Level of Distressed Properties
· Real Estate Market Forecast for 20102010 Market Forecast
Nationally, although the government stimulus payments for buyers and record low interest rates have recently given the appearance that the housing market has reached the bottom and is recovering, this is not the case. The trifecta of: (1) continued high unemployment; (2) nearly 30% of all borrowers upside down on their mortgages and; (3) an increasing serious default rate (60+ days delinquent) on loans not yet in foreclosure that is triple the number of loans already in foreclosure (9% versus 3%) means a continued, constant and record stream of distressed properties entering the foreclosure pipeline and keeping inventory levels abnormally high in 2010
Government efforts to stem the foreclosure tide through its loan modification program (HAMP), have failed miserably and there are no other real solutions on the drawing board to stop or prevent foreclosures. The U.S. Treasury Department’s new short sale program (HAFA) will still result in the same number of distressed properties entering the market as just completing the foreclosures to begin with would have. In fact, it may even speed up the rate that new distressed properties reach the market as the new short sales under the HAFA program will come on the market much sooner than if the properties would have had to complete the foreclosure process.
Locally, a continued and increasing flow of distressed properties entering the local real estate market will keep inventory levels very high and further depress market prices during 2010 in the Treasure Valley. For the first time ever active distressed listings have exceeded 4,000 properties. We are entering 2010 with the highest level of distressed properties ever recorded for this area.
Idaho Data Providers not only tracks new foreclosures but also postponements of foreclosure auctions and the trend we are seeing from lenders has been disturbing. Over the last year, the lenders have been repeatedly postponing a vast majority of their scheduled foreclosure auctions.
In past years 50 scheduled foreclosure auctions on any given day locally was considered a heavy day. We are now seeing over 200 properties on the daily auction schedule more and more frequently with only a small percentage of properties actually going to sale. This has resulted in a hidden backlog of thousands of foreclosures with pending auction dates. If the lenders start allowing these properties to go to auction there could be a potential flood of new REO properties hitting the market.
What this all means is that you should brace yourself for a double dip in the housing market in 2010. Look for local prices to still fall another 7% to 10%. A bottom to the housing market and the beginning of a real recovery is unfortunately still at least one year away.
Final Foreclosure Numbers for 2009
Ada & Canyon County Notice of Default Statistics
Ada County Defaults Remain Unchanged in December
December 2009 foreclosure rates dropped slightly from that of November by falling 9% to end the year with another 630 new foreclosure starts for Ada and Canyon Counties. Overall, during 2009 there were an incredible 8,639 new foreclosures filed in Ada and Canyon counties. Compared to 2008 when what was then a record shattering 5,202 new foreclosures were filed, this is an astounding 66% year over year increase to follow up the unfathomable 216% increase in 2008 over 2007. The breakdown of the numbers between the counties is set forth below.
Foreclosure Rates Down 22% in Canyon County for December!
In December 2009 new foreclosure defaults filed totaled 214 which is an 22% drop from November. In total during 2009 a total of 3,304 new foreclosure starts were filed in Canyon County. This is a 240% increase from 2007 when only 969 notices of default were filed and a 56% increase over 2008 when 2,121 defaults were filed.
TheCalm Before the Storm! Short Sales Decline By 1.9%
We very well may be seeing the ‘calm before the storm’ as far as short sale numbers are concerned! In December there were 2,667 short sales listed on the market. This number is consistent with the number we have seen for the past six months. The coming flood of new short sales will primarily be caused by the new US Treasury Department short sale program (HAFA). This program will cause the current number of short sales to skyrocket in mid to late 2010 as all potential foreclosures must now be evaluated for a possible short sale before a foreclosure can be started on the property.
New REO Listings Up Sharply by 7.7%
After remaining virtually unchanged in November, December REOs are up sharply by 7.7% with 1,342 REOs currently listed. As lenders start shedding properties from their all time record levels of REO inventory we can expect the number of REO listings on the market to gradually increase during 2010.
Total Distressed Listings Exceed 4,000 for the First Time!
We are entering 2010 with the highest level of distressed properties on the market ever recorded for this area. The total number of distressed listings at the end of December 2009 reached 4,009. This number is an increase of 38% in only the 11 months that Idaho Data Providers has been tracking this number.
September 21st, 2009
Rentals in Boise: Do they pencil?
I‘ve been getting a lot of calls lately from potential buyers and investors asking that very question. Have prices of easily rentable homes in Boise dropped to a level that makes them pencil out as cash flow positive? The answer is yes…and no.
As we are all aware, the mortgage crisis and the ensuing recession have all put downward pressure on housing prices both nationally and here in the Boise market. The latest numbers for August 2009 indicate that single family home prices in Ada County have dropped 17.9% in just the last year and in many areas have dropped as much as 35-40% since the peak in 2006. The current climate of near record low interest rates, readily available credit for well qualified borrowers, and relatively low prices presents a unique opportunity for those with access to cash, whether they be seasoned investors, or those lucky enough to have saved up a nest egg. Add to this that rents, while somewhat down, have held up much better than home prices and you can see why there is renewed interest in buying rental properties.
There are many, many ways to approach this question from in-depth analysis using several different measuring criteria such as Cap Rates, time value of money, GRM (Gross Rent Multiplier), etc. to the most basic. Is there any money left each month after I make my payment and cover other expenses? For the purposes of this discussion I will only be looking at single family residences, not apartments or multi-family houses. If the answer is yes, then there is positive cash flow. Obviously, this is the most desirable scenario. However, especially in times when home values are rising, there are many investors who are willing to tolerate negative cash flow in order to build equity. I believe it will be quite some time before home prices in this market begin to significantly appreciate so it makes much less sense to look at anything that isn’t cash flow positive or at least neutral, unless you have deep pockets and lots of patience.
I spoke to Gary Stott, a loan officer with Waterstone Mortgage The Stonebrook Group here in Boise, to get a lender’s perspective. A few basic things to consider before you decide that buying a rental makes sense now:
Almost all lenders will require at least a 25% down payment to provide competitive rates.
You will also need closing costs of around 3% of the purchase price.
Rates are currently around 5.5% for this type of loan, but can change daily.
You must be well qualified.
If you currently own a rental you must have a 2 year history as a landlord for the rental income to be eligible for qualifying you for the loan. Banks will typically assume a 25% vacancy rate and deduct that from the allowable rental income.
Most lenders will limit you to a total of four financed properties (including your residence), although Fannie Mae is now allowing up to 10. However the PITI reserves required by lenders increase dramatically for 5 or more properties.
Since the property will not be your principal residence you will not be eligible for the Idaho property tax homeowners exemption. If the property you are buying currently has the exemption applied to it you will need to multiply the assessed value by the levy rate to determine what the approximate taxes will be. This information is available from a qualified real estate agent or on line at www.adacountyassessor.org
There are other expenses which should be considered in your decision such as maintenance, repairs, vacancy, and management fees (optional).
So what are the magic numbers that you should look for to find properties that will pencil? There is no simple magic formula because there are so many non-numerical variables, such as location, condition of the property, layout of the house, etc. Most importantly in evaluating the property you need to try and determine, ‘How rentable is the property and how much will it realistically rent for?’ Rentability and rents vary by neighborhood, so thorough research is important. You need to ask, ‘Who are the potential renters in this neighborhood?’ ‘What affect will things like proximity to large employers, the freeway, or schools have?’ You can also research what current rents are by talking to a qualified real estate agent, property manager, or by scanning such sites as www.CraigsList.org and www.idahostatesman.com. You can typically search these sites by neighborhood and type of house.
But is there a simple litmus test the potential investor can use in today’s market here in Boise? Depending on your investment and income goals there are some criteria that you can apply to “weed out” properties once you have determined the areas you want to focus on and what the expected rents will be. 1) Typically, the most “rentable” home is a 3 bedroom, 2 bath newer home with at least a 1 car garage. 2) Rents will, of course, vary by neighborhood, but for our purposes, $800/month is a pretty reasonable number to use.
So one easy place to start would be 3 bedroom, 2 bath, homes with a garage where the PITI (Principal, Interest, Taxes, & Insurance) payment is going to be less than $800/month. We assumed hazard insurance of $35/month ($420 annually) and taxes at $185/ month ($2,220 annually).
We figured $140,000 for a starting point. Of course these are only estimates and the actual numbers would be dependent on the specific property involved. So I researched to see if there were specific properties available in the city of Boise that would meet our most basic criteria. There were:
| Listed Price (3bed, 2bathw/garage) | Number Listed as of 09-10-2009 |
| $140,000 or less | 181 |
| $130,000 or less | 91 |
| $120,000 or less | 38 |
I had Gary Stott at Waterstone Mortgage The Stonebrook Group run some sample good-faith estimates for me to see if we could hone in on a price point that works.
| Purchase Price | Loan Amount | Interest Rate | PITI Payment |
| $140,000 | 105,000 | 5.5 | 816 |
| $140,000 | 105,000 | 6.0 | 849 |
| $130,000 | 97,500 | 5.5 | 773 |
| $130,000 | 97,500 | 6.0 | 805 |
| $120,000 | 90,000 | 5.5 | 731 |
| $120,000 | 90,000 | 6.0 | 759 |
Based on Gary’s samples it looks like at an interest rate of 5.5% or lower the purchase price cutoff is around $130,000 and if the interest rate jumps to 6% then it is closer $120,000. Of course, this is not the whole picture as no allowance was made for other expenses such as vacancy, repairs, maintenance, or management. Nor does this consider that you are tying up anywhere from $30,000-35,000 in cash as a down payment in a market where values are not expected to increase anytime soon.
My conclusion at this time would be that if you can find a well located, easily rentable, property under $120,000 there maybe some marginal positive cash flow and that if you are able to hold the property for at least 3-5 years you may see some increase in the property’s value. Given the relatively large amount of up-front cash required and the relatively low (if any) cash flow in a declining market, this is probably not the investment strategy for most. However, compared to from 2005-mid 2009, the numbers are really starting to improve. For those who are comfortable doing more detailed financial analysis of rental properties there are several web sites that offer easy to use programs to quickly analyze investment properties. www.erealinvestor.com, www.realdata.com (I suggest the REIA Lite Edition), and www.planease.com are three that I am aware of. And of course you can always seek the advice of a qualified real estate professional.
June 29th, 2009
Hispanics form considerable economic base for Idaho
Recently a business partner brought to my attention an article on Hispanics in Idaho. I found the information very motivating with today’s economic conditions. Recent studies show that Hispanics in Idaho increased in purchase power in comparison with Hispanics nationwide by a full percentage point, reaching 13.5% in 2008.
Hispanics play a large part in overall economic growth, and are increasingly becoming more important contributors to the economy of Idaho and its businesses. Furthermore, the Hispanic population grew by 5% in 2008, representing 10% of the total population in the state. Pew Research Center shows that 60% of the 10% are homeowners/householders in Idaho and rank 3rd in the nation.
The statistics show that the influence of Hispanics will continue to grow in the future, and during the current recession, will continue to contribute to the economic growth of the state of Idaho.
Source: Idaho Department of Labor & Mirada Magazine