myidahohomes

I have people ask me whether or not is a good time to buy a home.  What I have been talking about lately is the cost of owning a home and how interest effects payments and total money out of pocket.  Mortgages are fairly expensive.  You are spreading out the cost of a house over 30 years and the resulting amount you pay to the bank is significant.  But right now with interest rates the way they are you could be costing yourself thousands by waiting to buy.

Let’s look at an example of a mortgage.  If you were to buy a $200,000 home right now you would be paying $926 dollars in principle and interest payments for a 30-year loan at 3.75%.  Total amount you would pay back to the bank would be the $200,000 owed and another $133,443 dollars in interest.  Now say you wait until next year and the rates go up to 5.5%.  Now you are paying $1,135 dollars in principle and interest payments for a 30-year loan.  Total amount you would pay back to the bank would be the $200,000 owed and another $208,808 dollars in interest.  That is an extra $75,365 dollars!!! Your interest went up less than 2%.

The other thing to consider is how much more of a house you can buy with the extra payment.  Looking at the example above; if you take the payment of $926 dollars on 5.5% interest for 30 years you are only able to buy a $163,088 house!!  By buying when interest rates are low you can buy a better house with less money out of your pocket in the long run.  The other factor to consider is that prices are still just recovering now so you are able to get houses on sale and deals that may not be here a year from now.

Happy house hunting!

This time of year there tend to be less homes on the market than the typical high points of spring and fall.  This year is no exception and in certain parts of Boise there is a real shortage of inventory to meet demand.  I have two separate clients that I am working with that can’t find a place to suit their needs.  One is moving up in house and wants to buy around $225K in North Boise.  There are some homes but none that he has seen that are suitable.  The second client is looking at buying a rental home for a college student child.  She is looking to buy somewhere around the $125K price point or below and within a couple miles of BSU.  Again there aren’t any homes that are in good condition to meet her need.

Prices are starting to tick up in the North Boise, NW Boise, and Southeast areas, which may prompt some spring sellers to get moving to put their home on the market.  If they do they will be rewarded with folks looking to buy that can’t find good inventory!  As always correct pricing is the key and homes that are priced at market value are moving quickly.

Boise has once again become a competitive feeding frenzy for the savvy investor in search of good deals.  Investors that Sheila and I both work with are finding it difficult to make competitive offers and many times facing multiple offers on each property we find.

The rental market here and around the country is projected to remain strong and experience growth according to leading economists.  There are many factors driving this trend.  Tighter lending standards are requiring more of a down payment than in the past and bills currently in congress could require at least 20% down in the future.  Some people are still facing foreclosure and it’s more positive alternative short selling a home.  These unfortunate people will be in the rental market from two to seven years before their credit recovers enough to buy.  Many economists also speculate that the more and more mobile our population becomes the less likely they are to buy until they are sure they are tied to a community.

What does this mean for Boise?  One thing we are seeing is that first time buyers and those looking to purchase under $100K will be facing tough competition and will need to be willing to move quickly when they find the right home.  Homes under $100K appeal most readily to the small time investor market and cash flow with rents very quickly.  This trend is both good and bad.  Bad for those looking for low cost homes in nice neighborhoods, which are becoming harder to obtain.  Good for the overall market, as competition will ultimately drive up prices and fuel a stronger market.

I recently attended a seminar put on by a regional planning entity here in Boise given by Professor Arthur Nelson.   He is an economist and planner from the University of Utah and one of the leading experts in community research and projecting growth trends.  He outlined the growing trend toward community and life style planning.

We see several examples of this type of development here in Boise.  The concept is that people now and in the future will be looking for more of a life style choice in where they live over specific amenities of the homes themselves.  The ability to walk to parks and schools, shopping, and recreational options are high on the list.  Bown Crossing is a good example of this here in South East Boise.  Homes are designed with a community identity in mind and people are able to get the majority of their basic necessities within a few blocks.  Bown is also a good example of what economists are calling ‘life cycle housing’ where you have a mix of apartments and single-family homes and perhaps even retirement communities within the same neighborhood.  So through out a person’s life the housing choices are all available in the same community setting.

These concepts are also seen in the Hidden Springs area and to a different extent the North End.  Hidden Springs was built this way by design with light retail space and lots of open areas, schools, library, and even community gardens.  The North End seems to have morphed into community housing with the reemergence of Hyde Park, the co-op grocery store, and access to foothills recreation.

Communities have a lot of appeal and may be worth considering for homeowners and developers.  As space becomes more and more limited in the Treasure Valley density will drive this trend forward.  Transportation costs and the logistics of traffic also make it an ideal choice.  Imagine if you didn’t have to drive your kids to daycare, school, soccer, karate, etc., etc.  What if it was all within walking distance and you could pick up your groceries too!

Having lived in Columbia Village (CV) for the past six years I am qualified to call myself an expert!  My wife and I love the location of this subdivision and the amenities provided by the homeowners association (HOA).  CV is close to downtown where my wife and I both work.  It takes 10 minutes to her work and 15 minutes to mine.  A straight shot down Federal Way.  We are both very outdoor oriented people and it is very easy to get up to Lucky Peak for boating or get out of town on the weekend over Highway 21 past Idaho City to Lowman.  It also has great freeway access in less than five minutes.  My folks live in Twin Falls so it is easy to get on the road.

CV is also close to convenient shopping options and we find that we rarely go anywhere else except for the southeast for most needs.  Albertsons is just up the road for last minute items and there is a Subway and Tully’s Coffee too.  Fred Meyer is close and Hastings for your entertainment options.  There are bars and restaurants in Bown Crossing and gas and car wash options on Federal Way.

My wife and I also like the convenience of hitting the green belt and parks in a very short time frame.   Barber is right below the subdivision and there is easy access at the diversion dam and park below Lucky Peak.  If your like me and want a bit more adventure, you can also hit the short and mid cliffs for rock climbing!

As far as Columbia Village itself there are huge soccer fields and baseball diamonds right in the center of the sub.  Feel free to take a Frisbee and toss it around or just get the family out for a walk.  There are also bike-riding trails that run in between the subdivision.  You can always find folks out walking dogs and getting a bit of exercise.  And speaking of exercise, CV has its own recreational facility!  It features a gym, racquetball court, and three different swimming pools.  During the summer you will find a good time with the family in the kiddie pool or get some lap time in.  There is a separate pool just for doing laps.

There are two separate schools within the sub division, Trail Wind Elementary School and Les Bois Junior High.  Both are rated very highly and within walking distance of anywhere in the subdivision!  It is a safe and very family friendly environment.  HOA dues are reasonable and the association is very active in keeping the neighborhood nice.  You will get a letter if you leave trailers parked out front or cars that don’t move.  They don’t mess around.  The HOA also has it’s own separate storage facility that home owners can use for a small fee.  I have a camper trailer there and it costs $20 per month.

Lastly, the people in Columbia Village are great and there are a range of price ranges to fit most budgets.  There are homes that range from 100K up to 370K or more depending on size and location.  If you want to learn more check out the association website http://www.cvoa.net/.  Hope to see you out my way soon!

Craig Soelberg

RE/Max Capital City

It is always the people who go against the grain that make real headway economically and for their future.  One of my favorite radio personalities is Colin Cowherd on ESPN.  He is always talking about buying when others are selling and generally not following conventional wisdom.  So true.  Think back to the great depression and the lives effected and fortunes gained.  If you could buy stock now in retrospect, would you give five cents a share for Coca-Cola stock?  Of course you would!  If you could talk to your grandparents at 20 years old would you tell them to scrape up whatever money they had and buy some stock?  Yes!  That one purchase ten years later could have made them a fortune and fifty years later could have changed their family tree forever.

The same situation is happening in real estate.  By the time conventional wisdom tells you it is time to buy and a “hot market” it will be too late.  By the time you’re all in and ready to buy it could be after all the smart people made the best deals.  The problem?  We all listen to the news way too much!

All finance like real estate is local.  I am not saying you should go out and do something your not capable of or overextend yourself and take unnecessary risks.  But I see people, especially first time home buyers, with good jobs and a down payment waiting to see what is going to happen!  Not smart.  With rates under 4% and prices what they were at seven years ago housing affordability is at an all time high.  I also see folks that could get out of there home and purchase the home they really want waiting until their home value goes back up.  I am here to tell you that by the time the values go back up, the value of the house you want is going to be that much higher and instead of 4% you are going to be facing 6-7% or higher!  That will mean payments of hundreds of dollars higher than what you would be paying right now.

I remember my parents buying a house in the early 90’s.  They got 10% on their loan and were very excited about the good rate that they got.  That could be you.  If you are considering a change, I would urge you to make it before the rest of the country realizes that this economic cycle too shall pass.   The economics of this country has waves, don’t be caught trying to buy or sell a home at the peak of a wave at high tide.

Example:  $200,000 loan at 4% on 30 years -$955 per mo principle & interest

$200,000 loan at 10% on 30 years -$1,755 per mo principle & interest

FYI if you are happy where you are, have equity, and haven’t refinanced your mortgage yet to down around 4% -go do it!

Craig Soelberg RE/Max Capital City

Sales ticked up for existing homes and new homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode. In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010. The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace. ”Inventories of new homes are very low: Theres nothing on the shelf, so any increase in new home sales will translate directly into new housing starts,” Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. “That means putting people back to work.”Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, and mortgage rates reached new record lows last week, pushing housing affordability even higher.

Source: “New Home Sales Edge Up,” CNNMoney Dec. 23, 2011 via Realtor Magazine

According to the latest Realtors® Confidence Index survey, distressed real estate sales fell to 28 percent of the total market in October, down from 30 percent in September. In March 2009 distressed sales had reached 49 percent of total market sales. In October, foreclosures were reported as 17 percent of total sales, while short sales were 11 percent.What does this mean for Realtors®?  It appears that the overall percent of distressed property on the market has been in the 30 to 35 percent range in recent years. Currently the number is at the lower end of the range. Rising sales of distressed real estate relative to the total residential market in the past are believed to have had a significant negative impact on home prices. In recent months, the problem of distressed real estate sales has improved somewhat, which suggests that additional downward pressure on prices from the growth of distressed real estate sales is currently not occurring. Financial institutions are believed to be holding substantial inventories of distressed properties; however, the properties appear to be entering the sales markets at constant or slightly declining rates. Although distressed real estate sales are believed to have had a negative impact on the residential market, the impact does not appear to be worsening.

via Distressed Real Estate: Down to 28 Percent of the Market.

Mortgage applications increased 12.8% for the week ending Dec. 2 as consumers rushed to refinance loans at low interest rates, an industry trade group said Wednesday.

The Mortgage Bankers Association also noted home purchase activity for the same week jumped with the purchase index increasing 8.3% from a week earlier.

Overall, the MBA found that its market composite index — a measure of total loan application volume — increased 12.8% over the previous week and the refinance index rose by 15.3%.

“Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months,” said Michael Fratantoni, MBA vice president of research and economics. “In particular, refinance applications increased sharply, with some lenders seeing refinance volume double. Despite this surge, aggregate refinance activity is still below levels reported two weeks ago. Some lenders indicated they are beginning to see an increase in HARP loans, but that increase is still a small portion of the move this week.”

Meanwhile, the refinance share of mortgage activity grew to 76% of total loan applications, up from 73.9% the previous week. In addition, the adjustable-rate mortgage share of activity declined to 5.7% from 5.8% of total applications from the prior week.

The average 30-year, fixed-rate mortgage rate on loans with balances less than $417,500 fell to 4.18% from 4.21% the previous week. The average, FRM on jumbo loans decreased to 4.52% from 4.55%, and the average 30-year, FRM backed by the FHA declined to 3.98% from 4%. In addition, the average 15-year, FRM declined to 3.53% from 3.58% as the average rate for 5/1 ARMs increased to 3.01% from 2.98%.

Of the home purchase applications, 85.5% were for fixed-rate 30-year loans.

Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by Realtor.com.

Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.

But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.

The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found.