Repomans Quarterly

July 2010 Edition 

Happy Summer!  What a fantastic buyer’s market for mid-summer in Boise Idaho!  Usually, mid-winter is the time for bargains, but the tax credit has thrown off the normal cycle.  Here are my top five undeniably great reasons for buying homes and real estate now:

1. Median home prices just surpassed a 5-year low in the Boise area.
2. Interest rates may be the lowest we’ll see in our lifetime.
3. Record numbers of foreclosed homes- over 700 for sale right now.
4. Pending homes have dropped by over 40% in last 2 months.
5. Mortgage applications nationwide at lowest level in 13 years.

I’ve never seen more favorable conditions to help you buy low with cheap money, little competition and big discounts.  Contact me today for homes or moneymakers.

The Credit Crunch and How it Affects You

Listen to the news these days and you’d think no one can get a loan.  This is not true for most homebuyers.  FHA remains the easiest loan to qualify on homes up to just over $300,000 in the Boise area, but the minimum down payment has been raised to 3.5%(except HUD Homes- only $100) .  Credit scores in the 600’s can qualify. 

For the employed lenders want 6 months on the job to count income.  Your total house payment can be up to roughly 30% of your gross monthly income, provided your long-term debts (credit cards, child support, student loans, car loans, etc.) are less than 10-12% of that income.  Higher debt reduces your max payment equally.

First-time (not owned in last 3 years) buyers who make below the median income may qualify for Idaho Housing.  IHFA offers grants for down payment, home buying classes and many special programs to help you become a home owner.

VA has not changed their zero-down financing for veterans.  With the seller paying closing costs, all you need is earnest money.  VA has always had slightly tougher qualifying standards for both the buyer and the home being financed.  Maybe that’s why VA Repos are somewhat rare today. 

The self-employed have it especially hard since those stated-income loans have disappeared.  Lenders now want to see a 3-year track record of tax returns to establish income.  Unfortunately, all those write-offs to lower your taxable income come back to bite you in qualifying for a loan. 

Investors now need a minimum of 20-25% down payment for 1-4 units.  The only exceptions I can think of would be VA Repos (only 5% down) and owner financing, which has been rare, but may come back.

There are still many financing options available and there’s only one way to find out if you qualify.  Call a lender and get checked out.  See my Preferred Partners for good local lenders that I have worked with.  Or call me for a quick pre-qualification. (208) 866-3481

Buying is cheaper than renting, especially now!

Now is a great time to stop buying a home for someone else- I mean renting.

Last week, my buyers were quoted rates as low as 4.5% fixed for 30 years!  If you borrow $100,000 at 4.5% fixed for 30 years, your principle & interest payment is only $537.  Add $175 for estimated taxes, hazard insurance and mortgage insurance for a total payment of $712.  This might be comparable to rent, but the benefits of home ownership make the comparison a no-brainer. 

The interest on your primary residence may be tax deductible and the property taxes will be 25-30% lower with the homeowner’s exemption.  And unlike rent, each mortgage payment knocks a little more off the principle until you reach the ultimate goal- a paid for home and no payments.  The sooner you get started...

The biggest & best benefit of home ownership is appreciation.  Despite the peaks and valleys, homes have appreciated 3-4% per year since World War II. That’s a 100% annual return on your down payment.  Buying now at a 5-year low, hardly seems risky. 

Your next month’s rent may be all you need to buy.  There are nearly 90 HUD-owned foreclosed homes for sale in the Boise Metro that you can buy for only $100 down on an FHA loan.  The seller can also pay most of your closing costs.  Today, you can get a super bargain, low payments on a fixed rate at nearly 50-year lows, and even get some of your $1000 earnest money back at closing.  Done that.

The Boise Idaho Foreclosure Bubble 

Nearly 39% of all homes listed for sale in the valley are either in foreclosure or foreclosed and owned by institutions such as HUD, VA, Fannie Mae, Freddie Mac and hundreds of lenders.  We see the foreclosures first as default notices/foreclosure notices in the paper, then listings as short sales, then foreclosed.

The good news is- the number of defaults and new short-sale listings are trending downward- see the charts below.  The bad news is- still more than 1 in 4 homes listed today in the Boise Metro is a short sale.  The main problem is short sales are priced low to quickly get an offer, but can languish for 3-6 months or more showing active with offers waiting for lender approval.  And buyers searching on their own can’t tell which listings are short sales (I can search for you and filter them out).  Also, that low asking price on short sales may not be real- most banks counter higher.  This causes many home buyers to think prices are lower than they really are, and is exerting major downward pressure on prices. Thankfully, lenders are gradually moving faster to approve the short-sale deals.

Foreclosed homes are at all time high- today 700+ homes, which is nearly 11% of all homes listed in Ada & Canyon Counties.  This is good news to me, not because my name is Repoman, but because this means a good portion of the foreclosures are at the end of the process, about to be recycled into homes and investments and removed from the market.  Foreclosed homes, with less uncertainty than short-sales, sell much faster, close in 30-45 days, and have a much smaller negative effect on prices. See in the charts below how much closer the sold trend is to listings on REO (real estate owned by lenders). 

We are a good way through this bubble.  Following the trend lines and barring any major changes, I see hope in the next 2-3 years that our market will slowly return to normal, which is why you should buy now when you have the most bargaining power.  Contact me today to get started on the path to home ownership or investing. (208) 866-3481

Will Home Prices Fall Further in Boise?

I am hesitant to make any predictions.  This is un-charted territory.  But let’s look at what happened in the last 5 years to get us here. 

Idaho was one of the fastest growing states in the nation for 3-4 years.  Meridian doubled in size in 3 years.  This huge influx of people overpowered the housing market as homes could not be built fast enough, causing extremely low inventory levels of single-family homes and double-digit appreciation.  Then the economy turned and we’ve given back all of those gains in prices. 

Today, those in-movers have not left.  In fact, we are still growing.  The pace of sales is well below where it should be.  Homes are the most affordable in many years.  Our prices compared to other metro areas are low and we have just over a 6-month supply of homes today, which is in the healthy range. 

Now the original question.  Yes, prices could slip further this year, but the bottom is near.  You never know the market has turned, until it has.  And the coming upturn has great potential.  I would buy every home I could right now! 

A Buyer’s Broker Costs You Nothing

In Idaho, the listing agent represents the seller and cannot fully represent you.  Good thing the price includes a buyer’s agent’s fee on all homes listed in the MLS.  That’s right, the seller pays me at closing to work for you.  For only your promise to use me as your exclusive representative, I will use my 20 years experience to help you find the best home, work to get you the best deal and protect you every step of the way.  If you don’t get a home, I don’t get paid.  Fair deal?  Contact me today to get started.

Update-  New Lead-based Paint Rules Delayed to End of Year

In my last newsletter, I reported on new EPA rules on renovation and painting of homes built prior to 1978 that will add HUGE costs to any job that disturbs more than 6 sq ft of interior and 20 sq ft of exterior painted surfaces containing lead. 

The enactment of these rules has been delayed to the end of the year because few contractors had been certified to complete the work.  If you see any of this work in your future, getting it done this year could save you hundreds to thousands of dollars, depending on the job. 

Learn more at EPA RRP- Renovation Repair & Painting Rules   EPA FAQ Page

Mold In My House in Boise Idaho!

I recently heard from my renter that he thinks we’ve got mold.  After I pinched myself to be sure it was not just a landlord’s nightmare, I called my mold expert.  Herb Jensen at ServPro in Boise 375-0300 is one of the top mold experts in the Boise area- also water & fire restoration.  Herb says he gets at least one call per day with the same story.

If no mold is visible, how do you find it?  First, mold needs moisture to grow.  Herb says it takes only 10 days for mold to grow when conditions are right.  I did have a small roof leak that took several attempts to locate and fix.  But before tearing into walls and ceilings, I had the air tested by Herb for mold spores.  This involved sophisticated equipment and multiple controlled tests to get an accurate reading and samples sent to a lab for analysis.

Those do-it-yourself tests are not the best option.  Many simply test for the presence of mold and there is mold in every home.  High concentrations are the danger.  These tests are also very inaccurate compared to a professionally administered test using the right equipment.  You don’t want to be making potentially expensive decisions based on poor readings.  Get help from an expert.

Two days later, my test results show the levels of spores in the upstairs bonus room were many times the outdoor measurement- looks like I have a mold problem.  To hear the rest of the story, see my blog, which I will update as I go along.

Repoman is at your service.  Call me (208) 866-3481 for expert help buying or selling real estate in the Boise area. Anyone you could send my way would be greatly appreciated and well cared for.

Inventory	1-2 months	3-4 months	5-6 months	7-8 months	9-10 months
Effect on Prices	Double-digit appreciation	Single-digit appreciation	Stable	Single-digit depreciation	Double-digit depreciation