Repoman brings you the best buys in Boise Idaho homes & real estate for sale!
Repomans Quarterly
Winter 2012 Edition
Happy 2012! The Idaho economy is improving and it is an unbelievably good time to buy homes. If you are waiting for a good time to sell, we’re moving that way. Many factors, most unique to our market, are increasing pressure on home prices to rise.
The ultimate buyer’s market in the Boise area appears to have been last winter. Since then, the number of foreclosed homes for sale in Ada/Canyon fell 70% from the all-time high to just over 200 today. Distressed properties- homes subject to short sale have also fallen dramatically- only 350 today in Ada/Can with no offers. The MLS shows another 650 short sale homes with offers waiting for lienholder approval, but most should close in the first quarter and greatly reduce the drag on home prices.
In addition, the supply of all homes for sale in the Treasure Valley is extremely tight- less than a 3-month overall supply is half what’s considered normal. Sales have also been strong over the winter, thanks to mild weather and record-setting low interest rates. A jump in home prices, especially in Ada County, is a very real possibility this year.
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Repoman uses his 20 years experience to get you a bargain on your next home or investment.
For updates and history on the Boise Idaho housing markets, see Repoman's Market Monitor.
See all Boise Idaho area government & bank-owned foreclosed homes for sale:
HUD Homes and Bank Repos plus Auctions.
Also, see Repomans Best Buys for my Top 10 bargains in foreclosures.
Call Repoman now at (208) 866-3481 for expert help buying or selling in the Boise area.
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4th Quarter Median Existing Home Prices
 Median home prices did not follow the normal seasonal trend of weakening in the 4th quarter this year. Ada County dropped only a thousand and Canyon County actually rose a thousand. This shows underlying strength in the housing markets that, if sustained, will translate to rising prices during the busy season.
Home Affordability Best in 40 years!
Falling home prices and record low mortgage rates have resulted in home affordability matching 1971 levels, according to HUD. Affordability is gauged comparing incomes to monthly housing costs.
The local picture may be even better than the national: In Ada County, median existing home prices are at 8 year lows, now 36.5% below the peak of $219k set in Q3 of 2007. In Canyon County, it’s been even longer since the median price was this low, now down 47.5% from the high of $150,500 in Q2 of 2007.
Housing predictor reports that home buyers are showing nearly double the income needed to qualify for the average home, but more stringent lending standards are holding some back- and slowing the housing recovery.
Source: “Home Affordability Reaches 1971 Level” Housing Predictor 1/11/12.
Rent vs. Buy
Now that home prices are down and interest rates are near record lows, there’s no question that buying makes sense. The benefits of ownership are considerable:
- Monthly Cost. The typical $100,000 3/2/2 starter home in Boise rents for $850. Payments for FHA buyers with 3.5% down at 4% fixed for 30 years would be approx. $700 including principle, interest, estimated taxes, mortgage insurance and hazard insurance. An immediate savings of $150 per month!
- Potential Equity From Appreciation. The long term average is 3-4%. At 3% per year, that’s $250 per month before resale costs, tax-free in most cases.
- Scheduled Equity From Loan Payoff. With each payment you make on a mortgage, more goes to principle and less to interest. After just the first year of payments, the remaining balance will be approx. 1% less, which is $1000, and over $83 per month in additional equity.
- Extra Loan Payoff. Paying a little extra principle early in the loan can save you tens of thousands in interest later and move you years closer to payoff.
Yes, over the last 4 years prices fell 35-50% and renting might have been smart over this short term, but it's always easy to see in hindsight. Prices rose quickly during the boom, a downturn was inevitable, but no one knew how deep it would be. Anyway, now there’s no question- buying is better.
Lending Trends Facing Homebuyers and Investors
It is harder to get a mortgage than it used to be. However, it may be possible for you. The only way to know, based on your own unique situation, is to call a lender and get pre-qualified. See my Preferred Partners for good local lenders.
Barb Perry at Waterstone Mortgage, one of my preferred partners, quoted some rates for me a few days ago, assuming you are a well-qualified buyer:
For home buyers, FHA was 3.75% on a 30-yr fixed with 3.5% minimum down payment. FHA may be the easiest to qualify for with credit scores of around 620 or better, depending on income/debt ratios, down payment and many other factors. At these rates, the principle and interest on a $100k would be only $463 per month. Amazing!
For zero-down loans there are programs available:
1) VA zero down for veterans.
2) Idaho Housing grant programs for below-median income borrowers, who have not owned a home in the last three years.
3) Rural Development zero-down in outlying areas, also for lower income buyers.
Investors need 20% down and could have locked in at 4.625% for 30-yr fixed.
*All rates are subject to change and qualifying- inquire with a lender for available loan programs, good faith estimate of closing costs and APR.
How much cash do I need to buy a home? It is common for sellers to pay closing costs for buyers, so you may need little more than the down payment. Even if you’re going zero down with seller paying closing costs, typical earnest money with an offer is $1000, credited toward your closing. You’ll also need about $300 for a professional home inspection and up to $450 to pre-pay the appraisal, even if the seller will pay it at closing.
Snapshot of Available Homes For Sale in Boise Metro
Start searching for a home and you may be surprised how few homes are available to you in the Boise area, especially in the lowest price ranges. This is why the discounts are small, even on repos and short sales, and why I see prices rising.
This snapshot also highlights the importance of getting help from a Realtor in the search phase. You can do your own searching, but on very limited terms- area, price, bedrooms, baths- the major amenities, forcing you to sort possibly hundreds of listings for your specific needs.
Is it a short sale that could take 1-4 months extra? 1 in 3 listings are. Only your Realtor can filter out short sales. Or homes that don't qualify for your loan program. Or include any specific features, from main level master bedroom to school district to RV parking.
Our MLS search technology allows me to instantly and automatically e-mail you any listing that meets your criteria, keeping you from wasting time on homes you can't buy or don't want. I can even provide your own private website with mapping and sorting tools, dedicated to your search for a home.
Investors- Pull The Trigger!
This is it, the perfect time in the market cycle to buy- just after the bottom and on the way up. We also have the best conditions in decades to make money long-term on real estate with low prices, strong rents and cheap money. There are many properties that will provide decent returns on investment, before any appreciation. Even with a property manager and no tenant hassles, a positive return is attainable.
Ask me for money-makers. I’ll provide a short list of the best-priced homes, most likely to appreciate in good locations that will attract the largest pool of renters for low vacancy and future buyers for ease of resale and liquidity. I can also provide an investment analysis, comparing financing options, to help you get the biggest return on the smallest investment- leverage is the key to the largest real estate profits!
Interesting MLS Statistics from 2011
Ada County 7118 home sales- avg discount 2.09%*, avg DOM 87 days**
18.1% short sales- avg discount 2.57%, avg DOM 166
28.4% repos- avg discount ZERO, avg DOM 50
Canyon County 3408 home sales- 1.8%, avg DOM 85
21.6% short sales- avg discount 1.45%, avg DOM 161
45% repos- avg discount 0.07%, avg DOM 42
*average discount calculated by comparing average list price to average sale price and does not include closing costs commonly paid by sellers, avg probably under 3%.
**DOM= days on market
I have 3 observations:
1) Nearly half of all sales in Canyon County were repos, reflecting higher levels of foreclosure inventory.
2) The discounts off asking were smaller than in the past, reflecting the tight supply, and almost non-existent on repos. This, along with the super-short market times, shows banks are pricing to sell.
3) On short sales, I am surprised the discounts aren’t larger, with an average market time over 5 months.
10 States Hit Hardest By Foreclosures
These are the 10 states with highest number of foreclosure notices in the month of November, according to RealtyTrac data:
1. Nevada- 1 in 175 homes
2. California- 1 in 211
3. Arizona- 1 in 256
4. Utah- 1 in 290
5. Georgia- 1 in 330
6. Michigan- 1 in 330
7. Florida- 1 in 358
8. Illinois- 1 in 427
9. Ohio- 1 in 500
10. S Carolina- 1 in 517
For the first time in years Idaho is not among the leading states in foreclosures. 1 in 770 Idaho homes received a foreclosure notice in November- an annualized foreclosure notice rate of only 1.55%.
Source: Realty Trac, Realtor Magazine 12/15/11
Home Improvement Projects That Return Best Value
It used to be kitchens and bathroom improvements that paid best, but according to NAR’s latest Remodeling Cost vs Value Report, that is no longer the case. The report compares construction costs with resale values for specific improvement projects in 80 markets across the country.
This year, exterior replacement projects make up 7 of the top 10 most cost-effective projects. Fiber-cement siding replacements came in first with an estimated 78% return in value. Foam-backed vinyl siding, upscale vinyl siding & window replacements, and exterior door upgrades all provided some of the best returns.
These projects require less expensive materials than kitchens and bathrooms, hence the larger payoff. Do-it-yourselfers could really make these projects pay with saved labor costs, energy savings and ease of future resale with added curb appeal.
Thank you for reading my newsletter- please share with any family or friends. If I can be of service, don't hesitate to ask.
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