Congress has recently passed H.R. 5981. This bill gives FHA authority to adjust (increase) its annual mortgage insurance premium. Concurrent with the increase will be a decrease to the Up Front mortgage premium.   This will become effective on September 7, 2010.  HUD Assistant Secretary David Stevens said that this would yield approximately $300 million per month in value to the FHA Mutual Mortgage Insurance Fund. As the reserves are critically low as a result of the effects of mortgage defaults, this is a necessary move.

All FHA guaranteed loans must have mortgage insurance. The premiums are two-part: 1 – the Up-Front mortgage premium, which, on September 7th, will be 1% of the loan amount. And, 2 – the monthly premium, which will be .85% to .90% of the monthly payment.

The hit on a $200k loan with a 30 year term will be an additional $43 per month. Over the course of the 360 months of the loan, the cost to the borrower will be an additional $15,480.

Unlike conventional loans, where once the principal is reduced to 80% of the value, the MI can be dropped, FHA requires MI for the life of the loan. The primary benefit of an FHA loan is that the borrower can purchase a house with as little as 3.5% down.

If you’ve been looking to buy via an FHA loan and can get it done before September 7th, you can save yourself some serious money.

Regardless, house prices are really low. The average price hit a low last April at somewhere around 38% below what it was four years ago. And, loan rates are hitting historic lows. If you can do it, now is the time to buy.

On July 27^th, the Conference Board reported that its Consumer Confidence Index fell to 50.4 from June’s revised reading of 54.3.

When will confidence improve?  We all know the two basic answers to that question are:  One, just as soon as individuals begin to see steady increases in employment, and two, as soon as the general public gets a sense of how their personal finances and tax burden are going to be affected by all the recent government actions.

A big boost to confidence will come with Job growth.  New jobs are not only good for the unemployed, they also provide a greater sense of security to those already employed.  Additionally, there soon will be some clarity on how our individual tax liabilities are going to change.  Then, consumers can again begin making decisions on longer-term commitments.  These two facts will have a compound positive effect on the housing market.  For, as confident buyers emerge, the housing market’s return will accelerate, and values will begin to climb.  Along with that, under-water owners will be floated to a positive equity position again, reversing the foreclosure trend.  There is potential for the return of the housing market to have an accelerated start.

The return of the housing market will be driven by two strong forces.  The first is buyers who deferred their purchases when the market slumped.  And, the second is the back-up of new buyers as a result of population growth over the course of the downturn.

This will put pressure on inventories.   On a Trailing-Twelve-Months basis, Ada County currently has 6.6 months of inventory.   That number as of early last year was in the 14’s.  There is no slack in the system.  New home construction has been negligible for the past couple of years, and a start up won’t happen quickly since development of the land is necessary before any construction can happen. 

These dynamics indicate that the early bird will: get the best selection, lowest price, capture the greater amount of appreciation over time, and at today’s rates, borrow at the lowest rates in over 60 years.

So, monitor that consumer confidence.    But, it will only confirm what you’ll already sense – everything seems a bit better than it did yesterday . . .last week . . .last month.  At this point, the green light comes from your gut.  Make the move!

I’ll help you do it.   – Alan Smith      http://www.AlanSmith-RE.com       (208) 473-0343

What are Boise area single family home prices doing?  Are there more, or fewer Short Sales and Bank-Owned properties?  Where is the market headed in the next six months? 

Well . . .let’s see.   Sales Activity:  . . .after a no-surprise, anemic January and February start for Ada County, total sales jumped up to the low 600’s in March, and hit the high 600’s in June. 

Prices:   Since last November, the Average and Median SFH (Single Family Home) price in Ada County has bottomed twice.  Since the second bounce in April, both Average and Median prices have risen over the past two months. 

Shorts and REOs (Bank-Owned):  . . . for the first six months of the year have averaged 16.7% and 27.4% of total monthly sales, respectively.   The trend has been that each has given up share to greater sales of non-default properties . . .yes, really! 

Values:  On a Dollars-Per-Square-Foot basis, the Ada County average is $101.77 – ranging from a high of $125 (NE Boise) to a low of $76 (Kuna).   There’s no denying that default properties have affected the prices of Non-Default listings.  But there still is a pricing premium for no-stories offerings.  That premium amounts to an additional (county average) of 18% over Shorts, and 24% over REOs.  Like with Dollars-Per-Square-Foot, pricing premium differences by type of sale vary from area to area. 

The Next Six Months:  Who knows.  I mean really.  Right now, it’s hard knowing how the implementation of new, major legislations (health care, financial regulation) will affect the public and private sector tax-wise.  That will become clearer as time goes by, as regulations and policies directed by the legislations are written.  The problem is, right now it’s hard to judge the extent of the hit.  But, over time, individuals will begin to find out how they’ll have to adjust, financially.  At that point, collective economic activity (retail purchasing, saving rates, capital spending, and hiring) will begin to indicate the rate at which the economy is going to return. 

We are heading for a rebound.  It appears that the local real estate market is improving.  Coincidentally, loan rates are at historic lows.  If I were looking to buy, or considering selling (to buy up or down), I’d think about taking advantage of the situation.  It may sound counterintuitive to sell now, but it’s either sell low and buy low, or sell high and buy high. 

Call me.  I’ll be happy to do a quick analysis of your house and its relative market.  If you’re looking to buy, I will provide you with data to help with your selection decisions. 

Alan Smith – www.AlanSmith-RE.com   (208) 473-0343

For sales of Single Family Home in June for Ada County . . .of the three type of sales (Non-Default, Short, and Bank-Owned), here are the comparative numbers for their average square feet, average dollars-per-square-feet, and the average lot size. 

                              Avg SqFt    Avg $$ PSF  Avg Lot Size (ac)
Non-Default         1975           $106.21           .224
Short Sale             2215           $ 89.08             .295
Bank-Owned        2343           $ 84.17             .31 

Here’s what that tells us: Bank-Owned sales prices are 5.6% less than Short Sale prices. Sold prices of Non-Default homes are 19% greater than those for Short Sales and 26% greater than those bought from the banks. 

There is a premium buyers are willing to pay for a “no-stories”, conventional transaction. Adventurous buyers, looking for a bargain are willing to attempt to find it via a Short Sale – accepting an “as-is” property condition, and a third party to the sale (the lender). An even greater bargain can be found with Bank-Owned offerings. The trade-off here, is that the “as-is” condition most likely has been affected by a longer period of dereliction. 

Additionally, a trend not shown by these numbers, but none-the-less interesting, is the share of total sales for Non-Default homes over the past five months, ie. 46%, 52%, 51%, 55%, 62%. The remainder being split generally 2-to-1, the heavy side going to the Bank-Owned properties. The loss given up for the shift to the increased share of Non-Default homes comes almost wholly from Short Sales. So, the monthly average so far for this year for the share of Short Sales and Bank-Owned properties to total sales is 17% and 29%, respectively. 

So, what’s that fact worth? Nothing, really, when trying to devine a trend. And that’s because, there are so many factors that are currently influencing the market. Any one, or number of which, can influence different people differently. And that will be the case until some of the vagueness as to how individuals and the economy will be affected by all the recent government actions intended to improve the economy and our lives, resolves to clarity. 

Here’s what we do know: Mortgage rates are at historic lows. Housing prices are at, or near, the bottom. The economy will eventually recover. The average length of home ownership is seven years. And , using the past 75 years of home prices as a guide, home values in seven years will be higher than they are now (and the same can probably be said for mortgage rates).

Freddie Mac, 6/24/2010 – “30 yr fixed rate at 4.69, the lowest level in 39 years. 15 yr fixed at 4.13%” 

There’s no better time to get out from under that higher-than-current-interest-rate-mortgage you have by refinancing to one of today’s low-rate loans. Better yet, if your home no longer provides the solution to your practical needs, use that new low-rate loan to get a house that does! 

Whether you need to move up, or want to downsize, doing it now makes the most sense. Rates are low, homes are a bargain, and the housing market is poised to begin its upswing. The return of the market may come at a less robust rate than its historical average, but appreciation is appreciation. 

So, if you’re considering a new mortgage, you might as well apply it to a house that will put a longer-term smile on your face. 

Call me, I’ll find that Boise area home for you

Alan Smith – http://www.alansmith-re.com/

Easy.  The services of their real estate professional.  The resources they have available to source, select, and screen for qualifying properties can’t be matched by anyone.  The Realtor’s value is additionally enhanced by the Realtor’s personal knowledge of, and experience with, the area they serve. 

All this is provided to the buyer for free, as the seller is the party that pays the commission.  There is no better deal on the planet.  So if you’re at the starting point of looking for a house, engage a professional.  A licensed Realtor is equipped to manage the necessary disclosures, documents, and process to make a stressful transaction as stress-less as possible. 

With consideration to the seller providing the commission, there’s a considerable amount of value received on that side of the transaction as well.  With respect to the listing agent’s resources at hand, there is no better way to optimize the marketing of a property.  The greatest element of the value received, is time – as in successfully selling a house in the shortest amount of time possible.  Obviously, this is unquantifiable.  But, a home on the market month after month continues to generate utility bills, taxes, and mortgage payments.   Each successive month on the market effectively reduces the seller’s realized equity. 

A house isn’t sold unless it’s seen.  Bringing it to the attention of prospective buyers is another value a Realtor can provide.  Property listings in the regional Multiple Listing Service database are also reflected in searches home shoppers enter on the Realtor.com website – you can’t broadcast any more widely than that.  Add-in the exposure from other media sources like Craig’s List, Facebook, YouTube, and others, and a Realtor’s leverage for marketing the sale of a home can optimize the speed at which the home sells. 

If you’re looking to buy, or sell, in the Boise, Idaho area, give me a call.  Also, I have experience with relocations.  If you have chosen Boise as your new home, I can help you find a home and settle-in. 

Alan Smith – http://www.AlanSmith-RE.com

This is an update on my blog of May 13^th – which was a “to-date” snapshot of May’s sales activity.  My general point in that blog was to show that April’s decline in average and median home prices in Ada County was a result of an increased volume of purchasing in the lower price ranges as buyers took advantage of the First-Timer / Move-Up tax credit before it expired – and prices would “re-adjust” following the end of the tax credit offering.  Tax-credit-advantaged sales contracts were no longer allowed after April, and must settle before the end of June. 

Checking-in again on May’s sales still supports that assumption.  Through the 26^th of May, average and median home sales prices have risen 4% and 3% respectively.  Total unit sold now extrapolate to 544, rather than the 421 indicated earlier in the month. 

Here’s the graph with May’s extrapolations plugged in.  If this was a chart of two stocks, you might hear some analyst saying . . .“looking at that double bottom, I’d say we’re done dropping”.

 The total number of home listed has risen also.  So, even in the headwind of a larger supply, prices are showing a rebound. 

If you’re considering buy or selling, call me.  I am happy to consult with you regarding your plans, and how to make the most of them in the current market. 

Alan Smith – www.AlanSmith-RE.com

In my previous blog I reported that the Average and Median sold prices for Single Family Homes in Ada County had dropped again for April.  But, I also suggested that the true market in the Boise area was flat, or beginning to rise. The continued decline in home prices as reflected in April’s numbers was skewed by an unusual amount of activity in the lower price ranges as buyers took advantage of the buyer’s tax credit before its end.

 So, let’s take a look at May’s numbers so far. To date, 153 houses have sold at a median price of $159,684 (vs April’s $149,900), and an average price of $183,934 (vs $173,981). Activity has likewise adjusted. There have been eight sales days, with 22 remaining. Extrapolating the 153 sales to the end of the month suggests total sales will be 421. That’s a good bit off of April’s Tax-Credit fueled 659. However, it’s back within the usual range of 14 to 17 percent of total listings offered.

 So, at least through one third of May, sales results indicate that the market is not continuing to decline. Good news! I’ll confirm it when May concludes. This is the most current indication of the Boise real estate market I can provide. But, if you’re contemplating either buying or selling, you need to have the most current information possible.

 When you decide to pull the trigger, give me a call. I am looking forward to helping you.

 www.AlanSmith-RE.com

The Median and Average Ada County home prices continued their decline through April.  In December and January, both had risen slightly, only to retreat continuously over the next four months.   But, I think that trend is a phantom, and we’re doing better than that, price-wise.

Here’s why:  The First-Timer, Move-Up tax credit qualification ended with April.  The rush by buyers to take advantage of it had an effect on the volume of purchases at the lower price ranges.  That volume is evidenced by two facts.  One, 62% of April’s sale prices were at, or below, the Average Price for April.  Two:  total sales represented 21% of total active residential offerings for the month.   Going backwards to December, that metric looks like this – 18%, 12%, 9%, and for December, 12%.

Without that tax credit effect, there would be a more usual distribution of sold prices.  There would be less skewing to the lower price ranges.   We’ll see for sure in May’s results.  But, I’d be willing to bet right now, that the trend we will see will be an indication of support for a bottom, or possibly even a slight trend up.

If you have been contemplating selling your house, but waiting until prices began to return, then now is the time to start conditioning your house for the market.  I’m pretty sure you’ll hear the starting gun fire as soon and May’s numbers are compiled.

Then, call me.  I’ll sell your house for you.  (208) 473-0343