2011 December sales were 477 in Ada County, a decrease of 9% over December 2010.

Total sales for 2011 are 6,299; up 7% over 2010. In July of 2011, we exceeded YTD 2010 sales for the first time in 2011. This is our first year-over-year increase, without influence of the home buyer tax credit, in a few years. This is our first time crossing the 6,000 homes sold threshold since 2007…how long ago that seems!

Marc Lebowitz, ACAR Executive Officer, The Idaho Statesman calls Marc “the guy who’s always saying now is a good time to buy.”

December sales decreased 3% from November’s 487. Historically, December sales decrease from November.

Of our total sales in December… 48% were distressed….up 1% from November 2011. In January 2011, 57% of our sales were distressed. We have seen a mild overall increase in the percentage of sales in distress. In July we were down to 42% overall and have seen the amount increase one to two points each month.

For homes sold in December, the average number of “Days on Market” was 86. This is essentially unchanged from last month. Down from 90 days last year this time and down from 93 days in January 2011.

Pending sales at the end of December were 691; a decrease of 7.5% from the end of November. This represents the smallest number of pendings in 2011. That is fairly consistent with historical data. The percentage of pending sales in distress increased 1% from November, totaling 49% overall. This is the highest number of pending sales in distress we’ve had since early spring. Even so, we are now at eight consecutive months below 50%.

At the end of December, we had 20% more sales pending than at the end of December 2010.

December median home price held at November levels. Overall median price was $149,300; up 1.2% from December 2010. For all of 2011 our median was down 6.97%. That is a significant improvement from where we were in January 2011: down 20%.

New Homes median price for December 2011 was $223,739; an 24% increase from December 2010. Year-to-date new homes median is up 15% over 2010 to $237,500.

The number of houses available continues to decrease. At the end of December our total active inventory was 1,991 homes. This is down 9% from November and 25% less than last year at this time. Our inventory has fallen below where we would call the market “in equilibrium”. We are now in a “shortage”.

At the same time, the percentage of distressed active inventory held steady at 36%. We have been hovering between 33% and 36% since May. We remain well below the 40% levels set last spring….when we were on the increase.

In Ada Countywe have 4.2 months of inventory on hand…historically this number defines a strong “seller’s market”. The price category in shortest supply is <$119,000 with 2.5 months. In the range of $120,000 to $159,999 we have 3.9 months. All price points up to $400,000 have less than 5 moths supply. We have benefited all year from inventory levels much lower than national average. now, however, we are starting to see some slowdown in sales as the inventory continues to fall.

Based on December sold data, our most desirable price point is $120,000 to $160,000 which made up more than 20% of total sales.

There is no longer any doubt that, in Ada County, we have passed our “low water” point.

The challenge to our continued recovery is available product.

Talking with our 2012 President, Kit Fitzgerald, we don’t see new homes construction being able to keep up with the demand, especially as we move toward Spring.

Financing for builders is still extremely difficult to come by. In Kits words: “Without sticks in the ground, there is no excitement. Without excitement there is no sales growth.”

Sure, we will see median price increase over the next months, but when we get to April and the pent-up demand comes roaring out of winter hibernation…then what?

Another thing I learned from Kit…the desires of new home buyers have changed…about the lots they want to build on. Gone are the days when .13 acre was an acceptable lot size. Buyers now want .25 or more….and there’s very few of those anywhere in Ada County.

Its going to be an interesting Spring.

If I was listing and selling I’d be brushing up on my multiple offer negotiation skills and brush off those old escalation clauses….who would’ve thought?

(Reposted with permission.)

Real Estate Predictions for 2011

Predictions for 2011 are wide-ranging:

• Some say home prices will rise in 2011
• Some say home prices will fall in 2011
• Some say mortgage rates will rise in 2011
• Some say mortgage rates will fall in 2011

The problem with housing and mortgage predictions is that — like all predictions — they’re just educated guesses about the future. Nobody knows what will really happen with the housing and mortgage markets in 2011. All anyone can do is theorize. As laypersons, though, it can be hard to separate theory from fact.

Television can make that task even more difficult at times.

As an example, when a well-dressed economist goes on CNBC and presents a clear, succinct argument for why home prices will fall on 2011, we’re inclined to believe the analysis and conclusion. After all, the outcome seems plausible outcome given the facts. But then, immediately after, a different economist presents an opposite argument — that home prices will rise in 2011 – and her analysis seems sound, too.

Even Freddie Mac can’t see the future.

Last year, the government group predicted mortgage rates to 6 percent in 2010. That never happened, of course. Instead, conforming mortgage rates dropped over a 7-month period this year to levels best be described as “historic”.  Freddie Mac couldn’t have been more wrong.

So, what’s a Boise homeowner to believe?

About the only thing that’s certain right now is that mortgage rates remain low by historical standards, and that home prices do, too. Also, that both housing and mortgage markets appear to be riding momentum higher into 2011.  This suggests that it will be more expensive to buy and finance a home by the end of 2011.

Until that time, however, predictions are just guesses.

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Unlike rent which is paid in advance at the start of a month, mortgage interest is only paid after it’s been borrowed. Your January mortgage payment, therefore, accounts for the interest that accrued in December.

And for a lot of Idaho homeowners, that mortgage interest is tax-deductible.

By making January’s mortgage payment in December, eligible homeowners can apply the interest paid to 2010′s tax returns instead of waiting to claim the same deduction against 2011. Don’t cut it close, though. It’s best to remit payment prior to the last week of the month, leaving your servicer ample time to receive and process your paperwork.

Most importantly, though, before prepaying on your mortgage, talk to your tax professional.

Not every homeowner is eligible for mortgage interest tax deductions, nor should every homeowner itemize their respective tax deductions. The “pay early” plan could be a wasted effort for you, ultimately, depending on your taxpayer profile.

If you don’t have an accountant that you trust, call or email me anytime; I’m happy to make a recommendation to you.

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The Deficit Reduction Commission has released its recommendations toward reducing the U.S. deficit, which include modifying a number of popular tax breaks, including the mortgage interest deduction. President Obama created the 18-member, bipartisan commission earlier this year to identify ways to balance the budget by 2015. The commission does not have any legislative power, and Ada County Association of REALTORS says that the commission’s report is just the first step of a lengthy process.

mortgage interest deduction

“Now that the report has been published, it is reviewed by members of Congress who will decide if they want to incorporate any recommendations into legislation, although they are not required to do so,” said Jim Paulson, President, Ada County Association of REALTORS® (ACAR). “If altering the MID ever becomes a discussion point in Congress, the Realtor® community stands ready to defend it. The MID is both a powerful incentive for home ownership and one of the simplest provisions in the tax code.”

The MID allows an individual to deduct mortgage interest paid on mortgage debt of up to $1 million. The deduction is available for interest on mortgages for a principal residence and one additional property. Individuals claiming the MID also must itemize their taxes.

The ability to deduct the interest paid on a mortgage can translate into significant savings at tax time. For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year.

According to the most recent IRS tax return data available, 65 percent of families who claim the MID earn less than $100,000 per year. “Home owners already pay 80 percent to 90 percent of U.S. federal income tax, and among those who claim the MID, almost two-thirds are middle-income earners,” said NAR’s Chief Economist Lawrence Yun. “If the tax break is modified or eliminated, home values could fall 15 percent nationwide, as buyers discount the value of the MID in their purchase offers.”

ACAR said the MID saves the average home owner thousands of dollars at tax time and helps American home buyers get into their first house.

“In today’s market, eight out of 10 home buyers must borrow money to buy a home,” said Paulson “For aspiring home owners who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the mortgage interest deduction help them begin building their future through home ownership.”

(Used with permission, Ada County Association of Reators, ACAR Watercooler blog)

Bright spots in the housing market

 from the truth.  In fact, there are some very bright spots in the housing market.

Standard & Poor’s/Case-Shiller 20-city home price index released today increased 0.6 percent in July from June. The national gauge of home prices ticked up in July for the fourth straight month.

The National Association of Realtors reported that sales of existing (previously owned) homes shot up 7.6% in August to a seasonally adjusted annual rate of 4.13 million units.  Another sign of strength is that the median sales prices actually increased, which shows that homes are not being moved due to lower prices.  The median sales price rose 0.8% to $178,600.

Sales grew in every region of the country.  They rose by 14% in the West, 8% in the Northeast and 5% in the Midwest and South.

(Waterstone Mortgage)

 That’s because some creative bookkeeping at HUD has spread the scheduled increase in FHA’s mandatory mortgage insurance premiums over the life of the loan, and will actually reduce the up-front payment at closing from the current 1.75 percent of the loan to 1.00 percent.

FHA lowers upfront fees

However, monthly mortgage insurance payments will increase from 55 to 90 basis points.  On a $275,000 mortgage, the change in payment would be about $70 higher a month.  On a $125,000 mortgage, the increase would amount to about $27 more a month.

Even though recent legislation passed by Congress authorized HUD to raise upfront mortgage insurance premiums as high as 2.25 percent of the loan, an increase that was originally scheduled to take effect today, HUD has decided to raise the annual premium and correspondingly lower the upfront premium, except for Home Equity Conversion Mortgages (HECM), so that FHA is in a better position “to address the increased demands of the marketplace and return the Mutual Mortgage Insurance (MMI) fund to congressionally mandated levels without disruption to the housing market,” according to a message circulated to FHA lenders September 1.

As expected, this change is causing confusion in the marketplace.

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100% Financing Available

Home prices are fantastic right now and mortgage rates are at historical lows. Call and get prequalified — or apply online, you could be living in your very own home this year, (208) 287-1717.

(Home Loan Boise)

One-third is a very sizable number and combined with consistently low mortgage rates at or near their historic lows, the stage is set for entry-level home sales to continue to surge. As the entry-level market continues to improve, that provides demand for those that are moving up to the next price level.

While renters are eager to own, they are concerned about the unemployment picture, the economy, and down payment options.

See:  100% Financing for Idaho First Time Homebuyers

(Home Loan Boise)

WASHINGTON – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.

Underwater Homeowners

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – or ‘underwater’ – because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.

“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”

Over the past week, Congress has taken quick action and passed H.R. 5981. The bill gives FHA the authority to adjust its annual mortgage insurance premium, yielding approximately $300 million per month in value to the FHA Mutual Mortgage Insurance Fund at a time when its reserves are perilously low.

As I have previously stated in my testimony before Congress, FHA will lower its upfront premium simultaneously with the increase to the annual premium¹. It is our intention that effective on September 7, 2010, FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years². A Mortgagee Letter will be forthcoming once President Obama signs the bill into law, but with today’s passage of H.R. 5981 and our expedited implementation schedule, I wanted to immediately inform the industry of our plans so the lending community can begin preparing for the operational and system changes required to implement FHA’s new mortgage insurance premium structure on all new case numbers by September 7, 2010.

With this authority, FHA is in a better position to address the increased demands of the marketplace and return the MMI fund to congressionally mandated levels without disruption to the housing market.

While we appreciate and applaud this recent action, there is still work to be done. HUD remains steadfast in its commitment to comprehensive FHA reform legislation, similar to the FHA Reform Act passed earlier this year by the House, which would further enhance FHA’s lender enforcement capabilities and risk management efforts. We hope Congress will take swift action to pass a broader FHA reform bill when they return from the August recess. FHA’s risk management efforts will not be complete without the ability to monitor lender performance and ensure compliance with our rules.

Although the transition timeframe is short, implementation by September is critical. Thank you in advance for the efforts of you and your organization to make this change happen on such short notice. We appreciate your hard work and continued partnership.

¹The upfront and annual premium changes do not apply to the following FHA Programs: Title I, HECM, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian Reservations), Section 223 (e) (declining neighborhoods), Section 238(c) (Military Impact areas in Georgia and New York).

² LTV’s <= 95% will increase to 85bps and LTV > 95% will increase to 90 bps

Home Loan Boise  and Waterstone Mortgage – Prime Equity Group