Idaho's Housing Market

Increasing home sales triggered by lower priced properties and foreclosures have begun to turn the markets in Idaho. But housing in Idaho is far from stabilizing, which could take at least another year. Unemployment is cooling-off a rebound as the state battles job losses in construction, manufacturing and high-tech.

Home prices nearly doubled in many areas of the state during the boom, and the overly inflated prices are still coming back to earth. In Boise alone, housing values escalated 50% in just over five years due to creative financing and the go-go days of Wall Street.

Although more homes are selling in Boise, it will take at least another year before the market stabilizes to become attractive to more first-time home buyers, despite the federal government's first time home-buyers tax credit. Foreclosures are projected to rise in Boise as more homeowners walk away from their mortgages, triggering a downward trend forecast to deflate housing an average of 10.2% in 2009.

In the neighboring city of Nampa, home sales rose sharply. However, tougher financing standards have made it more difficult for many perspective purchasers to obtain mortgages in the fall-out of the credit crisis causing a slowdown that is entering its third year, despite a spike in sales as a result of the temporary federal tax credit. The crisis has resulted in a rise in defaults, taking a toll on Nampa, forecast to deflate the market 9.1% on average by year's end.

Market Update: First-Time Home Buyers In Portland

I recently read that in Phoenix, 93% of September Home Sales were below $400k. The author says that Phoenix is essentially a tale of two markets, one where homes in the lower priced spectrum are selling & where high-end homes are sitting.

It's interesting to see how the first time home-buyer tax credit has been effecting the Portland market, so I included these numbers to see how Portland compares to the Phoenix sales by price range.

Portland is not quite as high as Phoenix, but still 85% of sales in Portland were below $400,000- which is up about 4% from September of 2008.

Also note that sales below $250,000 are up 9.4% from last September. A lot of those sales can probably be attributed to the $8,000 tax credit.

The tax credit is set to expire on November 30, and the debate rages on in Washington over its extension. It seems to have given the market in Portland a boost, so it will be interesting to see how the market fares if/when it expires.

If the tax credit does indeed expire, it would still take a lot for things to get worse this winter compared to last year. Last January, Portland saw sales activity drag to the lowest total in the Portland metro area since RMLS™ began keeping records in 1992.

Nevada housing market still suffering

The number of residential mortgage loans in Nevada that are either delinquent or in foreclosure reached 18 percent in the fourth quarter of last year, second only to Florida's 20 percent rate, the Mortgage Bankers Association reported Thursday.

"It doesn't look good," said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

The percentage of residential loans nationally that are delinquent or in foreclosure ran 12 percent, six percentage points less than in Nevada.

Nevada's 18 percent rate includes 11 percent of loans that are past due, an increase of more than 2.5 percentage points over the third quarter. Properties going through foreclosure, the other component, jumped 1 percentage point to 6.6 percent.

With the high delinquency rate, Schwer fears the number of foreclosures will rise in Nevada, particularly given the state's high unemployment rate.

"That creates a lot of economic pressure on households that have a mortgage," he said.

But Brock Davis, president of US Express Mortgage in Las Vegas, said many of the subprime borrowers, those with weak credit ratings, already have lost their homes. Lenders have started resetting the rates on adjustable rate mortgages held by prime borrowers, Davis said.

He hopes the number of foreclosures will be smaller, but he is concerned.

"I'm getting questions from good credit people about 'How does it affect me if I walk away' (and allow the lender to foreclose)," he said.

"This new second wave is just as big as the first wave and continues until December 2011," Davis said.

"My personal hope is that the second wave of better credit, first-time home buyers have more credit character and won't have foreclosure rates as high as the first wave of poorer credit homeowners."

Florida Housing Market

I read an article from the Florida Real Estate Journal that I thought I would share for my post this week. Since I have recently expanded the number of states that I can lend in, Florida's housing market is now of a greater interest to me and my readers. The article below is from that publication and discusses what's been going on in the industry, predictions for 2010, and how Florida stacks up against the rest of the country.

The president of a leading Central Florida homebuilder said the worst housing market he’s ever seen could start to show noticeable improvement in late 2010. Until then, homebuilders - and businesses in general - will have to focus on shrewd management to survive.

“In my 37 years of doing it, this is the most difficult time I’ve seen in the overall housing industry and everything that relates to it,” said Robert Adams of Highland Homes.

“This (downturn) is a little different because it was preceded by a high level of demand for housing that was largely artificial in a lot of markets in the country, including Florida,” he said. “Homes were built not for use by the buyer but for anticipated resale by the buyer.”

About 60% of the housing demand was artificial, Adams said, resulting in a near doubling of home prices from 2003 through the end of 2005.

“We have never seen that kind of rapid escalation. It was enabled and facilitated by mortgage programs that allowed a lot of folks to contract for homes who had no business doing it,” he said.

The house of cards began to fall at the end of 2005, Adams said, with housing demand collapsing amid a drop in consumer confidence. The last 18 months have seen an uninterrupted decline in new-home pricing, he said, and new-home starts in Polk County have fallen to an annual rate of 1,000 from 8,500 in 2005.

“We got left with a glut of inventory. Those things combined made this (downturn) very difficult,” he said.

The good news, Adams said, is that existing-home inventory is beginning to be absorbed, which must happen before a market recovery takes hold. The Florida Association of Realtors reported a 20% increase in sales in February from one year ago.

“Meanwhile, it’s a very competitive environment among the homebuilders striving to carve out a piece of a substantially reduced pie,” he said.

Highland Homes - which has about 20 projects in Polk, Hillsborough, Pasco and Lake counties - has seen a 40% drop in business from the most recent peak, compared to 75% for the industry in general, Adams said. Highland Homes’ pricing ranges from the $120,000s to the $250,000s.

Adams said he plans to expand Highland Homes into the Orlando market on a very limited basis, but he doesn’t expect an upswing in the housing market or a change in first-time home buyers confidence for some time to come.

“I don’t see much change for the foreseeable future. We’re prepared to slug it out through 2009, and we’ll be in the same environment through most of 2010. I would hope as 2010 comes to a close that we’ll see some improvement,” he said.