Boise Mortgage Applications

Loans in the Boise real estate market are getting a bit easier to get again since the bailout plans are starting to work.  It is a good sign to get some of the inventory moving in the Treasure Valley.

Mortgage applications rose last week after hitting an eight-year low the previous week.

The Mortgage Bankers Association’s seasonally adjusted mortgage applications index rose 16.8 percent from 408.1 the prior week to 476.6 last week. On an unadjusted basis, the index increased 29.6 percent compared with the previous week, but was down 30 percent compared with the same week last year.

Much of the increase was in refinance applications, which rose 28.5 percent compared with the previous week. The index of conventional purchases rose only 7.9 percent.

Falling mortgage rates encouraged the increase in applications:

* 30-year fixed-rate mortgages decreased to 6.26 percent from 6.28 percent
* 15-year fixed-rate mortgages decreased to 6.01 percent from 6.05 percent
* 1-year ARMs decreased to 6.90 percent from 6.97 percent

Source: Mortgage Bankers Association (10/29/2008)

Boise Real Estate Inventory

The Boise real estate market inventory is dropping and that is good for homeowners in the area.  There are currently 4,600 single family homes on the market in Ada county which shows a 24% drop from just 4 months ago when there were 6,100 single family homes available.

Bargain hunters and home owners who pulled their properties off the market hoping for better days down the road helped shrink the inventory of available homes in September, according to a Wall Street Journal survey.

The largest year-over-year declines in inventory were 32.1 percent in Sacramento, 27.1 percent in Orange County, Calif., 21.6 percent in Los Angeles, 21.5 percent in Boston, 21.1 percent in Denver, and 20.6 percent in San Diego.

Demand for housing has slowed even as the population has increased, according to Census Bureau figures. Mortgage Bankers Association chief economist Jay Brinkmann blames lack of jobs, noting that young people don’t go out on their own nearly as frequently during tough times.

With that being said, if you are looking to buy a home in the Boise real estate market, now is a  great time before the inventory drops even more.  If you are a seller, it is not great yet, but things are looking up.

National Home Sales Are Up

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.  These numbers and stories effect all markets including the Boise real estate market.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

“This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac,” Yun says. “Inventory remains high, and price declines are pressuring owners.”

Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street.

“Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

* Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

* National median existing-home price: $191,600 in September, for all housing types. That’s down 9 percent from a year ago when the median was $210,500.

“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions,” Yun says. “These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

* Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

* Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here’s a breakdown across the country of existing-home in September:

* West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

* Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

* South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

* Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: NAR

Rescue Money: How To Use It

Despite the fact that the $250 billion the government plans to invest in banks is intended to help them make new loans, J.P. Morgan Chase, BB&T, and Zions Bancorporation are among the financial institutions hoping to use the money to acquire other banks.

While some experts are worried such deals could further the trend of creating banks “too big to fail,” others believe they could prevent the failure of numerous small banks and boost the economy.

U.S. Treasury Secretary Henry Paulson acknowledged that the money could be used to acquire smaller, weaker banks. He stated, “There will be some situations where it’s best for the economy and for the banking system for there to be a consolidation.”

Source: Washington Post, Peter Whoriskey and Zachary Goldfarb (10/22/08).

Mortgage Rate Disclosure

There is some new regulation on lenders today from the feds.  On Monday, the Federal Reserve created new mandates that make it a requirement for mortgage lenders differ between prime mortgages loans and the higher-priced ones offered to less-affluent borrowers.

New Regulation C rules will require disclosures to prospective borrowers if the difference between prime and subprime rates is equal to or greater than 1.5 percentage points on a first-lien loan or greater than 3.5 percentage points on a second mortgage.

The Fed said that in defining the rules for rate disclosure, it tried to avoid requiring comparisons among prime mortgages why demanding disclosures only for subprime mortgage rates.  This could be a really good thing that we need to keep our the lending industry regulated.

Fraud Warning in Boise?

Even in Boise, there is quite a bit of buzz as you have seen, but the housing bust has not ended mortgage fraud – hucksters are just finding new ways to make dishonest bucks.

The number of fraudulent loans issued during the second quarter this year increased 45%, compared with the same period in 2007, according to the Mortgage Asset Research Institute (MARI), a service of LexisNexis.

The group counts as fraud any misrepresentation intended to get a better deal on a mortgage or a home sale.

During the boom, that might have meant a buyer who inflated his income to qualify for a bigger loan. Some went so far as to get a fake appraisal, invent a fake buyer, and after securing a mortgage, absconding with the cash.

Such ruses may not work in this environment, with lenders tightening up their standards.

But several scams still are effective, according to Jim Ronan of Interthinx, a provider to lenders of fraud-prevention services, and Robert Hagberg, a fraud investigator for mortgage giant, Freddie Mac.

“It’s a constant battle to keep up with the innovative ways that scam artists come up with to defraud others,” said Vincent Robago, an Arizona assistant attorney general who works on mortgage fraud cases, “especially in the real estate industry where transactions are very complicated.”
The new appraisal fraud

One modern gambit is under-appraising property values.  In the Boise market, property values have not taken near the hit as they have in most other states.

These schemes involve short sales, which come up when a struggling homeowner is “underwater,” or owes more on his mortgage than the home is worth.  I have run into this quite a bit in the Boise area and I can’t believe how
many so called “investors” there are out there trying to make a buck
When done legitimately, the owner sells the home for the lower market value, and the lender agrees to accept just that amount and forgive the difference.

When illegitimate, fraudsters fake very low appraisals for the homes and use those appraisals to justify low short-sale prices – well below true market values.

If busy bankers don’t check the appraisal closely, they may agree to sales of homes that should be worth $200,000, for $150,000 or even less.

The buyers – in cahoots with the owner – then flip them for a big profit.
The new ‘liar loan’

Another fraud, one more often committed by average buyers than by career criminals, has also morphed into something new.

During the boom, many borrowers misrepresented their income or assets with “no-doc liar loans,” approved on the basis of good credit scores with no documentation.

After the mortgage meltdown, no-doc loans vanished, but applicants who lie have not.

“Liar loans are now fully documented – but with really good fraudulent documents,” said Hagberg.

In one case investigated by Interthinx, a New York man buying an investment property in Georgia provided documents that showed double his actual salary.

Advanced information technology and photocopying equipment have gotten so accurate that very convincing papers, including income statements, savings accounts and tax returns can be produced on demand.

Ronan said there are Web sites, such as replica.co.uk, that provide believable documents that scam artists use.

“Because the site says it’s for ‘novelty purposes,’ you can’t really do anything about it,” he said. “They don’t say it can be used to defraud.”

Scams that misrepresent income or employment are still the most common type of fraud, according to MARI.
‘Buy and bail’

This is a new scheme that had no equivalent during the boom years.

You’re underwater on your mortgage and want a new, cheaper home down the block.

You could just bail on the existing home, but no lender would give you a mortgage for the new one.

So you tell the bank you plan to rent out the current home – even though you have no intention of doing so.

“This is a very difficult scam to pin down,” said Jennifer Butts, a spokeswoman for MARI, because the rental agreements that borrowers proffer may not be scrutinized by lenders.

The Federal Home Administration announced in late September that it hoped to head off many buy-and-bails by no longer insuring mortgages if the homeowners had existing loans – unless they could show enough income to pay off both loans simultaneously.

But don’t sell fraudsters short – they’ll probably find brand new ways to get around the policy.

Eagle Idaho Luxury Homes

Well, it is probably no secret by now that Eagle, ID is a great place to live just outside of Boise, ID.   The best thing about the Eagle real estate market is the fact that most of the homes in the area are newer, nicer, upscale subdivisions such as Two Rivers, Island Woods, Banbury, Castlebury and more.  You most likely won’t be buying an Eagle luxury home that is right next to starter home.

Search for Eagle area luxury homes here below.

$250 Government Bank Bailout

The United States Treasury announced today that they would purchase $250 Billion in preferred stock in some US banks.

“Government owning a stake in any private U.S. company is objectionable to most Americans – me included,” Treasury Secretary Henry Paulson said in a statement. “Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable. When financing isn’t available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop.”

How will this move on the Boise real estate market?  Only time will tell, but it seems like something had to be done to prevent further collapse.  There are some great deals out there in the market and interest rates are great, so if you are looking to buy, now would be a great time.  Don’t wait until buying in Boise becomes popular again.

Tuscany Subdivision – Meridian

Tuscany or “Messina Meadows”, “Messina Village” and “Tuscany Lakes”  is a beautiful subdivision in S. Meridian, ID.  Some of ammenities include: 4 community pools, clubhouse, 6 acre community park, pocket parks, basketball courts, and a new K-8 Magnet School.

It is a great place to live and is in a great location for access to I-84 if you need to commute to downtown Boise.  Tuscany should be a primo location for you if you are looking for a newer home between 250k-500k in Meridian.

Boise Area CMA Request

Everyone who has ever sold a car knows they have to first find out how much it is worth and what people are willing to pay for it. It’s easy to gather the information you need to set a price from newspapers, the Blue Book, or online used car sales sites. When you’ve gathered this information you can then set a price that potential buyers will find attractive. It’s really pretty simple and requires very little pricing expertise.

If you want to sell your home, it’s not so easy and it’s certainly not simple. The value of your home is much more difficult to predict and the information available to home sellers can be untrustworthy. Online home valuation sites are fun to play with, but they are based on past sales, not current market factors. Newspaper listings give you some information, but houses are usually so different that it’s hard to compare.

The best method available to home sellers to learn their home’s current value so they can select the best sale price is a CMA, or Comparative Market Analysis. CMA is the term real estate agents use when they conduct an in-depth analysis of a home’s worth in today’s market.

The best part about a CMA is that it’s usually free!

When should I ask for a CMA?
If you don’t get a CMA before you list your home you might try to sell it for the wrong price. Setting the price too low means you’ll get less money for your home; setting it too high means it might not sell at all. Every real estate agent in the country will want to complete a CMA on your home before helping you sell it. Sellers who haven’t yet chosen a real estate agent often ask several agents to complete CMAs so there is opportunity to meet different agents and to see how they work.

How is a CMA prepared?
First, an agent will walk through your home. The home does not have to be in perfect condition. However, property condition does affect price, so if you plan to do work on the property, let the agent know. At this point the agent may recommend improvements to increase your home’s value.

Second, the agent will research information about comparable properties in the area, usually using a real estate industry resource called the Multiple Listing Service. This includes:

• Properties that have sold and closed within the last 12 months
• Active listings – properties currently for sale
• Pending sales – listings that have sold but not yet closed
• Expired listings – properties that did not sell during the listing period

Lastly, the agent suggests a probable selling price. Don’t be surprised if a CMA results in a price range rather than a set price, particularly in markets were there are price differences due to property size, age, architectural style or physical condition.

What can you expect to see in a CMA?
A completed CMA is presented in the form of a report, which includes the selling price, detailed information about your home, and the comparable properties that were researched to determine its value. Because the price derived from a CMA is somewhat subjective, some agents may include brief statements on the perceived selling points your home.

A CMA is not an appraisal.
A real estate appraisal is a comprehensive evaluation performed by an independent professional appraiser. With a CMA, the agent’s experience in the business and familiarity with the local area can affect the accuracy. Typically, a CMA prepared by an experienced agent with good knowledge of the local market is right in line with your home’s appraised value. A CMA can therefore be a very useful tool in a real estate transaction.

When selling your car, an incorrect price might cost you a few hundred dollars. If you set the wrong price for your home, you could lose tens of thousands of dollars. Do your homework and ask a real estate professional for a Comparative Market Analysis to ensure you get the most value for your home.

Paulson and Neel In The Way?

That stands for Troubled Asset Relief Program, and it’s the centerpiece of the federal government’s effort to take bad mortgages and other toxic financial products off the books of banks.

The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers – thereby helping to ease the current credit freeze.

TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.

Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kashkari and he’s an aeronautical engineer by training who used to work on satellite designs for NASA.

High on Paulson’s and Kashkari’s priority list will be to quickly start buying up defaulted “acquisition, development and construction” (ADC) loans made by local and regional banks to home builders. That’s potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.

Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular “piggyback” plans that allowed people to purchase homes with no downpayment.

Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.

Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks — and that’s extremely important — its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.

Still another key priority: Reworking the repayment terms of tens of thousands of “underwater” and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.

That, in turn, should gradually begin to have positive impacts on local real estate market conditions.

But don’t expect miracles overnight. This is going to take months and years to fully work its way through the system.

In the meantime, Realty Times will keep a close eye on TARP — and keep you posted on important developments.

Boise Real Estate Stats

Boise MLS Search – How It Works