Posts Tagged ‘ market bottom ’

Home Prices- Pre-Bubble?

In a recent Wall Street Journal article it was discussed that we are now at pre-bubble prices for housing. (Pre-bubble is considered to be pre 2003.) Nationally there are still pockets that are over valued (Seattle, New York, Portland , Oregon and Charlotte).  Place like Cleveland are so undervalued that their prices are considered to be at the 1991 level! Economists are expecting another 5-10% drop. But that is nationally, and as I have said in a prior post, real estate is local!

So I checked the Intermountain MLS to see if the data agrees with that and here is what I found for the ADA County (Boise, Idaho area):

In 2002 the Median price (sold) was : $140K

In 2003 the Median price (sold) was : $146.9K

In 2004 the Median price (sold) was:  $162,990

In 2010 the Median price (sold) was : $155K

It is possible that if the 2010 price goes down 5% it will be $147,250 which is near the 2003 price. If it goes down 10% it will be $139.5K which is almost the 2002 prices. So far the data I have seen doesn’t suggest a 10% decrease but a 5% decrease is plausible.

Would that be bad news? No! I do not remember anyone complaining in 2003 that homes were too expensive (okay, maybe there were a few). I have stated before that getting back to normal prices for real estate in the Boise, Idaho area will be closer to 2002-early 2003 pricing.  And affordability is always a good thing! 

If you would like to see what current home prices are in the Boise, ID area please go to my website: http://www.BoiseRealEstateChick.com

To see more of the Wall Street Journal article go to:http://online.wsj.com/article/SB10001424052748703313304576132291585938656.html

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Hello Buyers-Mortgage Rates on the Rise

 

Buyers who have been waiting for the real estate market to bottom need to take note. All indicators tell us that we are coming out of bottom. What also needs to be watched are the mortgage interest rates and they are on the rise.  Interest rates on a 30-year fixed rate mortgage rose to the highest level since April of 2010.  Now historically the interest rates are still very low at 5.04% fixed on a 30 year mortgage but with just a small percentage hike, what you can afford goes down. Let me show you:

On a $150K mortgage with a 5.04% rate for 30 years is $808.90 per month.

On a $150K mortgage with a 5.75% rate for 30 years is $875.36 per month.

No big deal right? It is just a $66.46 a month difference. But over a year that $66.46 grows to $797.52, and over 30 years grows to $23,325.60. Now it is a big deal because that is money that you would like to keep! 

In order to have that monthly payment stay at $808.90 with a 5.75%  rate you would now only be able to borrow $138K.  And if you have been out looking for a home  in the Boise area you know that you can buy a lot more house with$150k than $138K.

If you would like additional information please go to my website: (There is no sign-up or registering, you can browse as long as you want!)  http://www.BoiseRealEstateChick.com where you can use the mortgage calculator and see how much home you can afford. Then browse through the listings to see the difference $12K makes when buying a home!  

If you have any questions please feel free to contact me: mary@heritagewifi.com

Are We There Yet?

Many are wondering if the real estate market has hit bottom (here in Boise anyway…). It seems every time we think that the market was there, it then edged a little lower the next month. But if we look at the statistics from the past few months, the story seems to be changing. So, are we there yet?

The problem with knowing when the market has hit bottom, is when the data shows you that your are already out. And the numbers are indicating that we are not in bottom anymore. Now there will be those that argue that “shadow” inventory has not hit yet so we can expect further decreases in prices and increased inventory. The problem with this theory is that shadow inventory could be considered every house that is not for sale yet! Well if that is the case, then the market is doomed! Kind of silly thinking, so here are some real numbers to consider:

In the ADA County (Boise, ID)  market units sold:

December: 2010- 518  homes sold

                       2009 – 374 homes sold

                       2006 – 614 homes sold

Keep in mind that in 2009 the buyers credit was in place and yet we still sold more in 2010. This means a few things to me: 1. that lenders are doing a better job of closing short sales and bank owned, and 2. that smart buyers are realizing that the prices are definitely in bottom.

Inventory has also had quite a change:

December: 2010 – 2641  active

                       2009 – 3428 active

                       2006 – 3919 active

The difference between Decembers 2010 and 2009 for active listings really highlights how inventory has decreased. With prices staying relatively flat for the past few months and inventory on the decrease, I sense a subtle shift in the market. Now does this mean that we are going back into a seller’s market? Not immediately, because we do have to see how it goes come spring, but it is pretty safe to say that the pendulum is starting to shift out of the buyers side and back in the sellers direction.

One more thing to keep in mind! When we think of getting back to normal, do not think of the market as it was in 2006, when the median sales price was $ 232.9K but closer to the 2004 median sales price of $167K.  2004 was a much “saner” normal!

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