Green Real Estate in Idaho

While you might not know that we’re already deep into spring time here in the Treasure Valley based on the weather, the calender doesn’t lie and neither does the bump we’re seeing in the market. Historically, the Treasure Valley real estate market is very cyclical with slower times in the late fall and winter months and a vigorous revitalization in the spring and summer which peaks in late July.

This year is no different, in fact early spring sales got a terrific shot in the arm with home buyers seeing the expiration of their tax credit incentives drawing to a close. The vast majority of home buyers taking advantage of this opportunity were focused on the $110,000 to $180,000 price points and they came out in droves before the end of April (2010) at which time they had to have an executed contract on their property of choice to qualify.

Some agents and analysts lament this activity and appear to anticipate a dramatic drop in activity post tax credit. While this opportunity for buyers did accelerate many first time buyer time lines I do not anticipate closings to plummet. Buyers late to the party will be closing throughout May and June. Individuals and families that are buying up or buying down were less likely to be affected by the tax credit and are more likely to be focused executing their move later this summer. While activity in the entry level housing market (sub $200,000) has probably peaked, sales will continue and likely we’ll see homes at higher price points coming under contract during the summer.

The issue that continues to plague this and every market is the amount of distressed property that must be absorbed. The number of distressed homes for sale, short sales or REO/Bank Owned, outnumber traditional resale and have for months. This continues to put downward pressure on prices. Prices have stabilized considerably but the “fire sale” pricing of short sale and REO homes will likely depress prices for the foreseeable future, at least the next several years.

Why will things continue for the next several years you may be asking… well, the reason is simple. Before the sweeping mortgage reforms, most home buyers opted for 3, 5, or 7 year ARMs meaning that in X number of years the fixed mortgage APR becomes adjustable. Since most homes purchased in the last 5+ years are now underwater these homes will likely wind up as future bank owned or short sale listings. Thankfully, interest rates continue to be at all time lows, realistically there is no way they will stay here for ever. I’m the first to admit that I am no financial guru, but to see rates at 6% or higher in the next 12 months doesn’t seem at all unrealistic. 6% is still a fantastic interest rate, but when buyers become used to 5% there will be a crunch when rates rise.

It will all work itself out. Bottom line is that prices are down, interest rates are fantastic, and the amount of home that your money will buy is downright incredible. While many sellers will not like what the market will support in the sale of their home, if they are buying up the returns (in the form of savings) can far outweigh them.

If you’re a first time home buyer that has been sitting on the sidelines waiting for interest rates to improve (come on, they are at 5.5% which is FANTASTIC), or a better selection (Spring/Summer usually represent the largest inventory levels) your time to take advantage of the $8000 tax credit is fast expiring. In it’s current format you must be closed (funded and recorded) on your purchase before December 1, 2009. As of this writing that leaves you with exactly 81 days to get across the finish line.

While 80+ days sounds like a long time, keep in mind if you’re not in the process at all yet you need to sit down with a lender and get pre-approved. You need to find a good agent that will guide you through the process, representing your best interests, find the perfect house and then navigate the escrow process. A typical escrow (in our market) is about 30 days. This absolutely does NOT include short sales. If you don’t have a short sale in contract at this point and the tax credit is important to you, you’ve probably already missed that boat. Many banks (not all) have expedited things considerably over last year, but it can still be 60+ days for an approval and THEN you open escrow.

While the $8000 tax credit certainly isn’t a deal breaker… I find that most people think the idea of getting $8000 vs not is pretty cut and dry. If buying your first home is on your list of things to do, now is the time to get into the game. Interest rates are still fantastic, prices are still down, and there are still some fantastic gems to be found. Granted, they are moving quickly, especially in the sub $200,000 price range. If you’re ready to make the dream of home ownership a reality, I’m ready to get to work for you to make that happen. Call or email me today!

Ben
208-991-HOME (4663)
ben[at]IdahoRealEstate.com

As of last Friday there has been an exciting improvement to the $8,000 ($8,000 or 10% of sales price, whichever is less) tax credit available to first time home buyers. Now, buyers using FHA approved lenders will be able to take an advance on their $8,000 credit and put it towards their down payments and or closing costs.

While the stimulus provides this credit to first time buyers (or those that have not owned a home for the past 3 years) the $8,000 previously could only be collected after the close of escrow by filing an amended 2008 return or waiting to claim the credit in 2010 on the buyers 2009 tax return.

I expect this to make a great thing even better as many first time home buyers find it difficult to come up with thousands of dollars in closing costs along with a down payment. For additional information regarding this new program consult your preferred lender. You can read the full article about this new program here.

You may not have heard, but now there is even more money available to first time home buyers, up to $7000 (seven thousand dollars) actually and the beauty of this new money is that it can be used at the time of purchase to put towards your down payment. As with everything in life and home buying, there are rules, restrictions, and qualifying that have to be addressed. The good news however is that if you’re a first time home buyer and you meet the qualification for the $8000 (eight thousand dollar) tax credit you’re well on your way.

This is a very new program and has enormous potential to help even more first time home buyers (FTHB) achieve their goals of home ownership. Coming up with thousands of dollars in closing costs and down payment is difficult at any time, today is no exception. The good news is that rates are at historic lows, prices are down, and inventory abounds in most price points here in the Treasure Valley. Rates are not likely to go much lower and when the FED begins curtailing their involvement in the purchase of mortgage backed securities rates will almost certainly rise later this year.

If you’re thinking about purchasing your first home, I’m here to help. Give me a call at your convenience and we can get started putting together a plan to get you into your new home in time to take advantage of all the fantastic incentives available to you. In fact, feel free to try out the new Google connection widget, top right of every page on this site. Just enter your name and your phone number and click connect.