Sandra Braunstein spoke today at the Committee on Financial Services regarding challenges facing Community Reinvestment programs.
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Home sales in the Ada County, Idaho housing market are still lagging behind the record-setting numbers recorded in 2006, according to the Intermountain MLS Sales Survey reported this week by the Ada County Association of Realtors.
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Nationally, the housing market is cooling off fast.
But that doesn’t mean mortgage loan activity has cooled off in all areas of the country. Case in point: The Pacific Northwest.
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The number of Treasure Valley homes for sale is at a record high, and that is sure to keep driving down Idaho home prices, experts said Friday.
The median price of an Ada County home has fallen for the first time since the slump in the Idaho housing market began nine months ago.
The median price was $226,800 in March, a 1.3 percent drop from $230,000 in March 2006, according to the Intermountain Multiple Listing Service.
In the Idaho housing market …
If you are in the market for a high-end house, you’re in luck.
If you’re in the market for a low-priced house, take a number and stand in line.
If you are a builder or developer, you might want to re-read the above sentences before deciding what kind of house to build. After all, affordable dwellings are difficult to come by for Idaho mortgage seekers these days.
That’s the message from local and national real estate experts in response to the recent downshift in the Treasure Valley housing market.
Following more than a decade of boom, the Treasure Valley housing market this year will continue to undergo a market correction that started last year.
“We’ve been through a heckuva transition period,” from decades of stagnant growth to an unprecedented valleywide boom to a minor bust in the form of a housing market slowdown, John Starr told an audience of more than 200 people Tuesday at an Urban Land Institute conference in Boise.
Local and national experts had some advice for the sold out crowd — build more affordable housing, monitor the glut of high-end homes and pace development with city services to support it.
Idaho is ranked third nationally for growth. Experts predict the Gem State will hold that spot through 2030, provided key players — developers, mortgage loan lenders, business and political leaders — pay careful attention to the market.
LACK OF AFFORDABLE HOUSING
The Ada County median household income has stayed flat for the past few years at about $56,000, while home prices soared 50 to 60 percent during the same period, said Starr, with Colliers International Boise office.
“You cannot have a work force live in Ada County if all they can afford is a Canyon County home,” he said.
The solution is multi-faceted: Income must go up, housing prices must come down and developers must build more affordable homes and fewer high-end homes.
Ada County has a 2.3 percent unemployment rate; Canyon County’s is 3.1 percent. While this is a good incentive for people to move the Valley, it may not be an incentive for large businesses to move here.
That’s the downside to a low unemployment rate, Starr said, a lack of employable work force. Starr said a community college is critical to bringing higher-paying jobs to the area and keeping Idahoans applying for home mortgage loans in Idaho.
“Idaho has never sustained job growth for its children,” panelist Jim Adair said. “You have exported your children for decades.”
To continue reading this Idaho Statesman article, click here.
According to this week’s Idaho Business Review, the Idaho Housing and Finance Association is gearing up to unveil two new home loan products and a new down payment assistance program.
The products offered through the association’s IdaMortgage program target credit-worthy borrowers who do not meet standard Idaho mortgage financing requirements, the association said in a statement.
A 30-year, fixed-rate mortgage product is designated for credit-worthy borrowers with higher income levels who don’t meet the standard home loan program requirements.As of February 27, mortgage rates averaged just 6.09 percent for the new 30-year home mortgage loan product, and 6.65 percent for the 40-year mortgage loan.
Idaho Housing and Finance also just started offering “Good Credit Rewards,” a 30-year, second mortgage with a fixed interest rate. Home buyers earning less than 140 percent of area median income can qualify for a down payment assistance loan.
This option can range from up to 102 percent or a maximum of 5 percent of the first mortgage loan. Idaho Housing then offers the second mortgage at 1-2 percent above IdaMortgage’s standard interest rate.
Gerald Hunter, the president and executive director of Idaho Housing and Finance, said the association exists to expand Idaho’s affordable housing opportunities.
“These new loan products will assure that many more families have the opportunity to have a place they can call home,” he said.
Idaho Housing still offers its Home Investment Partnerships program.
It provides down payment and assistance with closing costs to first-time buyers in the form of deferred-payment, no-interest mortgage loans.
The association can forgive the mortgage assistance over time if the first-time home buyers earn 80 percent or less of median family income.
Idaho Housing and Finance partners with about 200 participating lenders and 74 mortgage brokers statewide to offer below-market interest rates.
SOURCE: Idaho Business Review
Don’t expect too much of a slowdown in the North Idaho real estate market in the coming years.
The region is still growing, and still seen as a bargain compared to many parts of the country. Combined with the wealth of several generations - retirees, baby boomers and generation X - the fascination with the outdoor life style and attraction to the area’s lakes and rivers is expected to continue to drive growth for about a decade.
Between 2000 to 2004, approximately 1,400 new homes per year were being built in Kootenai County, Pat Krug, managing mortgage broker of Windermere Coeur d’Alene Realty told nearly 700 real estate agents and others involved in the industry last week at the 20th Real Estate Market Forum held in Spokane’s convention center. Projections for the next eight years are expected to double to about 3,000 per year.
The “stabilizers,” who live and work in the area, will require housing in the $130,000 to $300,000 range, she said. They will continue to be the largest segment of the market.
The “baby boomers,” recipients of $40 trillion in inheritances, will be looking here for their final homes. They’ll be coming from the urban centers of the West Coast and rural areas of the Inland Northwest before applying for an Idaho mortgage.
“Vacation home collectors,” earning $200,000 to $500,000 per year will continue to look to the area for luxury homes, Krug said, and since about half will pay cash, interest rates will have little effect.
In total, she said, there will be a need for 25,000 new homes in the next eight years.
The market hasn’t slowed as much as many had thought. How come? Because much of what happened in 2005 and 2006 was a reaction to a sudden demand and the inflation in values of North Idaho real estate.
In 2005 the average time from the time a single-family residence went on sale to closing was 2.8 months, Krug said. In 2006, that increased by 30 days.
“In 2006, only 38 percent of single family listings actually sold,” Krug said. “What happened to the other 62 percent?”
Was that a result of supply exceeding demand, or of overpricing, she asked.
“Data suggest if the home did not sell within four months, there was a high probability that listing expired and probably wasn’t sold at all,” Krug said. “Many sellers think it’s still 2005. They may have been sold if they had been competitively priced.”
Of 2,855 current listings, 1,286 have been on the market for more than four months; that same number is not seriously for sale, she said.
The new home market, in fact, was slow to respond to a slowdown, and that had its own impact on Idaho home prices, said James Diffley, group managing director of U.S. Regional Services, Global Insight, Inc.
“In 2002, we recognized something significant was happening,” he said.
They analyzed how high home prices should go, watching areas such as Las Vegas, San Diego and the Florida housing market where double-digit increases continued for several years before beginning to level off.
He said there was a lot of criticism from the industry of media reports of the bubble bursting, due to the importance of consumer perception.
“In 2006 the real news came in the spring when there wasn’t a price crash,” Diffley said. “New starts fell, but the surprise was how long it took for builders to pull back. Builder discounts were the single biggest factor in the price retreat. As they unloaded, soft prices resulted.”
That’s a temporary cycle, and the housing industry will remain soft for about a year as investors take homes off the market, he said.
Click here to read the rest of this Post Falls Press article.
Spokane, Wash., and North Idaho home buyers may get a much-deserved breather from runaway real estate prices this year, according to the Spokeman-Review.
Local experts predict that the pace of price increases will slow in 2007. During the last two years, residential real estate values rose at double-digit rates, outpacing most income gains and dampening the hopes of many home buyers.
Dan Flanagan, past-president of the Coeur d’Alene multiple listing service, said the influx of out-of-town home buyers should slow. That in-migration fueled property-value increases of nearly 30 percent in 2005 and 13.3 percent last year.
“We still have a tremendous amount of people who want to come up here, but they’re having trouble selling homes in other places,” said Flanagan, who predicts that this segment of the Idaho housing market will increase by about 5 percent this year.
In Spokane County, Rob Higgins of the Spokane Association of Realtors said the residential real estate market is stabilizing and Washington mortgage demand returning.
He forecasts that Spokane will return to a more normal rate of appreciation in 2007 — about 4-6 percent, compared with the 14.5 percent rate seen in 2006.
In the past few years, Kootenai and Spokane county markets have taken a twist: While low-to-middle income buyers have struggled to find reasonably priced houses, an emerging population of affluent residents - who don’t depend on Washington or Idaho mortgage financing - are spending half a million dollars and up to live in condos and upscale developments.
Old mill sites in North Idaho are currently being revamped into mixed-use developments and historic buildings in Spokane converted to condos.
Last year, Spokane issued building permits for 79 condos in a half-dozen complexes. Spokane is starting off 2007 with permits pending on about 200 units — including projects in the former home of Joel Inc. and the City Place condos, going into the Ridpath Hotel’s former Executive Court.
“I think 2007 is going to be a defining year in terms of how deep that market is,” said Dave Black, CEO of Tomlinson Black Commercial, speaking about the higher-end downtown condo market.
Although national home loan trends don’t necessarily apply to Spokane and Kootenai counties, financial experts predict less activity from short-term investors, who some blame for the rampant price increases in North Idaho and Western Washington in 2005.
With the stock market rebounding, mortgage rates expected to rise and some property values already dropping, experts say that speculative investing isn’t quite as attractive.
Local developer Jim Frank, owner of Greenstone Corp., explained the impact of speculative investing.
“When the market slows — as is the case right now — the speculators become sellers depressing the market. The result is that the speculative activity distorts the markets in both directions, helping to cause a boom and then bust cycle,” Frank said.
A number of communities in the Western Washington market are grappling with issues related to affordability, said Chris Venne of Community Frameworks.
The Spokane-based nonprofit, which plans, finances and builds affordable housing, held workshops on the creation of affordable housing in high-priced markets for audiences in Kellogg, Boise and Sun Valley, Idaho. Attendees ranged from city and county officials to developers, he said.
SOURCE: Spokane Spokesman-Review
John M. Foster of the Idaho Business Review asks that question today. The conflicting sides:
The Press-Tribune story, written by Mike Butts, quotes a Caldwell leader who makes it clear that community shows no signs of a bursting housing market bubble:
“If building is slowing down, it hasn’t done it here,” Mayor Garret Nancolas said.
The Statesman story, by Joe Estrella, quotes an economist who makes it clear that the Treasure Valley segment of the Idaho housing market as a whole is actually going through a correction: “I don’t know that you need to panic yet. There’s still an awful lot of construction going on around here,” Boise State’s John Church said.
The Statesman story is actually a pretty thorough accounting of something the Idaho Business Review has been reporting, too. The residential real estate boom is done, but it hasn’t crashed – home sales have just returned to levels from earlier in the decade.
According to the Statesman: Meridian issued 43 permits in November, 79 percent less than in 2005. Boise authorized 35 single-family permits to home builders this November, 61 percent less than in 2005. And Nampa issued 43 building permits, 58 percent less than 2005.
Yet Caldwell, for the entire year (according to the Press-Tribune) had an increase in home price appreciation. Why the difference?
Well, as reported last month, new home starts in Eagle and Meridian have dropped dramatically, while Caldwell is among the few Treasure Valley communities still expanding. Residential real estate is tied to a commercial real estate boom there, not traditional factors such as the cost of home loans. More businesses are building in the Caldwell area, so residents have more reasons to live in that area.
Also, as we’ve been reporting since the summer, the Treasure Valley’s housing market hasn’t really burst as much as it has shrunk to a more realistic level. Prices and permits have dropped dramatically in recent months, but it’s all relative.
Remember that the decline in mortgage loan activity and the slower market that followed is compared to the last year or two. Compared to the years before that, it looks like we’ve returned to normal.