In Ada County the March median home price was $186,750; up 22% from March 2012. Median home price is above $180,000 for three months running.

Single Family home sales in March were 555 in Ada County up 4.3% year over year.

Days on Market averaged 67 in March. On average a home sold in a week’s less time in March than in February.

New homes sold in March totaled 137, an increase of 49% compared to new homes sold in March of 2012. However…sales of existing homes were down 5% in March; for the third month in a row. More on improving inventory later.

Historically, March sales increase by more than 30% from February as we ramp up towards Spring. March 2013 sales increased by 19% from February 2013.

Of our total sales in March… 18% were distressed (100 total sales)….down 5% from March 2013. This is the first time that “Distressed Sales” have been less than 20% of “Total Sales” in at least five years! In March 2012, 44% of our sales were distressed. February 2012 started a noticeable decline in distressed property sales. In March 2013 41% of distressed properties were REOs (41 total sales ) and 59% were short sales (60 total sales).

This is one full year with short sales being the larger percentage of distressed properties sold. Looking for undermarket-REO deals? That boat sailed.

Pending sales at the end of March were 1,275; up 20% from February. In general, pending sales in May are the highest of the year; and June the second highest.
At the end of March, we had 12% more sales pending than at the end of March 2012.

The percentage of Pending sales in distress decreased 4% from February, totaling 19% overall. This is the first time under 20% since we started tracking this indicator three years ago.

Inventory: The number of houses available at the end of March increased 3% from February 2013 to 1,787. This is 5% less than last year at this time. Since January we have increased the number of single family homes for sale by 7%.

Available inventory increased in price points between $160,000 and $1mil+. The number of New Homes increased in the $250,000 to $300,000 price range.

In Ada County we now have less than 4 months of inventory on hand.

The price category in shortest supply is <$159,999 where we have 2 months supply.

Now here’s something really interesting…the number of Existing Homes for sale has increased by 10% from 1,108 to 1,223. At the same time the number of New Homes available has increased only 1%. With Existing Homes median price up 22% YTD it’s clear that more owners are getting their relationship with their mortgage “right side up” and electing to list their homes for sale.

In the rest of the US; according to NAR’s most recent report, new home median price for March was $252,000; up 24.9% from March 2012. For Existing homes the increase is 23%.

Distressed Active listings decreased 1% to 21% overall. Getting this last “Distressed“ indicator under 20% should happen by the end of April. We have been hovering between 33% and 36% for the last year. We remain well below the 40% levels set last spring….when we were on the increase.

Distressed Inventory 79% are Short Sales (296 homes) and 21% are REO (78 homes). This represents a slight increase in the number or REO listings; something to watch moving forward.

Multiple offers are much more prevalent even becoming the norm.

March was a very solid month. Sales are increasing as inventory grows. Median price increase is a more sustainable. Distressed activity shows improvement in all areas; back to pre-bubble days.

Everything forecasts a very strong next three months. Next weekend is NAR’s Nationwide Open House. As 2013 ACAR President Gary Salisbury observed: “this event brings national focus and attention to home ownership and it gives REALTORS concentrated access to the public to share their local market knowledge, housing issues and ownership benefits”.

This a direct quote from my lender of many decades!  Another seasoned colleague of hers took it a bit farther.  He said, “THE ONLY THING WORSE THAN FHA IS…..RENTING!”

How can this be?  FHA has always been there for those who can’t quite get into a conventional loan product.  Maybe your credit has a few dings or your income to debt ratios are too tight.  Or maybe you only have 3.5% for a down payment; FHA to the rescue.

In fact, prior to the Great Banker Recession, FHA was used in 70% of home purchase loans.

First the 3% minimum down was raised to 3.5%.  Then Mortgage Insurance or MI went up from 0.55% three years ago to 1.35% as of April 1st.  Now, along with the increase, MI will stay in place throughout the term of the loan.  Unless you sell or refi, you can’t get rid of it even if you only owe $10 on your mortgage!

FHA’s mortgage insurance effectively adds 2% to the interest rate on a typical home sale in the Boise area.  It begs the question – why have a government backed loan program at all???

In rides the Conventional Mortgage Loan on a white horse.  If you can muster 10% down, you can ask the sellers for closing costs and add the balance to the loan amount.

Want real numbers?  Okay let’s say you borrow $133,000 for an older, three-bedroom on the Boise Bench and your scores are 760.  If you put 5.5% down using Conventional financing, versus an FHA, in five years you will have saved a whopping $7,798.80!!!

If you have good credit and your lender suggests FHA, ask them WHY!!! Then go talk to another lender!

I thought I was seeing a lot of new construction as I drove around town.  People I met would comment on how new home construction is “going crazy” all over the Treasure Valley.  From Caldwell and Nampa to Boise and Meridian, rooftops are sprouting again.

So I dug a little deeper…

From the 1800+ homes on the market as of yesterday, I pulled a list of the newest homes off our MLS “Hot Sheet”.  94 out of the 186 newest home listings are ready to sell, homes under construction and those permitted but not yet started.  I guess that qualifies as “going crazy”.

New construction is a harbinger of a healing market.  Builders, unlike big banks and the Federal Government, cannot operate at a loss.  Once the tract or production builders get going, the rest will follow when financing loosens up.

How about a look at what price points are selling.  Looking at Ada County pending sales as of yesterday, two homes at 500k or more are pending.  That market is still moribund.  Five homes are under contract 400-500k range.  43 or 86% of the pendings are under 300k.

While the President was playing golf and Congress was kicking cans around, US Housing made big news this week. Here’s the recap:

• FHFA House Price Index – Home prices continue to increase gradually. The FHFA price index for December increased 0.6 percent which follows November’s rise of 0.4 percent.

• Case-Shiller Home Price Index – Home prices continue to rise by a very strong 0.9 percent for December’s 20-city adjusted Case-Shiller index. This pace of increase is the best since last year’s second quarter when monthly gains averaged 1.0 percent. From the same time last year the index is up 6.9 percent which is the highest since the giant housing bubble back in 2006.

• Pending Home Sales Index – The pending home sales report points to strong improvement for February. The number of contracts signed to purchase an existing home rose 4.5 percent from the prior month. One of the biggest challenges to home sales is that properties for sale on the market are scarce and the pace of increasing sales is draining what inventory there is. The market, believe it or not, is starting to return to the seller’s advantage.

• New home sales in January surged a monthly 15.6 percent to an annualized 437 thousand from an upwardly revised 378 thousand for December. The latest number well topped market expectations.

According to Forbes, Boise made the top ten list of recovering cities.  I’ll skip numbers 1-2 and 4-10.  Here’s what they had to say about our big little town:

#3. As Idaho’s capital city, Boise’s median prices are up 9.1 percent for the year, houses sell in a median 79 days, and they’re affordable— a $169,000 median price. Like other outperformers, unemployment is well below national norms — 6.2 percent — and the city is home for major employers, including Boise-Cascade wood and paper products, Morrison Knudsen engineering and Micron Technology.

We’ve got a ways to go but the horizon is bright.

A family member just asked me about flipping…where to begin.

Val and I were going to make this our new means of livelihood.  We needed to reconstruct our retirement plan post Great Recession.  We (I) had the bright idea of rehabbing and flipping even though I knew we were late to the party.  In fact, there were several reality shows devoted to it already and I was not looking forward to dealing with the robo-signing, money-laundering, LIBOR-rigging Wall Street banks.

We soon discovered that Boise (Ada County) there are very, very few bank-owned homes (REOs) to be had by non-owner occupants (investors).  We gave up on REOs and went after short sales until we figured out that 34% of all the homes on the market, excluding new homes, were “contingent-short sale” meaning they were tied up under contract, waiting for the lender or their minions to process the files.

In the meantime, the homes we were interested in went up 25k before our very eyes. They were talking about Boise’s rebound on NPR (2/1/13 Market Place) and the Today show.  The Boise housing market was starting to smoke.

Okay so I wasn’t completely oblivious to the fact that professional flippers, with tens of millions to spend, were getting the deals straight from the banks.  I thought since Val and I have fast, reliable info through the MLS, and local savvy on where and what to buy, and a combined 35 years of experience, that we would have a leg up.  Well that’s all fine and dandy but guess who else is doing the very same thing?  Hungry Realtors with buyer clients, investment pros backed by huge pools of cash and other mom-and-pop-investors like me and Val were all poised, ready to strike online at the next new listing.

The daily MLS Hot List might have 40 homes on it; 13 are (or will be in 24 hours) contingent short sales, 23 are new construction, two are 120 years old and crappy, one is $895,000 and the last one gets eight offers in 48 hours. (see below)

Regrouping again, we raised our price point to 160k from 130k and began looking for nicer homes in a price range that was not optimal for the mortgage versus rent ratio but still cash flowed.  We both scanned the MLS Hot Sheet hourly.  We ran out and looked at each one that made our short list.  The folder of rejects grew fatter.  Prices were going up at least $1500 a month if not $2000.  No pressure.  Don’t sweat it. Just make the right choice and make it FAST.

Sellers are sick of flaky buyers who are sick of waiting on banks and have learned a few tricks of their own from the pros.  Banks trained the buying public to be dishonest, irresponsible and uncaring.  While you’re waiting for Wells Fargo to do something – anything – on your bid, you write offers on five more homes with the intention of closing on at least one.  Now you have six families waiting on pins and needles, hoping to just move on with their lives.  Do buyers care?  They used to, but they have learned a new set of rules.

We closed on one yesterday and have two others in escrow that will close this month. Three are “equity sales” meaning the sellers are not in trouble.  This means they actually close and often within 30 days.  The fourth is a short sale with my least favorite bank of all; Bank of America.  Our offer was accepted by the sellers on 11/19/12 but B/A has yet to contact us.  We heard from the seller’s agent on 12/13/12 that they were “actively reviewing the file”.  We all laughed and I promptly set the file aside and forgot about it.  The contract is voidable and I really don’t care if we get the place or not.  More than likely Wells Fargo will come back at some point with a much higher counter offer and my response will be unprintable.

Our last purchase a few days ago attracted eight offers in 48 hours.  The lowest bid was for asking price.  Ours was $5000 over.  There were two other investors bidding and the net was the same as ours.  We won because we could close in three weeks and we didn’t even ask for a home inspection, never mind asking the sellers to pay for any of our costs.

The house was lived in by an elderly woman.  I knew she had people taking care of her lawn because the wooden fence posts were half eaten through by powerful trimmers. Landscapers do that to fences.  That took the guesswork out of whether the lawn was healthy and sprinklers were functioning.  The hatch was off the crawl space and I could see dry dirt and it smelled okay.  We took the word of a guy and his wife, hired by the seller’s Realtor to fix stuff and clean, that the home was solid.  We could tell he was ligit and straightforward by talking to him for three minutes.  I liked her smile and his demeanor. I know the other agent and he wouldn’t hire a dolt or a liar.  I wanted to offer 153k but Val said make it 155k.  I back spaced over the 3, hit a 5 and then send.  It’s so easy to spend money these days.

So how do you assess a $155,000 dollar investment by walking around the place for five minutes, using the smell test on the crawl space, the smile test on the cleaning lady and talking to a complete stranger who works for the opposing team?  I would not recommend it unless you have sniffed 1000 crawlspaces and talked to 100 inspectors.

If you plan to go after those scream ‘in deals everyone is talking about, finding them won’t be easy if your market is like ours.  Selecting and financing them is the #2 and #3 priority but that’s a subject we’ll tackle another day.

Check out this recent NPR story! Boise’s economy is roaring back with an upsurge in new construction and rising home prices.  Boise is one of the worst places in American to buy a foreclosure!

http://stateimpact.npr.org/idaho/2013/01/31/worst-place-to-buy-ranking-is-fine-news-for-boise-homeowners/

If you are thinking about buying a property in the Boise area below market value and maybe flipping it for a tidy profit, think again.  Not only are the bargains hard to find but you will also be competing with well-heeled, professional investors with truckloads of cash.  I regularly see short sales with asking prices over $100 per sq foot now.  Less than a year ago they were plentiful at $75.

A quick look at the MLS for active listings in Ada County this morning shows 1664 single-family homes for sale.  Of those, 234 are to-be-built, 127 are under construction and 193 are completed and ready for new owners.  This means about one third of the present inventory is new construction.

FYI  ”To-Be-Built” means that permits have been pulled for a specific home but the ground has yet to be broken. “Under Construction” is self-explanatory but it could be a muddy hole in the ground or it could be all but finished.

They also agreed to by back 6.75 billion for some 30,000 toxic loans they foisted off on the taxpayer backed entity.

But the trouble doesn’t stop there. B of A CEO, Brian Moynihan, realizes his bank is the least favorite of the four unpopular big Wall Street banks and wants to do something about it. Consumers rank B/A at the bitter bottom for customer satisfaction so Moynihan sent letters to the homes of 270,000 bank employees worldwide urging them to be problem solvers according to an article by Reuters in late January.

These are the final numbers as we put 2012 behind us.  December is never a strong month and looking back, it was a crazy year.  In the price ranges that make for good rental properties, the housing market was hot.  Offers came flying in on most any home under 150k the day they were listed.  928 square foot, three bedroom, one bath, built in 1968? No problem.  Snapped up in under 30 days.  Short sales for $100 a sq foot?  Sure why not throw an offer at it.  Let B of A or Chase “actively review” it for 4-6 months and then see what happens.

Where are those balanced days of 2004? Gone forever? Is this the new normal? First there was too much inventory. Now there’s not enough. Banks used to give away money. Now people with 740 scores and 20% down are being turned away.

Not surprisingly, December sales are down 11% from the prior month but up 6% from this same month last year.

Pending sales are down 11% but are up 12% from a year ago.  The big shift to New Construction in Pendings continues as Resale Pendings are actually less than a year ago! (Worrisome! Hope it’s a blip)

Distressed sales were up slightly.  Short Sales were 19% of the total sales.  Record high 01/12 at 23%.  REO sales were a mere 6%.  Record High 12/10 at 40%. That makes 25% of the sales “distressed”.  Record high was 12/10 at 61%.

Short Sales closing success up to 20%.  12/10 high of 22%.  Low 1/10 at 10%.  Many buyers won’t wait around for six months while the lenders “actively review” their offer.

The dollar volume of all sales was down 11% and 25% up year over year.

Year to date sales up for 2012  9% more units than a year ago.  The year to date dollar volume is 24% higher this year.

Median Price down for ALL homes sold - $176,330.  This is unchanged from November and a 21% increase from this same month last year.  WOW!  Waiting for the bottom?  Ya missed it!

Median Resale home prices are up to $162,500 which is a 2% increase from November and a 20% increase from 11/11.  Record low 01/11 at $126,500.

Inventory is down 8% and is 12% lower than last year at this time. This used to be a good thing but now it works against any recovery.

New Construction inventory is up to 583 from 565 last month.  Last year at this time there were 559 new homes for sale.  New Construction inventory has dropped for 51 of the last 75 months since reaching a high of 1890 September 2006.  Record low was 12/10 at 503.

Resale inventory is down - 1155 from 1316.   Last year at this time there were 1414 resale homes for sale.  July 2008 was the all-time record high at 3920!   July 2005 was the low point in resale inventory at 657.

Selling odds, using a “2 month rolling average” for sales is 2.8 from 2.9 last month. February 2009 set a record high of 15.6. Last year at this time there were 3.5 months of resale inventory. July 2005 was the peak of the seller’s market at .9 (that’s less than one month).