• It’s encouraging to note the positive increase of sales in all categories!
• It’s positive to note the lower rates of price declines  in all categories.  It wasn’t that long ago when those numbers were hovering in the 20-30% range.
• It will be fascinating to see what happens to our market when the $8,000 First Time Homebuyer Tax Credit expires. Buyers must be “under contract” by April 30^th and close by June 30^th to get the credit.
• The upfront FHA mortgage insurance premium will rise from 1.75% to 2.25% on April 5^th. This will result in an extra $1,000 of buyer closing costs on a $200,000 loan.
• It’s positive to see sticks (new homes) starting to go up throughout the Treasure Valley!
• It’s positive to see people buying homes for the right reason (to live in them!) instead of speculating on them and using them as their personal ATM.
• 63.9% of all 2010 year-to-date Ada County closed residential sales have been below $200,000.
• 1.33692% of all 2010 year-to-date Ada County sales occurred between 10:14.56 a.m. and 1:33.21 p.m. on cloudy Thursdays. (I just made that up to see if you’re really paying attention!)

Freddie Mac stated “Our purchases of these mortgages and issuances of guarantees of them, expose us to greater credit risks than do other types of mortgages.”

Freddie Mac posted a $7.8 billion (yes, that was a “B”, Martha!) loss for the 4th quarter of 2009 and a $25.7 billion (hmmmm . . . this is soon gonna add up to real money here!) loss for the entire year.

Freddie Mac’s interest-only and “Alt A” loans accounted for 44% of Freddie Mac’s credit losses in 2009.

Gee, mebbe they shudda done this sooner???

Source: DSNews.com

If so, carefully consider what could happen.

Here’s how the development business works:

• When a developer develops lots, he incurs heavy upfront costs to acquire the land and install the infrastructure.
• Those costs must either be paid in cash or financed.
• If they’re financed, the developer must pay interest on his acquisition and development loan and may have a due date for full repayment of his loan.
• Those financing costs result in ongoing debt payments that erode any potential profit when the lots are eventually sold. (Life gets exciting when a developer owe millions of dollars on an asset that is unsalable and/or declining in value).
• The lots created by the developer must either be built upon or sold to builders to recoup development costs and, hopefully, a profit.
• In our current market, those builders have stopped building because they can’t obtain construction financing and/or they fear they cannot sell their spec homes.
• This leaves the developer facing the decision to hold onto his lots or sell them at today’s lower lot prices.
• If the developer sells his lots at a lower price point, builders who purchase them can then build lower-priced homes to meet market conditions.
• That means homeowners who previously purchased homes when times were better may end up with smaller homes or homes of lower quality built on the remaining vacant lots in their subdivision.

Another separate consideration is what may happen with incomplete common areas and other amenities (think pool, community clubhouse, etc.) if the developer sells his remaining lots to another builder who doesn’t deliver on promises to complete those amenities.

The bottom line?

It’s best to be in a proven subdivision developed by a developer possessing financial strength and a track record of delivering what they promise.

But, it can also be a good thing if a capable new developer/builder takes over a stalled subdivision and builds it out with quality homes.

That’s certainly better than looking at weedy vacant lots for years to come!

Here’s a breakdown of 2009 sales for Harris Ranch subdivision in Boise, Idaho:

# Sales: 32
Average Price: $350,504
Median Price: $347,000
# Short Sales: 2
# REO’s: None

Here’s a breakdown of 2009 sales for Lexington Hills subdivision in Eagle, Idaho:

# Sales: 14
Average Price: $353,428
Median Price: $325,000
# Short Sales: 1
# REO’s: None

Here’s a breakdown of 2009 sales for Bridgetower subdivision in Meridian, Idaho:

# Sales: 44
Average Price: $271,534
Median Price: $264,900
# Short Sales: 3
# REO’s: 8

Here’s a breakdown of 2009 sales for Two Rivers subdivision in Eagle, Idaho:

# Sales: 41
Average Price: $612,853
Median Price: $485,000
# Short Sales: 8
# REO’s: 12