by Phil Hoover, Real Estate Broker

Eagle, Idaho To Grow (more!)

If Arizona-based developer M3 gains approval for their new planned development in the Eagle Foothills, the City of Eagle will grow by another 12,000 homes.

The population of Eagle has risen from 11,000 to 19,000 in the past few years, thanks to the area’s exceptional quality-of-life and a hot real estate market.

M3’s proposal drew complaints from local citizens during their first Planning & Zoning Commission meeting earlier this week; primarily over concerns about additional traffic being routed through downtown Eagle’s already-congested streets.

Following the meeting, the Ada County Highway District asked that the development plans be tabled until they can develop plans and costs for badly-needed streets and roads to accomodate the growth.

The proposal will be taken up again at the Planning & Zoning Commission meeting on October 30th.

October 18th, 2006 Posted in About Eagle, ID | Print Print | No Comments »

Building Permits Decline Sharply

It’s apparent that local builders are hesitant to start more homes until they sell their existing inventory, according to the number of building permits issued in September.

Meridian, formerly a hotbed of residential construction, issued only 76 single-family building permits in September vs. 280 permits in September 2005.

Boise issued only 20 building permits this past month, down from 77  in September 2005.

September sales activity (closed units) for Ada County single-family homes on lots/acreage was off more than 42% from a year earlier.

A year ago, developable land in North Meridian was going for as much as $140,000/acre, but now that same land goes for $80,000/acre and builders are trying to sell their lots because they no longer have buyers lined up to buy their homes.

I am hearing comments that some of our larger builders are sitting on hundreds of unsold homes, a fact borne out by daily e-mails from desperate listing agents offering as much as $10,000 bonus commission (in addition to a 3% selling commission) if I will sell one of their homes.

And, I am seeing huge price reductions as builders try to unload their spec home inventory before our slower winter market arrives.

If you are a buyer, looking for a deal on a new home, now’s the time to make your move!

Those motivated builders are creating stiff competition for resale home sellers who are still trying to get last year’s price for their home.

Current builder incentives include bonus commissions to selling agents, mortgage buydowns, $5,000 for buyers to use however they want, etc.

Holland Realty is even offering a new car to homebuyers in one of their subdivisions!

Only problem with that is who wants a Kia Sephia parked in the driveway of their new home?

Doesn’t anyone get it?

It’s the price (insert the word of your choice here)!

October 15th, 2006 Posted in Buyer Stuff, Inside Real Estate | Print Print | No Comments »

Have You Been Saved?

The guvmint is concerned about the possible implosion of the housing industry due to so-called “exotic” mortgage financing, such as interest-only loans, pay option ARMs, and just plain old ARMs.

So, they’re gonna save us with (what else?) some new regulations!

The Comptroller of the Currency, with the concurrence of The Federal Reserve Board, held hearings in late September and quietly approved new regulations requiring lenders to underwrite such “exotic loans” under worst-case scenarios instead of the previously-used starter/teaser rates where anyone with a heartbeat could get a loan.

On the surface, this makes sense and had they acted sooner, they might have alleviated some of the impending trauma for borrowers with adjustable loans that are (gasp!) starting to, well, er  .  .  .  .  adjust!

There is, however, more than a little absurdity involved in lumping all such financing tools in the category of “exotic”.

What about the homebuyer who gets transferred every 5 years?  Is that homebuyer really going to benefit from getting a 30-year fixed loan that may cost more in both rate and fee?  That buyer would probably be better off getting a 5/1 ARM because he will likely be down the road before the loan can adjust.

Then there’s the (Omigod!) dreaded, exotic, interest-only loan.

Let’s get a grip, guys ~ you aren’t paying much principle in the early years of a 30-year fixed-rate loan anyway!

Example:  a $250,000 interest-only loan @ 6% interest works out to $1,250/month or $15,000 in payments in the first year.

If you amortize that same loan over 30 years, the monthly principle/interest payment is slightly less than $1,500/month, or $18,000 the first year.

Thus, the difference between interest-only and fully-amortized is only $3,000 ($250/month) in the first year of the loan.

If the buyers  take the interest-only loan, they can simply add $250/month to their monthly interest payment to create their own amortization schedule and pay it off in 30 years, just as they would if they opted for the 30-year amortized loan. 

And, if the borrowers encounter unforeseen financial challenges, they are only required to pay the $1,250 interest payment instead of the $1,500 principle/interest payment.

Pay option ARMs are an entirely different story.  I would be the first to proclaim them as “exotic”; maybe even “stupid”. 

I am proud to say that I have never allowed any of my clients to get one of them. 

Call me conservative, but I can’t come up with any valid reasons for speculating on cyclical real estate values while concurrently skipping payments so you can end up buried even deeper when/if things go awry.

The unfortunate result of tightening these guidelines may be that some people will now be unable to refinance their way out of trouble as their ARMs reset from those tantalizing teaser rates that sounded so attractive when they got their loan.

October 13th, 2006 Posted in About Our Area, Inside Real Estate | Print Print | No Comments »

Eagle Real Estate MLS Statistics

According to Intermountain MLS data, 47 Eagle, Idaho homes closed escrow during September 2006 with an average selling price of $415,764.

This compares to 88 homes closed during September 2005 with an average selling price of $418,899,  indicating a stunning 46.6% year-over-year decline in closed units.

The average selling price for a home in Eagle during September 2006 was $415,764 ~ a little less than 1% below the year-earlier number.

Here’s the interesting part:

We now have 167 homes for sale in Eagle, Idaho that are priced above $700,000, with an average asking price of $1,071,601.

88 comparable homes have closed in the past 12 months, which works out to an absorption rate of about 7.3 homes/month in the $700,000+ price range.

Dividing the listing inventory by the absorption rate tells us that we have 23 months’ worth of listings above $700,000 (if no more homes are listed).

(data is for single-family homes on lots or acreage).

October 11th, 2006 Posted in Combined Market Stats, Eagle Market Stats | Print Print | No Comments »

Boise Real Estate MLS Statistics

According to Intermountain MLS data, 723 single-family homes closed escrow in the Boise real estate market during September 2006 at an average selling price of $276,274.

This contrasts to 1,258 closed escrows during September 2005 at an average selling price of $236,262.

The numbers indicate a year-over-year 42.6% decline in closed units combined with a 14.5% increase in the average selling price.

I seriously doubt that we will continue to see 14.5% annual appreciation when we are experiencing a 42.6% decline in closed units.

(data pertains to Ada County single-family homes on lots or acreage). 

October 11th, 2006 Posted in Boise Market Stats, Combined Market Stats | Print Print | No Comments »
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