Our Meridian Blog

The Building Contractors Association of Southwestern Idaho is bringing their 2009 Parade of Homes to the Treasure Valley beginning Saturday April 25th and running through May 10th.  Weekday hours are 5PM to 8PM, Fridays are 3PM to 8PM, and Saturday and Sunday hours are Noon to 8PM.  This year the Parade of Homes is FREE!  No tickets are required.

Reflecting the slower housing market, there are just 17 new homes on the Parade this year, but they are homes presented by many of the Valley’s best builders including Tahoe Homes, The Marrs Company, Capitol Building, Brighton Homes, Crocker homes, Borup Construction, James Clyde Custom Homes, Boise Hunter Homes, Berkeley Building Company, Roth Homes, Flynner Homes, and Eric Evans Construction.  The Parade Awards will be given out this evening, and as soon as I get them I will share the winners here on the blog.

There is an excellent clickable tour map online at the BCA website.  You can also click through to previews of each home.
 

 Single Family home sales in Ada County increased in March, climbing back over the 300 unit level, with 381 sales closed for the month. 2007’s 711 units was the third highest March on record, and last year there were 440,so the comparison is still tough. But while 381 is still a fairly weak number, it is well over January’s low of 237. The sales numbers are proving out what some agents have been saying, that traffic and buyer interest is increasing.

Also interesting and encouraging for the month is a strong increase in the pending contracts figure. We are starting April with 697 contracts pending, well up from March, which had 580. Buyers are finding homes, and contracts are being accepted. One interesting note, in a closer look at the sales I find 66 that were Short Sales and 98 that were Bank Owned. That doesn’t appear to be the bottom yet to me.

Inventory levels are at 3779 homes for sale, which is much better than last year’s 4270 active listings on the market in Ada county. Ada and Canyon combined show a total of 5676 Single Family homes on the market. Adding in single family homes with acreage, townhomes, and condos gives you a choice of 7115 listings to choose from here in the Treasure Valley. With that kind of overhang on the market, we will not see firming prices any time soon. When your agent talks about it being a great time to buy property, this is what he means. There is a lot to choose from, and prices are soft. Really well kept and well priced homes are selling. Homes with problems, or that aren’t priced to this market are sitting.

And just a reminder, the 2009 Parade of Homes runs from April 25th thru May 10th. The parade homes are open to the public this year without charge and without tickets… yes, FREE!

This year’s Spring Home Festival is coming up this weekend and next weekend, noon to 6pm Saturday and Sunday both weekends.  Be sure to get the Real Estate section from tomorrow’s Idaho Statesman for a complete list of homes and a map.  There are a lot of great homes in the tour this year, so get out and take a look.  You won’t be disappointed!

Here is what I wrote at the beginning of March in my newsletter to clients and friends

 Single Family home sales in Ada County rose to 269 units in February over January’s 237 units.  Those are both very weak numbers (568 sold in February 2007).  I believe they are going to continue weak as long as people are afraid of the future.  I’ve had two buyers and two sellers put their plans on hold because of fear or what might happen in the next couple of months.

One good thing to take notice of is that at the moment there are 3706 active Single Family listings.  That is not quite 10% less than a year ago, and that is a good trend.  Those figures do not include townhomes or condos, or Single Family with Acreage.  Pending sales figures were very good at 580, increasing 130 from the beginning of January.  I have heard of an increase in buyer showings this month, especially Short Sale listings.  Could mean a few investors are starting to get interested.

I’m asked about the number of  Short Sales, foreclosures, and bank-owned properties on the market right now.  Yes, there are a lot of them.  At the time of this writing, with 3706 active listings on the market in Ada County, the MLS shows 777 of them are Short Sales.  168 are listed as being in foreclosure, and 239 are shown as bank-owned.  Numbers that high are definitely out of the ordinary and they are large enough to pull prices down throughout the county.  And I suspect there are many more listings that are not listed at a reasonable price in this market and will only draw offers that will make them Short Sales, so that number is probably higher than the MLS shows.  The Micron announcement will not help matters at all.

Last year’s March issue of Forbes joined the parade by reporting Boise in the top 5 cities for business, and Micron had just announced it was planning a new plant here in the Treasure Valley!  Many were forecasting the market would turn around by the elections.  What a difference a year makes.  Focus on the good things, and don’t let the bad news get you down.  This is the third time I’ve seen tough times.  They don’t last forever. 

The soft real estate market in the Treasure Valley continues through March. Last year at this time the inventory of homes for sale in Ada County was increasing weekly. Since the beginning of this month, we’ve only increased to 3799 active listings. Pending sales continue to increase, standing at 653 this morning. And sales for the month so far stand at 251; compare to last year’s 311 on this date, or the 505 we had by this day in 2007, you can see how soft the real estate market is.

The real story is still how the distressed sales are affecting the market. Of the 3799 active listings today, 1046 are shown as Short Sale or bank-owned property. That’s 28% of the available market. That 28% is having a huge effect on the pricing in the market. Of the 251 sales so far this month, 45% were Short or bank-owned. That is a big number, and it draws down the price for all properties. The “Pending Sales” show the same thing, 45% of those are distressed properties. Until the market works through the large overhang of these properties, expect to see continued soft prices. And until the economic situation becomes clearer, expect the soft sales market to continue as well.

Lots of new housing numbers out this week, including the release of the Fourth Quarter Federal Housing Finance Agency Report.  If you really want to get into some of the true housing numbers, here are 80+ pages of them.  Interesting to note that Idaho still shows a 146% appreciation since the early Nineties, and in fact, has a 46% appreciation over the last 5 years even with the recent falling prices (Boise shows 48.8% price appreciation over the past 5 years).  If you purchased your home in 2002 or 2003, and resisted the temptation to buy boats, snow machines, or Harleys with a refi loan, you’re not doing badly even today.

In general terms, remember that more than 90% of America’s mortgages are being paid on time.  The largest part of the foreclosure problem is taking place in five states, Nevada, California, Arizona, Michigan, and Florida.  Those five states are skewing the foreclosure data for the nation.  Yes, there has been an increase in foreclosures and short sales here in Idaho, but a significant number of those are the result of poor financial decisions, rather than some catastrophic meltdown of the economy.  Look at the big picture, and remember to keep some perspective.  There are 20 year tables in the OFEO report that show an occassional pullback in prices, but the real story is that for most homeowners living in their homes and financing them with conventional type mortgages, their home has been a great investment.  I see no reason that isn’t true today.

A question I’m getting quite a lot lately is “are we at the bottom yet?”   People are frequently asking if we’re seeing any turnaround in the real estate market.  Well, for all of you bottom watchers, at least one well know agent is publicly calling the bottom - in Seattle.  From this morning’s Seattle Times

Has the Seattle area’s real estate market hit bottom?

Most observers say no. But one agent who recently predicted continued price declines set off a tizzy in the local real estate blogosphere over the weekend by declaring: “We’re at bottom.”

Ardell DellaLoggia, an associate broker with Coldwell Banker Bain and an editor of the Rain City Guide real estate blog, filled in the details Sunday, writing: “While we wouldn’t expect to see prices bottom with continued bad news as to layoffs, buyers are consistently calling the bottom at 20 percent under peak pricing” (not including houses that are not in foreclosure or being sold as part of an agreement to avoid foreclosure).

Very interesting.  Our market here in the Treasure Valley depends a lot on the bigger markets that feed population into Idaho.  The Seattle market peaked nearly a year after our market did, which helped keep ours from a freefall as bad as the California markets went through.  The health of the markets in areas like Seattle, Nevada, and Arizona play a much larger role in the health of our market now than they did even 10 or 12 years ago.  But does that bottom call have any bearing on our market?

I’m not as bold as Ardell, and I won’t try to call the bottom.  But I can give you an idea of our price levels now compared to the peak.  Let’s look at prices in Hunter Pointe Subdivision in Northeast Meridian.  I’m choosing it for a couple of reasons; it is good sized (290 homes), established (no “new home glut” problem), and the homes are comparable in terms of quality and amenities.  My records for summer 2006, which is our peak of activity, show that 22 homes in Hunter Pointe sold for an average price of about $125 per square foot.  Our price peak in established neighborhoods came early the next year, 2007.  Only 9 homes sold in the sub that summer, but the average price was $130 per square foot.  In 2008 we knew we had topped out, as only 7 homes sold by Fall, and at much reduced prices, one (a bank owner property) as low as $98/sqft.  Whew!

Compared to Seattle’s 20% “bottom”, where does that put us?  If our top in Hunter Pointe was at $130 per foot, a 20% bottom would be around $104 per square foot.  The third quarter of 2008 saw homes in the sub selling at an average of $105.  In the fourth quarter the average was $103.  Isn’t that interesting.  Where are we today?  No homes have closed since the beginning of the year, but there are two that have just gone under contract.  Their list prices averaged $108 per foot.  I believe the comparison is valid, although calling the bottom and predicting the future is not what I get paid to do.  I can find you many more “experts” who say we still have room to go downward.  Prices have stabilized in some neighborhoods.  And with rates still very low, and Congress hinting about a tax credit, now seems to be a good time for many to think about buying.  We’ll only know the bottom after it is past and prices start going up again. 

Ada County Home Sales

As expected, January usually sets the low mark for the year for Ada County home sales and that is true again for 2009.  Single Family Homes sold in January were a meager 237, a 23% decline from January 2008.  Remember that I mentioned in the December newsletter that last year we started the year with a 38% decline, so you know I am looking for bright spots.  Traffic at Open Houses and individual showings have both been lower than we’ve been used to, although with the low interest rates of the last couple weeks that is changing.
One sign of that is the increasing number of contracts Pending.  Currently there are 527 homes under contract which is a big jump from the 459 we started the year with.  One of my Title company contacts told me that they saw a number of sales close with loans at rates below 5% a week or so ago (although the rates have again gone back over 5% for now).  Rates at that really historic  low make it  easy for some to make the decision to buy.  And considering that the inventory of active listings hasn’t changed from January’s 3635, perhaps we are in a calmer place in our market.
One interesting thing the data shows is that the sales are being made in a bit lower price level in the market.  Last year’s median price in January was $217,500, while this year it was $180,000.  This is a 17% decline year over year.  While that implies lower prices, it also more strongly indicates that buyers are working in the lower levels of the market.  The “expensive new construction boom” we had two and three years ago is over,  so those sales don’t affect our numbers as strongly as they did then.  Another way to show that is to see that of the sales in January this year, 60% of them were homes priced below $200,000.  Last January only 40% of the homes sold were below $200,000, and in 2007 it was barely 36%.  That is quite a market change!  And one last tidbit, it should come as no surprise to know the length of time on market has increased from 73 in 2008 to 90 days this year,  according to MLS figures.

Meridian Home Sales

The numbers from January for Meridian real estate sales, although slightly weaker than the County as a whole, track pretty closely to the Ada County numbers.  There were 66 Single Family homes sold in January 2009, compared to 95 in 2008 and 139 in 2007.   That is a 31% decrease fom a year ago.  There are currently 1069 active listings, which is much better than the 1210 listings a year ago.  And there are currently 176 contracts pending for Meridian homes,  which is slightly better than last year’s 163.

The median price numbers are also similar, with the median price in January 2009 at $181,800 comparing to January 2008’s $234,900.  No, I don’t think all Meridian property values went down that 23%, because I believe the buyers active in the market now are buying homes in the under $220K price ranges.  Two thirds of the homes sold in January in Meridian were priced below $200K.  A year ago there was a much greater demand for higher priced new construction.  Last year, only 27% of the homes sold during January were priced under $200K.  Be careful when you hear “median price” figures quoted by the newspapers of the talking heads on TV.  Median price is more useful for looking at the market than it is for judging the value of your home.

Through the Meridian Lions Club I have had opportunity to learn a little bit about the Meridian Food Bank.  We hear about the Idaho Food Bank in Boise quite often on the TV and in the paper, especially during the Holidays, but not so much about our own food bank here in Meridian.

The Meridian Food Bank is currently at 58 E Idaho downtown, just west of the Sunrise.  They are open Monday, Wednesday, and Friday from noon to 4pm, and also on Wednesday and Thursday evenings between 6:30 and 8:00pm. 

I visited the Food Bank on Wednesday afternoon and had a little chat with the volunteers there.  At our last Lions meeting Mayor Tammy de Weerd told us that the ACHD has leased one of its properties to the food bank for $1 per year, which will more than double their space, so I drove by the new office at 15 E Bower (corner of Bower and Meridian) first, but they weren’t quite ready yet.  By the way, I understand that CBH Homes has donated the painting and renovating for the new space.  They are hoping to be moved sometime in February.

The Meridian Food Bank serves an amazing number of people from that little office, and with the current downturn in the economy they are seeing more and more folks every month.  According to the numbers they gave me, in 2007 they helped 9854 people with 2736 food baskets (538 new clients).  That number rose in 2008 to 16,685 people with 4455 baskets (810 new clients).  And yes, November and December were double the numbers from last year.  At the beginning of this last week they had already handed out 440 baskets to help 1588 people.  By the way, these numbers represent all the people in a household, and each household is allowed two baskets per month, so there is some double counting in thee numberrs.

However you count them, there are a lot of people helped by the Meridian Food Bank.  I wish them all the best in their new location, and may I suggest that you stop in and help them out in any way that you can.  You can donate at their offices, or contact any Lions Club member you might know (myself included).  Support your local Meridian Food Bank… you just never know how far that gift will go.