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Finally, some good news on the local housing front! Main Meridian Homes for Sale
Long term mortgage rates are down for the second week in a row and price appreciation in both resale and new homes compared to 2006.

Long-term mortgage rates dipped slightly for the second week in a row.  According to Freddie Mac, the average interest on 30-year fixed loans was down to 6.67 percent this week from 6.69 percent a week earlier.

 

According to the National Association of Realtors, the median existing single-family home price nationwide was $223,700 in May.  They claim the median price was $341,900 in the West.  In AdaCounty, our existing home price median is still below the national average at only $215,000!  The median price for the sales of newly constructed homes was $285,900.  Both categories were had price increases from May of 2006 (up 5.91% and 7.51% respectively)!

 

I am tired of everyone saying how bad the market is here.  The fact is, the market is great for the homes that are priced in this range since the average family can still afford a $200,000 home.  For example, even though there are currently 2,075 homes in AdaCounty for sale under $250,000; there were 2,609 closed so far this year and another 516 with offers waiting to close!  Call any agent with a well priced listing with 3 bedrooms between $150,000 and $175,000 in AdaCounty and you will find they still are dealing with multiple offers on them!

 

The real problem is that we were building bigger and more expensive homes than the average family could afford!  The builders were trying to put hardwood and granite in everything.  For example, in AdaCounty, there are currently 3,237 homes priced over $250,000 for sale and yet we have only closed 1,577 so far this year in AdaCounty.  These are the guys that are singing the blues.  At this pace, we have over a year of inventory, no wonder the banks are not interesting in lending builders more money to build spec homes!

 

One builder told me that in order for him to build a pre-sold home these days at about $300,000; it still costs him around $18,000 out of pocket up front to get the construction loan.  This is a far cry from last year when builders were building $500,000 model homes with 100% financing.

 

I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers, says Lawrence Yun, NAR senior economist.

 

Therefore, I am glad to see a bit of good news on the horizon!

 

Feel free to email me or call me with any questions/concerns about this article!  [email protected] or 208-573-0471.

 
Posted by Jim Paulson at 6/29/2007 9:56:00 PM
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Comments (2)
Re:Finally, some good news on the local housing front!
Okay, so I am a little confused?
What happens to all those $300K+ homes that 95% of Boise people can't/shouldn't be able to afford without 100% LTV subprime, IO loans?

They become $200-250K homes. What does that do to the lower end of the market?

Can someone please look at Nampa and Meridain and tell me we aren't the next FL but just a few months behind?

I would love to be wrong as I own 2 Boise homes in the $150-200K range.
Posted by on 7/1/2007 6:41 AM
Re:Finally, some good news on the local housing front!
Thanks for the comment and questions!

The good thing about the lower end of the market is those homes can't typically be duplicated for less so that protects that price point.


One of the basic principles of economics is "supply and demand". It is really difficult to build a new home in Ada County for under $200,000 so you are fairly well insulated on your two homes. At $150,000 they should just about cash flow so the investors still buy those pretty quickly if they are in a decent area.

Keep in mind that people are still moving here faster than they are moving out. With an increasing population base, we WILL absorb the inventory of the affordable homes. In the month of June, I had four properties close. That is still a slow June for me, but much better than earlier in the year.

I took over the marketing of a new home priced at $409,900 this past week and was pleasantly surprised that I have already had four showings and two of them have already come back for a second look!

The Meridian market does need to be watched very closely as there are no barriers to entry on building there to speak of. Boise is slowed by the mountains, the river, the airport, the lack of sewer to the southeast, etc. However, Meridian is mushrooming in concentric circles!

Something to consider, if you home is like all the other homes, it becomes a commodity. Commodities are sold by the price (lowest wins). If it is truly "unique" it becomes a collector's item or art and sells due to its rarity, but you have to find the right buyer that appreciates it for what it is. For example, where there were only 3 golf courses here in the valley, a home on the golf course sold for a premium. Now with all the golf courses in the valley, they too are almost a commodity!

Development costs for lots are running from $28-$35,000 per building lot these days in Ada County. Therefore, even if you were able to buy development land at $100,000 an acre and got four homes per the acre, you would be running $53,000 - $60,000 hard cost for improved lots. Using an old rule of thumb that construction cost of a home will be about 4x lot cost, that puts new homes at $265,000 - $300,000. I just optioned 3 lots for a builder in Kuna last week on $65,000 lots and we are struggling to keep the costs under $300,000. We are taking out the Granite and some of the hardwoods, etc. We looked at building smaller homes, but we get devistated by the "cost per square foot" when we have to still absorb the cost of the exact same size garage, kitchen, the and bathrooms on a 1500 sq. ft. home that we will have in our 2,000 sq. ft. model! Just absorbing the $65,000 lot cost adds $43.33 to a 1500 sq. ft. home; however it drops to only $32.50 for a 2,000 sq. ft. home! Remember, do not just buy your home based on sq. ft. for the dollar!

I had a builder tell me yesterday that he wanted me to consider taking over the marketing of two or three of his homes in Nampa, so I will gladly take you up on your request to research the Nampa market. That will become my next blog.

Jim Paulson, CRS, ePro, GRI
Jim [email protected]
Posted by on 7/1/2007 11:28 AM
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