Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year. Main Meridian Homes for Sale
Would you believe you might actually be better off if you sold your home this year and bought a new one instead of doing it last year when you could have gotten more for your home?

I just pulled the statistics for the month of May 2008 for Ada County in the Intermountain Multiple Listing Service and found some interesting facts:


Date Range                  May 2007        May 2008

Total Homes Sold         729                  498

Average Sold Price       $280,641         $235,721

Median Sold Price        $231,000         $205,470

Average DOM             52                    68

% of asking to sold $    98.52               $97.79

Based on these numbers, it appears the sales are coming back to the level that most wage earners in Ada County can begin to buy homes again.  Keep in mind that 2007 was the year of opulence in construction for Ada County.  Even the production builders were including granite counter tops and hardwood or tile flooring on their homes.  Now they are starting to put in formica and vinyl again and calling the granite upgrades as they should have been all along.


When I researched the proverbial 3 bedroom 2 bath home with 1750 – 2000 sq. ft. and a 2 car garage, I found:

Date Range                  May 2007        May 2008        

# of solds                     13                    6                     

Average Price               $282,200         259,441          

Median Price                $250,000         242,450         

DOM                           48                    78



















 If you were looking for a 4 bedroom 3 bath home with 2500 – 2750 sq. ft. and a 3 car garage, I found:

Date Range                  May 2007        May 2008       

# of solds                     13                    9                     

Average Price               $334,710         307,100         

Median Price                $345,000         299,900         

DOM                           52                    109                


On the bright side of all this is that if you compare selling the average 3 bedroom home to buy the average 4 bedroom homes noted above, the net effect of buying in May of 2008 would have been a loss of $22,759 on your home; however a savings of $27,610 on the replacement home, so a net savings of $4,851!  The payment assuming a 30 year mortgage at 6% and no down payments on the 4 bedroom home (principle and interest only) would have been $2,006.76 in 2007 but only $1,841.22 this year saving you potentially another $165.54 a month.


How is that for spinning negative numbers into a positive?  When life gives you lemons - make lemonade!


Posted by Jim Paulson at 6/6/2008 2:34:00 PM
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Comments (8)
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
Thanks for the latest stats Jim. Any insights on New vs Resale homes? How many new homes are on the market at this time and how many this time last year?
Posted by on 6/6/2008 9:02 AM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
Great question Trey. I will research that and post the answer.
Posted by Jim Paulson on 6/7/2008 12:11 AM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
Great post... We are getting close t that 3X average income for the median price...another 15-20% to go on prices but its looking better...

Heres a wild idea for your readers... RENT THAT 3 or 4 bedroom home. I bet it will run you 900-1200 per month! Think of ALL THAT SAVINGS!
PLUS you wont have a total loss or -100% return on your down payment...never repair a damn thing....Homes built in the 2000's are like Fords built in the 80's.

I a different world ...long long ago (USA 1900-1997) you paid a premium to rent, since you got no hassle to fix crap, could move easily to that new job, could trade up easily...etc...
Fast forward and NAR has sold you on 'nesting', homes are a great investment blah blah blah...


Well the rent still stinks! (mortgage that is)

Americans home equity is at a RECORD LOW! Look at the new FED data --- 46%

ALL THE BS you have been sold about building anything is a lie.... YOU HAVE BEEN PAYING A MUCH TOO HIGH RENT TO A BANK! If you buy today you still will be.

So trade up!

Heck, rent a 6 bedroom palace for the price of a 3/2 mortgage! Break stuff...then call the landlord of course :-) And when you need to move for a new job, neighbors stink, crime etc......JUST DO IT!

never been a better time to rent
Posted by on 6/7/2008 4:43 AM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
Oh, and READ this stat
Mortgage Bankers Association show that 8.8% of American home loans were past due or in foreclosure at the end of March, making the first quarter of 2008 the worst three-month period for homeowners in nearly 25 years.

Okay, so most of you have 2 neighbors! BUY NOW AND YOU HAVE A 17% chance of living next to a default...that can mean unkept weeds, vandals, green pools!
Now assume the 3 houses in front...3 behind...your general neighbors...ALMOST A 100% chance!!!

Across from my moms house the REO just had its AC/pool pump/copper wiring etc...STOLEN overnight!


Rent and you can move the next day...Buy, and buy a nightmare!

8.8% ...if that number does not scare you about where this economy is headed...then go buy a big house...maybe I will rent next door for 1/3 of your mortgage...or maybe it will just be an abandoned crack house
Posted by on 6/7/2008 4:52 AM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
Sometimes it does make sense to rent. I am curious, emdeplam do you own or rent your house today? I have owned my home here forthe past 19 years and I have bought and sold several rentals since then as well.

If you can rent a home for a lot less than the mortgage payments, it might be worth giving up the "pride of ownership", the long term appreciation, the tax deductions on the mortgage, the ability to have pets, the ability to paint your house the color you want on the inside, etc.

If however, you don't care about any of that, and have great credit, let me know and I will let you rent from me so I can take advantage of the opportunity for you.

Keep in mind home purchases should be for the long term. If your home fails to appreciate or even depreciates for 1/2 of the years and breaks even the remaining half, at the end of your mortgage you still own it! I like the idea of having my tenants pay my retirement. If however, the rents don't justify the payment, it is time to buy the rentals in areas of the US that still do and wait for the local market to make sense again. Real Estate is like the stock market, you have to know when to buy and sell, and what you are investing in!
Posted by Jim Paulson on 6/7/2008 6:59 PM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
I did research the new construction vs. resale but wrote it in Word and for some reason couldn't cut and paste it into the comment, so I will post it in a new blog.
Posted by Jim Paulson on 6/7/2008 7:23 PM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.

Are you buying rentals in this market? If so where are you seeing the value pencil out?

In terms of the mortgage deduction, I think 70% of people don't get it (less than the std for them). I am well in the top bracket, but not self employed and probably only ever got a slight bit of it).

- I own property, sold one at the early 2007 top... and currently rent. When this contract ends depending on where the job goes I will check with you. I won't buy this market until we are closer to the bottom...which is progressing ...maybe 2011?

My biggest fear as a renter is renting from some failed flipper our mortgage bag holder ...In 2008 I will refuse to rent from anyone that won't let me run their credit, and yes I pull tax records and lien info haha! (I am sure you are good).
Posted by on 6/8/2008 1:45 AM
Re:Analyzing the net impact of trading up from a 3 bedroom home to a 4 bedroom in Ada County this year.
No, I am not personally buying rentals for the sake of rentals in Boise right now since the current market rents will not create a positive cash flow. If, however, I can find another home to buy that I can rent out while I subdivide the property to gain another lot or two; or rent it out to wait for zone changes to occur making at a potential commercial use, yes I would consider it in a heart beat since that is just an investment decision, not just buying a rental.

Your last sentence is something people should be aware of to protect themselves as renters. You are absolutely right in that if you sign a lease and the seller defaults on their mortgage, the courts will look at which contract was entered to first to see if you will be evicted or not. For example, if I own a property free and clear and rent it to you; then I file bankruptcy, the home could be sold but it would be subject to your lease (meaning you get to stay). If however, I have a deed of trust recorded in 2007 and sign a lease with you in 2008, then I default on the deed of trust, you are on the street! You could try suing your landlord for breach of contract; however, if they just lost the home in foreclosure, they probably won't have much to go after in your lawsuit! I used to be an agent for a real estate company that ended up going bankrupt recently, forcing me to switch offices and notifying my past clients, so running credit checks on your employer might be in order as well. On the bright side for me, it forced me to refocus, get my Broker's License, so that no one could do that to me again since I now have my own company and am not subject to someone elses financial indescretions. The same benefit goes to buying your home instead of renting it.

I am looking aggressively at buying homes in the south east (i.e. New Orleans, etc.) where there is a huge demand for housing due to many of the older homes being destroyed by hurricanes or concerns over mold in older homes that survived. The IRS has some amazing tax incentives to get people to invest in those areas to help it rebuild and meet demand. For example, they offer an accellerated 50% depreciation of the improvement in the year you acquire the property. When I can buy a brand new home there for $130,000 which rents for $1000 - $1200 a month and provides extremely favorable tax incentives I can't match in Idaho, my investment dollars will be going there for my rental inventory. I am still researching the cities and demographics before I decide and my CPA is researching all the benefits, requirements, and limitations regarding the IRS viewpoints. I have developed partnerships with other Realtors in those areas and with CPA's familiar with these tax credits so I can help other investors take advantage of this opportunity if they want to as well.
Posted by Jim Paulson on 6/8/2008 1:33 PM
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