The inventory of homes for sale in the Treasure Valley has fallen to the lowest level we’ve seen since June of 2006 when the home buying frenzy was just cooling down. Mortgage rates remain steady, near record lows, and on the surface this seems like a recipe for increases in home prices and sales.
Despite that however home prices aren’t too far off their 10 year low points in Ada and Canyon counties. There are a number of reasons for this, one of which is the more stringent lending practices currently in effect particularly for those looking to work with Fannie or Freddie. This is just one little snag in the market that is currently still dominated by distressed properties.
Two out of every three homes sold in Canyon county and two of every five in Ada county were distressed according to the Intermountain Multiple Listing Service.
This means that the sellers of the homes were in such deep financial turmoil that their homes had either been repossesed by the bank or were being sold off for less than the amounts still owed on the mortgages.
“REO properties and short sales are a big part of our market, and we’re going to see that for a while,” said Blake Mayes, owner of Blake Mayes Team at RE/Max Capital City in Boise.
For those willing to brave this market there can be great returns however. You can find lists of over 500 bank owned homes online. That number of homes doesn’t include the ones that need work before they go to market or those that mortgage-backed securities companies may still be in the process of taking back from homeowners.
People who don’t HAVE to sell their homes generally aren’t selling now, with prices as low as they are. Many more other homeowners simply CAN’T sell because they owe more on their mortgages than their homes are worth.
Some are giving up rather than struggling to make payments. “There’s still a lot of people who are making the decision to let their house go because they are so upside down on the value,” Mayes said. “There’s no way of knowing how much is out there.”
Thankfully the number of upside-down homeowners in the Treasure Valley is decreasing somewhat, dropping 1% between March and June. Underwater homeowners who’d like to sell, and those who’ve lost a lot of equity, are hunkering down to await better prices.
This limits the market for newly built homes, too unfortunately. New-home construction remains sluggish. Since 2006, one of every two residential-construction jobs in the Valley has disappeared; this has spelled hard times for the struggling jobs market.
As more homeowners are staying put fewer and fewer homes in Idaho are being sold the old-fashioned way – by sellers seeking to relocate, move up or downgrade. The local supply of homes is also down some 25% from what it was just a year ago, and many agents in the valley report multiple offers coming in on low-priced distressed properties – and those properties are in fact moving quickly.
Many local REALTORS are still optimistic, noting that Idaho has remained relatively well insulated as compared to some of the other national markets. And with great news about the Gem State growing, being top ranked as a good place to live and retire we’re seeing many out-of-state buyers and retirees stimulating the market. This up turn is good news in real estate and most expect home values to rise 3-4% a year, but many advise it will likely still be a decade before they return to their pre-2006 prices.
