Boise Real Estate Blog

Excerpt from Fannie Mae's "Ecomomics and Mortgage Market Analysis"

With the banking sector still largely frozen in terms of credit extension, the Fed has been aggressively expanding its balance sheet again. In particular, it has been focused on the housing sector, which remains central to the recovery. The Fed has ramped up its purchases of both GSE debt andmortgage-backed securities, and is again growing its balance sheet. The Fed’s purchases have more than offset the decline in purchases by foreign investors. It also has been purchasing longer-term U.S. Treasury securities in an attempt to bring down longer-term interest rates.

 

 

Rates have fallen as a result and this has kick-started refinance activity in the market. The Mortgage Bankers Association application index for refinance applications has leaped with the decline in rates, and volumes of loan production have risen substantially. There has been a modest rise in purchase applications as well. However, purchase lending activity is substantially less interest-rate sensitive than refinancing.

While home sales have been searching for a bottom and there have been numerous statements of optimism and some data for support, the bottom has probably not occurred, though it is closer. Several monthly indicators had a good month recently, including builder optimism.

 

Nonetheless, it is worth noting the dramatic shares of recent months’ sales that are attributable to short sales and foreclosure sales among the existing home sale data from the National Association of REALTORS®. In March, more than half of existing homes sold were distressed sales, and there isnot yet evidence of a turning in the rate of foreclosure. Thisdifficult to track because at last count nine states and a number of counties and municipalities, plus individual companies,had foreclosure moritoria in place.

 

The trouble in the single-family market which has generated a huge supply of vacant and for sale owner-occupied homes is starting to have some impact on the multifamily business. While recessions always impact multifamily properties as household formation rates decline and rent hikes slow or fall, this cyclical turn has the added pressure from the abnormal events in the single-family world. Average rent fell as vacancy rates topped 7 percent in the multifamily market in the fourth quarter of 2008.

 

Doug Duncan and Molly R. Boesel, Economics and Mortgage Market Analysis, April 8, 2009 

 

Ada County Market Overview - April 2009

Canyon County Market Overview - April 2009

Pending Home Sales Rise, Housing Affordability Near Record

Washington, May 04, 2009

Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the National Association of Realtors^®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82.0 in February, and is 1.1 percent higher than March 2008 when it was 83.7.

Lawrence Yun, NAR chief economist, said it should take a few months for the market to gain momentum. “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” he said. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.” (press release text continues below)

NAR’s Housing Affordability Index² remained near record highs. The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the increase in buying power is quite remarkable. “Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he said. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”

A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.

The National Association of Realtors^®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Walt Molony 202-383-1177 wmolony@realtors.org - National Association Realtors

KW Commercial has launched!

Keller Williams Commercial

We now can service all of your Commercial Real Estate needs.  Keller Williams International has launched its commercial division nation wide.  Locally we have assembled a team of some of the Treasure Valley’s top agents to serve you in all disciplines of commercial property transactions.  Industrial, Office, Retail Services, Non-Profit and Municipal Services, Design, Construction and Development Management, Land Brokerage and Multi-Family are all areas our office can handle for you.  If you have a need for a commercial broker or have a friend or family member that need assistance with any of these commercial real estate disciplines give us call at 472-8600.