News out concerning the national sales data compiled for May. 1 in 3 homes sold was a foreclosure or property in a distressed sale. This is keeping sales prices down, but number of sales up. Locally, in North Idaho – Kootenai County specifically, we had 241 residential home sales in May. 25 of these were REO (Real Estate Owned) properties, 5 were short sales. 12% of our sales being distressed. This tells me that sellers of property are pricing their homes aggressively to compete with the distressed sales. Further, this is also telling me that banks are not just “dumping” properties but holding out for higher prices, getting into the real estate game. There are currently 84 REO properties on the market now. Let me know if you want a foreclosure list. Here is the rest of the article:
I have grappled with this concept for the last couple of days, I figure now is the time to take a stab at explaining inflation effect on property owners, investors, and property buyers. I am no economist, just curious. First of all, I need to explain inflation in my simple mind. Inflation is the price of goods/services going up as a result of the increase in money supply – a decrease in purchasing power. As the FED prints more money it dilutes the value of the money currently in the market driving up prices of goods and services. As a counterbalance to the rise of inflation, the government and/or market raises interest rates. Somehow, unemployment, output and productivity come into play as well.
INCREASE IN FORECLOSURES – Now, as the price of goods and services go up, property owners have to spend more of their income on these items reducing the amount of disposable income. Homeowners that are at the edge of their expenses who do not have savings, become unemployed or have not had increases in salaries will be pinched on making mortgage payments. When a person has to choose between food for family or mortgage, the food will probably win. There will be an increase in foreclosures. Take into account adjustable mortgages as well, when interest rates reset, payments go up making the pinch and foreclosure statistics a whole lot worse.
BIGGER POOL OF RENTERS – When people lose their homes, they are still going to have to have shelter. I think investment properties, rentals, will have a steady availability of tenants. We are seeing this now in North Idaho. Leases/rents are negotiable and reset after a set period of time investors can increase rents based upon inflation creating a hedge that a typical homeowner cannot.
INVEST IN ASSETS THAT CAN PAY OFF YOUR DEBT – Creating hedges in an inflationary environment is key to wealth protection. Inflation hedges include tangibles and goods (commodities). Land and property is definitely an asset but you have to buy right. Finding property deals that are close to the bottom as possible is key. Any good agent can give you a synopsis on the current market conditions in the area you would like to purchase. Good indicators would be level of foreclosures and short sales, active price ranges, and amount of solds/pendings in each price range.
HYPERINFLATION (a long shot) – Lets say hyperinflation comes around – that is – huge increase of inflation month over month. The value of money changes drastically and becomes worth less and less (i.e. it takes much more dollars to purchase the same thing). It makes sense if you have tangibles that increase at the same rate, if you owe 200,000 on your property and a pound of gold is worth 200,000 you can sell and pay off your house. I see having debt as being a plus in a hyperinflationary environment, AS LONG AS, you have assets, tangibles, goods that can counterbalance. The value in this for example, is now you can buy pound of gold for under 16,000. You have got to have a means to create income that is adjusted to inflation on a daily basis.
IN SUMMARY – The key to inflation and the housing market on you, the property purchaser is to make sure you get the best deal you can on a house you have interest in. Be aware of what is on the market, and the direction the market is headed in you area. Act in front of the market. Your real estate agent should be able to help you with local housing information. If you can get a loan, buy an investment property in foreclosure or one that is priced right. If your the property SELLER, get your price in front of the market now! That is where the buyer pool is. If you are backwards in value to loan on your house, shortsale it. Banks are taking losses on their loans, freeing up homeowners that could go into foreclosure. Good luck and let me know if I can help!
I am a very visual person, and I wish a video came with this report (LOL). A visual guide to the state of the economy county by county. Using this chart, you can see what real estate market areas are improving and which are being hit the hardest in almost real time.
The population of Kootenai County is 137,475. According to this report, 1.16% of property is in foreclosure in Kootenai County. Not bad, considering parts of California and WA are over 5 times that amount. See the link here:
Today, Bloomberg came out with a report summarized with this “Home prices in the U.S. dropped the most on record in the first quarter from a year earlier, led by California and Florida, as banks sold foreclosed properties.” I think this can be avoided at this drastic of a level. Banks are not doing all they can do to stop the foreclosure from happening. An agent in my office today was telling me a story about a property that was being negotiated via short sale. His client put in an offer of 153,000 to take to the bank. Months passed, bank chose not to respond and the property ended up REO. The same client was able to put in an offer on the property in the REO state, and got it accepted for 135K. Kudos to the buyer for getting what they wanted for better than they wanted.
What is it going to take, besides taxpayer money, to get these banks to understand that they benefit by streamlining and putting resources into the short sale process. It will help solidify prices in the market, move inventory, help their troubled clients, and avoid the dreaded foreclosure. See the links to two stories about foreclosures and short sales out today:
Home Prices in U.S. Drop Most on Record in Quarter
The current market trends remain volatile in the upper price categories and fairly consistent in the sub 175K range. Between 300K and 400K we have noticed an “uptick” in pending sales. This is do to motivated sellers in the 400+ range dropping prices and taking offers well into the 300’s. Upper level homes 750K plus, there are 7 pending sales. Of the upper end CLOSED properties, sellers are getting within 82% of their asking price! Recently, in the $125-175 range sellers are getting up to 98% of their asking price. First time homebuyers, inventory, and affordability are responsible for the vibrant sub 175 environment. Incentives (8K buyer credit, Interest Rates (sub 5%), and Variety of Inventory) are creating a buyer perfect storm. To view properties in all price categories visit my website http://www.LiveCDA.com. Let me know if I can improve my search function.
The North Idaho Multi-Family market is turbulent, with 425 options available. Only 41 (9.6%) of those are pending. There are 35 properties available between 175K and 200K. Not 1 is pending at this moment. I believe this is presenting an opportunity as motivated sellers are going to start getting anxious for offers. Look over the TMO multifam report attached. If you would like to look over the multi-family inventory please see http://idahomultifam.com/. Let me know if you would like to preview any of these properties.
Many foreclosures (REO) are available, with a constant churning of activity. See the current list here and call me to schedule an appointment to get into these vacant homes:
We are seeing MANY short sales with aggressive and knowledgeable agents successfully navigating the negotiations with the bank. There are now 144+ short sales available. Citi Mortgage, Countrywide and ASC are the hardest and longest to negotiate with 80+ days for approval. Ocwen, Home Equity, and EMC are the best with around 40 days for approval. To see the complete list of bank turnaround times, see my blog http://blog.livecda.com Further, see the current list of North Idaho Short Sales here:
I have developed a new web design with many new features. You can follow me on my social media Twitter, Facebook, Digg, and more. I have designed a new blog where I update all information and I have been taking videos for testimonials, The Mortgage Minute, The Real Estate Minute, and new property VIDEOS.
I listed a very nice 10 acre commercially zoned property in the CENTER of Kootenai County. It currently has a 2800 SQ/FT church with a 44,000SQ/FT set of plans available. Square, level and treed. ONLY $295,000. If you know of anyone looking for a commercial building, or a church in the valley looking to relocate, please let me know! See the listing data sheet here:
Thank you for taking the time to go over the information enclosed. If you have questions or would like to “chat” please never hesitate to get in contact with me. As always, I will take care of your referrals as if it were you. Please forward me anybody you know that is looking to buy or sell any property in North Idaho (I have a very well rounded experience in real estate). 208-660-5785. Have a blessed rest of April.
This chart depicts the short sale bank turnaround times from real estate purchase contract to bank approval and bank approval to successful closing. I highly recomend using real estate agents familiar with the short sale process in purchasing property. Particulalry, using listing agents that know what information to get to the bank and how to successfully communicate with them.
I just crunched all the sold data in the last year for residential REO and Short Sales in the Coeur d’ Alene MLS. What I found is interesting:
Only 21 Short sales closed in the last year for an average of 15% below Original Ask Price. As the seller was adjusting their price downward, short sales closed within 3% of the adjusted price (Around $14,000). This tells me that once a price hits a certain zone, below market prices, it will getan offer and close within 3% of asking. However, closing short sales can present a challenge, only 21 closed in the last year. 119 Real Estate Owned by Banks (REO) sold in the last year for an average of9% below Original Ask Price. Again, banks had to adjust their property pricing downward to create the sale, then after that, sold for within 4% of asking price. This tells me, if you find an REO, if it is the lowest in its class, you can probably get it 4-9% cheaper. The AVERAGE REO sold price was around 200K, which makes sense, saying our average income in North Idaho is42K, banks will loan to someone making this much money around 240K (MAYBE),people get laid off, the property goes into foreclosure, bank tries to sell it at 220K, they reduce the price to 210K and they accept an offer at 200K.
I’ve attached my spreadsheets if you want to take a look at it or play withor create your own data…
