|NOBODY’S HOME: Houses in Boise’s ‘burbs, some built with out-of-state cash near the national markets’ peak, are getting harder to hang onto.|
The Treasure Valley Repo Bus Tour embarked on its maiden voyage in March, driving about 25 pre-qualified and hopeful homebuyers on a tour of Boise and nearby Eagle and Meridian, hunting for deals on foreclosed homes.
“In this market it’s ‘Think outside the box.’ What can we do to generate some business?” says Nate Wilson, who helped organize the monthly bus tour.
In 2005, Wilson’s agency, the Boise branch of Keller Williams Realty, had 600 agents. In mid-April, the count was down to about 380.
Boise has been hammered by the national housing slump and the sub-prime loan debacle. In April, there were 200 homes in Ada County scheduled for a trustee sale, the last step in the foreclosure process, compared to 42 last April. March saw 245 defaults filed, up from 99 in March 2007. In the fourth quarter of 2006, single-family home permits plunged 39.6 percent.
Idaho, as of February, ranks 20th in the nation with one foreclosure for every 774 households. Colorado ranks fifth, with one foreclosure for every 305 households. Utah is 15th. Wyoming, with one for every 3,683, is 44th.
While the same factors that triggered the national downturn have been felt in Boise, the housing bubble that ballooned there was, in some respects, a product of Boise-specific forces, says Kirby Robertson, a Mountain West Bank construction lender.
In 2004 and 2005, right as national housing prices neared their peak, out-of-state investors discovered Boise and its cheap housing and solid job growth behind the likes of Hewlett-Packard and Micron. Other factors included low crime, good schools, mountain-town amenities and a research and development-minded Boise State University.
“We got a major influx of people from California and Washington who descended on Boise like a stampede,” says Idaho regional economist John Panter.
|“We have an excess supply of housing, plain and simple,” says Lender Kirby Robertson|
As Robertson explains, the influx of investors formed a bottleneck to available lots, driving up prices, and the new construction boosted existing home prices. Between 2002 and 2006, the median home price in Ada County jumped from about $140,000 to $235,000, and then dipped over the next year, for a five-year annual average growth rate of 10.2 percent. That dip represents a bad case of oversupply.
“The reality is that we have an excess supply of housing, plain and simple,” Robertson says.
Trey Langford of the real estate Web site BuildingCredibility.com says the downturn hasn’t hurt buyers who live in their own homes and haven’t been forced to sell by a job loss or a divorce. Boise ranks pretty low in owner-occupied foreclosures. The house-flipping investors got burned. Investors accounted for about one in five home loans.
A sign of the times, CBH Homes, which has built nearly 8,000 homes in the Treasure Valley and was ranked in 2005 by Builder magazine as the 57th largest homebuilder in the country, held a “Deal of a Lifetime” fire sale in October last year, discounting homes by as much as 70 percent to sell more than 100 homes in two days.
But while Boise’s may be one of the hardest hit real estate markets in the Mountain West, it remains better than the worst spots in the country, says Mike Ferguson, who works in Idaho’s office governing financial management. Boise’s price run-up occurred later than markets such as California, Arizona and Florida. “We went to the punch bowl, but we held off for a while,” Ferguson says.
An April report released by the Idaho Department of Finance says, “Idaho’s financial institutions are a beacon of good news, in stark contrast to the nation’s mortgage crisis.” The state’s total annual mortgage delinquency number is 3.86 percent, compared to the nationwide number of 6.31 percent.
And Idaho’s economy is otherwise pretty healthy. Idaho still boasts a low (but rising) unemployment rate of 3 percent, compared to the national rate of 5.1 percent. The median family income in Boise in 2007 was about $60,000. In mid-April, the median home price was $238,000, down about 10 percent from the previous year.
“I’m not putting on my helmet yet, because I don’t think the sky is falling,” Robertson says.