John L. Scott Real Estate
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Tuesday, March 25, 2008

Please don’t let me spoil a good cathartic experience for you. If you are certain the sky will fall, then by all means wear a helmet and turn elsewhere for confirmation. I enjoy amateur economics, you know, basic stuff like supply and demand. In my job, we study the real estate market in the Treasure Valleyand have been closely monitoring residential inventory since 2006 after the unfathomable sales year of 2005. At this point, you probably know there is an extreme excess supply of residential lots and, in my opinion, a much more reasonable supply of finished home inventory. I would argue that the market has been correcting itself for some time and we have made considerable progress toward equilibrium.  

One way to evaluate the trend of finished residential inventory supply is to study the change in inventory by month from one year to another. Because we live in Idaho, winter both impedes the construction process and the buying process. During the holiday period, people are otherwise focused to think about buying a home and builders know this and try to stage inventory appropriately. The real estate business is seasonal and so viewing year over year data using analysis on a month by month basis is appropriate. Figure 1 measures these variances[i]. In June of 2006, the supply of units began to outpace that of the prior year. The peak of the variance was in September of 2006 with 4,601 more housing units available than in September of 2005. Since then, this variance has steadily decreased to December 2007 where we had 471 more units than the prior year. This trend, derived from fewer home starts and a reasonable level of sales, indicates that the excess finished home inventory is eroding.   

Sales trend measurement is one method of gauging the demand for housing. We experienced extraordinary record sales in 2005 that spawned the large inventory in subsequent periods and we may not reach those sales levels for a few more years. However, we can study the change in sales volume numbers for the market to help us understand the direction of the market. Figure 2 is a three-month rolling average of the year over year sales variance measured in number of residential closings[ii]. In October of 2005 our number of closings began to slow until they fell below the prior years figures in August in 2006. Closings in 2006 were well below the levels of 2005, but 2005 was a fantastically, and unrealistic, robust period. Since June of 2007, we are trending back toward growth. This is in part due to the more realistic comparison to 2006.    
We have established that the inventory levels are correcting nicely and the number of closings is trending back toward a more normal level but if you are a buyer, you probably want to know how far prices might fall in this excess supply environment. The parts of the country particularly hard hit by falling prices are where there have been extreme levels of appreciation over the last several periods. The question then becomes how much appreciation did we experience and what has the reversal been since then?
The following table (Figure 3) uses the 3 month rolling average and compares the average home closing price, in both Ada and Canyon Counties[iii]. It is interesting that both counties’ average sales prices have come back down to the average established in June of 2006. This implies that today you can purchase a home in the Treasure Valley for about what you would have paid 20 months ago. Coincidently that is the time that closings fell to below the prior years 3 month average (see Figure 2).  If you look closely at the trend lines in Figure 3, you will see that both the Canyon County and Ada County average closing price attempted to rally back up again last summer. You could argue that there is a ‘floor’ developing, which would imply the average home closing price may very well start up again soon. 
One other variable worth studying is the foreclosure rate in the area because foreclosures will add to our already large inventory pool of finished homes. Goodness knows we have been inundated with bad news about the impending catastrophe. Much of that data we see in the media is collected by national entities that collect information on foreclosures and merely count every document filed as a foreclosure. Sometimes property owners salvage the property from foreclosure for a time and then fall back again into foreclosure. The result of this data collection technique is that instead of measuring the number of foreclosures it measures the number of filings. The following chart (Figure 4) was obtained from the Federal Deposit Insurance Corporation (FDIC); it gauges actual property foreclosures in the state of Idaho, not the number of filings[iv].  
This indicates to me that our situation in Idaho is rolling within the range of the last few years and that we are in much better condition than the nation as a whole. The next graph (Figure 5), again supplied by the FDIC demonstrates the delinquency and charge-off rate for Idaho compared with the nation5. The Idaho rates have been rising but within an historic margin of variance. 
If you are a prospective home buyer and you think that foreclosures will add significantly to the supply of inventory I would argue that the likelihood of that is remote. History has shown that national recessions drive people to our productive, beautiful surroundings and quality life style. If you were unemployed and/or tired of bigger city crime, smog and alienation where would you look to live? Perhaps in a city with mountains, clean water and an unemployment rate of less that 3%. 
I submit that the fundamentals of our real estate market are correcting and by waiting to purchase you may see the home prices rise. The facts are that the excess supply of finished residential inventory is eroding. Lot inventory notwithstanding, the number of home closings is accelerating and prices appear to be ready to stabilize. When you add to these facts mortgage interest rates in the 6 % range it seems like an excellent time to buy. 
By David R. Player
Dave Player has been in the banking and commercial finance industry for 30 years. He graduated Magna Cum Laude from the Business School of the University of Utah with a degree in Economics. He is responsible for commercial lending in southern Idaho and Northern Utah, and a Senior Vice President at Mountain West Bank.

[i] Jere Webb, [], “Webb Charts”, January 2005-January 2008.
[ii] John L Scott Real Estate, [], “Monthly Market Survey”, 10 Jan 2008.
[iii] Jere Webb, [], “Webb Charts”, January 2005-January 2008
[iv] FDIC Regional Economic Conditions, Federal Deposit Insurance Corporation, 21 Jan 2008.
5 FDIC Regional Economic Conditions, Federal Deposit Insurance Corporation, 21 Jan 2008.


Posted by Jenna Englund at 3/25/2008 10:00:00 PM
Tuesday, March 11, 2008

Gradual Recovery Through Spring

Boise, ID: Home sales statistics for February show that 360 Single Family Homes sold in Ada County according to figures released by the Intermountain MLS and reported by the Ada County Association of REALTORS®.

According to the National Association of REALTORS® Lawrence Yun, NAR chief economist said many buyers have been waiting for higher mortgage loan limits. "The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions," he said. "Therefore, a notable rise in home sales can be anticipated in the second half of the year."

"Buyer activity is continuing to grow," said ACAR President Dan Hernandez. "February sales are up 16% compared to last month. Sellers are coming back gauging the temperature of the market and getting ready for the spring."

Median home prices for existing homes slipped 5.54% as sellers continued to adjust expectations downward due to sluggish sales. "A median price of $196,000 means that more Treasure Valley families will be able to achieve the dream of homeownership," said Hernandez.

The number of days that it took to sell a home dropped from 74 last month to 66 in February.

"Our Ada County market is still fundamentally strong," said Hernandez. "The national attention to short sales and foreclosures suggests that a significant number, if not the majority of homes for sale are in foreclosures. Nothing could be farther from the truth."

The Ada County Association of REALTORS ® (ACAR) is the business advocate for real estate professionals in Ada County. ACAR represents more than 4,000 REALTORS® active in all phases of real estate brokerage, management, development and appraisal. 

Posted by Jenna Englund at 3/11/2008 7:48:00 PM
Monday, March 10, 2008

This is a very confusing time in our economy, and especially in the real estate market. We hear from the national media that values will continue to drop on homes and that we should wait to buy a home.

Interest rates are down and I want to buy, but I’m afraid and not sure what to do! That is what we are hearing from a number of people. It is a very important decision and there is a lot to consider.

First of all not all states and city’s are created equally. Every city or community has their own economy. The problem with these statements from the national media is that they do not tell us what is really happening in our own community. Even the local papers are quoting some expert in Washington D.C., New York or wherever! We need to know our local market. In the Treasure Valley we are very lucky as we have very low unemployment, a healthy commercial building climate, job creation and growth, low crime rates and mild weather, which all create an atmosphere where people want to live and move. We have been through a number of economic downturns in the economy and the Boise area always recovers quicker than the rest of the nation because of our underlying health economy.

The next big question a buyer has to ask themselves is how long do I plan to live in my next home? Real Estate is normally a long term investment. Most of the people who got caught up in the 2005 housing frenzy buying and flipping homes got hurt. It takes a very sophisticated buyer or investor to play in that environment. If we plan on living in our next home 4 years or more, the risk is very low.

The next question is whether I’m buying a new or existing home. Most generally the highest equity gains come in the first 4 to 5 years of a new home. Right now in the Boise area there are great opportunities. Builders have dropped prices dramatically. They are taking money to the bank to get rid of current inventory. The problem comes with the depleting new home inventories. Once the deals are gone, they are gone forever. The homes that will replace the old product will be more expensive. Cost of permitting and raw materials are going up. We are in a global economy and the demand for raw materials in on the rise. Foreign economies are placing heavy demands on building materials as well as oil. If you are thinking of buying or building a new home, DO NOT WAIT! Waiting will cost you money.

With regards to existing homes it will take a bit longer. The foreclosures and short sales are where some of the real deals are right now. However, we do not have the high inventory levels that we see in the larger cities and this supply of distressed sales will clean up soon. Then the full attention will be back on the existing inventories.

There is also one more major factor that gets overlooked, HAPPINESS! How do you place a price on that? Sometimes we get so wrapped up in finding a great deal we forget the most important part of the American Dream, being happy. If we find the ideal home, we can afford it, and it will make me or my family happy, then so be it. Do not let being a tough business person interfere with the most important aspect of home ownership, HAPPINESS!       

Posted by Mike Pennington at 3/10/2008 9:35:00 PM
Saturday, March 1, 2008

As seen in Meridian in the Middle Magazine, JAN/FEB Edition

Treasure Valley Family YMCA
Turns to Meridian for New Campus

Story by Linda Funaiole

To view this story at Meridian in the Middle, please click here.

Treasure Valley Family YMCA officials have looked southward to Meridian for a satellite campus to house a proposed pilot lifetime fitness project that would help stem a growing national health care crisis. Jim Everett, Treasure Valley Family YMCA president and chief executive officer, says the developers of Gramercy Village in central Meridian have donated a parcel of land within their subdivision for a new “compact” center that would address school health and wellness needs.

Plans call for a limited facility initially, with room for expansion to a full-fledged YMCA in the future that could include an aquatics center, climbing wall and youth activity center, if the community approved and helped fund it. First phase construction will be paid through private donations.

The donated site is next to Mountain View High School on the south side of Overland Road, between Eagle and Locust Grove roads. The estimated $5 million center is expected to comprise 26,643 square feet on 2.7 acres connected to Intermountain Orthopedics through 2,619 square feet of shared space. Construction started last fall and is slated for completion this spring.

Phase I of the new Southwest YMCA would include a teaching kitchen, basketball gym, cardio and strength training area, indoor cycling room, aerobics rooms, locker rooms and a drop-in nursery.

“The vision is that we’re going to partner with the schools, we’re going to partner with the medical community, we’re going to partner with Idaho State University to work within the schools at the elementary level, at the middle school level, at the high school level, and with parents too,” Everett says. If approved, the proposed project would focus on “best practices” to inspire youth and their families to eat more nutritiously, exercise more regularly and break destructive lifestyle habits. The program would be an intensified version of similar fitness efforts nationwide and at other YMCAs, especially the downtown center, adjacent to Boise High School.

“On a nationwide basis, a lot of communities have done this, but we think we’ve taken it down to the micro-level,” Everett explains. “This is the facility that’s going to be the biggest part of our model and our experiment on how we learn what the best practices are in cooperation with the schools and the medical community.”

The new Southwest YMCA would foster educational opportunities for students, the community and the partners involved. “Because of the unique nature of these partnerships, we would be better able to use outcome-based data to determine what works best and replicate that in other schools and communities,” according to a YMCA news release.

The Meridian Joint School District No. 2 would also reap benefits from the new
center, which is a short five minute drive from district headquarters since the Locust Grove interchange opened. For example, the proposed new baccalaureate high school would be built without a gymnasium because of its proximity to the new fitness center.

“We would use that facility there for the fitness component for our kids,” says Dr. Linda Clark, Meridian School District superintendent, adding that other educational entities in the proposed partnership could provide training of athletic instructors and educational programming.

Bessie Katsilometes, ISU-Boise dean of academic programs, says that university faculty members have been exploring an innovative collaboration with the YMCA, school district and other area health providers to address the serious health implications of obesity.

“An intervention for the reduction of obesity through heightened educational awareness, increased physical activity, healthy nutritional approaches, and behavioral lifestyle changes for the school age population would be an exciting partnership in preventative health promotion,” Katsilometes explains. “ISU’s health science programs and research knowledge, together with the expertise of other educators, service providers, and health care practitioners involved in preliminary dialog, may result in a pilot project which could be replicated in Treasure Valley schools to reduce obesity and associated health risks through making lifestyles changes in this critical population.”

The YMCA, along with public-private partnerships, is one of many nationwide organizations taking major steps to solve the health care crisis bought on by physical inactivity and unhealthy eating, Everett says.

According to the YMCA:
• $227 million was spent in Idaho in 2004 on obesity-related expenses.
• Childhood obesity rates have climbed steadily over the last 15 years.
• Type II Diabetes is now being seen in
sedentary, obese children for the first time.
• At least 30-35 percent of the population leads healthy lifestyles that need to be sustained and supported.

Everett, a 33-year YMCA veteran and 20-year CEO, says the organization is working hard to apply lessons learned over the years. “One of the things we’re learning is that that group (30-35 percent) needs a lot of coaching. We’ve tended to do pretty well on the front end of helping people. And we think, boy, if we could just help at the front end, this habit would get established. That’s been my historic paradigm.”

For more information on the Treasure Valley Family YMCA and plans for a Meridian branch, please visit , or call 208-344-5501.

Posted by Jenna Englund at 3/1/2008 5:53:00 PM
Tuesday, February 26, 2008

Best States for Jobs
Anthony Balderrama, writer

Location is everything, according to the real estate adage. Many people learn the wisdom of these words after they move into their first apartment on a tight budget and have a view of a landfill and the smells that come from it.

The same holds true for job hunting. Your chances of finding the right job – or any job, really – depend on where you live. The unemployment rate is the ratio of job seekers to the working population. Therefore, a low percentage means few people are having any difficulty finding work.If you’re looking for a job, you want to be in a state that has an unemployment rate lower than the national average, which is 5 percent according to the most recent data from the Bureau of Labor Statistics (BLS).
Here are the 15 best states to find work ranked by their unemployment rates.

1. South Dakota
Unemployment rate: 3 percent*
Population: 796,214**
Mean annual wage: $30,460
Top industry: Trade, transportation and utilities (19.9 percent)***
2. Idaho
Unemployment rate: 3 percent
Population: 1,499,402
Mean annual wage: $34,810
Top industry: Trade, transportation and utilities (20.2 percent)
3. Wyoming
Unemployment rate: 3.1 percent
Population: 522,830
Mean annual wage: $34,290
Top industry: Government (23 percent)
4. Nebraska
Unemployment rate: 3.2 percent
Population: 1,774,571
Mean annual wage: $34,300
Top industry: Trade, transportation and utilities (21.1 percent)
5. Utah
Unemployment rate: 3.2 percent
Population: 2,645,330
Mean annual wage: $35,540
Top industry: Trade, transportation and utilities (19.7 percent)
6. Hawaii
Unemployment rate: 3.2 percent
Population: 1,283,388
Mean annual wage: $38,630
Top industry: Government (19.6 percent)
7. North Dakota
Unemployment rate: 3.3 percent
Population: 639,715
Mean annual wage: $32,440
Top industry: Trade, transportation and utilities (21.4 percent)
8. Virginia
Unemployment rate: 3.5 percent
Population: 7,712,091
Mean annual wage: $41,450
Top industry: Government (18 percent)
9. Montana
Unemployment rate: 3.6 percent
Population: 957,861
Mean annual wage: $31,290
Top industry: Trade, transportation and utilities (20.5 percent)
10. New Hampshire
Unemployment rate: 3.6 percent
Population: 1,315,828
Mean annual wage: $39,250
Top industry: Trade, transportation and utilities (23.3 percent)
11. New Mexico
Unemployment rate: 3.7 percent
Population: 1,969,915
Mean annual wage: $33,980
Top industry: Government (23.2 percent)
12. Delaware
Unemployment rate: 3.8 percent
Population: 864,764
Mean annual wage: $41,680
Top industry: Trade, transportation and utilities (18.7 percent)
13. Maryland
Unemployment rate: 3.8 percent
Population: 5,618,344
Mean annual wage: $44,030
Top industry: Government (18.2 percent)
14. Iowa
Unemployment rate: 4 percent
Population: 2,988,046
Mean annual wage: $33,250
Top industry: Trade, transportation and utilities (20.4 percent)
15. Vermont
Unemployment rate: 4 percent
Population: 621,254
Mean annual wage: $36,350
Top industry: Trade, transportation and utilities (19.4 percent)
*Unemployment rates, mean annual wages and industry percentages obtained from BLS in January 2008. Percentages based on nonfarm payrolls, seasonally adjusted.
**Population figures based on U.S. Census Bureau data.
***Top industries are those that employ the largest percentage of a state’s labor force.
Anthony Balderrama is a writer and blogger for He researches and writes about job search strategy, career management, hiring trends and workplace issues.
Last Updated: Friday, February 22, 2008 - 1:54 PM
Posted by Jenna Englund at 2/26/2008 9:04:00 PM
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