Sandpoint & North Idaho Real Estate Market Conditions - Spring 2010

As recently as last summer, fall, and winter the news pundits touted the apparent recovery of our national housing market. With the various government programs feeding the market, such as first time home buyer credits and loan amelioration programs, mainstream media found no end to positive spins of news stories. While these special tax credits and various programs have been extended and helped the lower end of the market, the improved numbers were not so improved at at, and these programs are losing their effect. Now, we are seeing the numbers in the housing market turn down once again.

For the third month in a row the NAR (National Association of Realtors) reported existing home sales failing 0.6% in February to a seasonally adjusted 5.02 million units. While 'seasonal adjustments' can be attributed in great part to the deluge of snow much of the country was inundated with, this adjustment actually helped the overall numbers. Certainly sales in the Northeast and Midwest were down even more significantly than other areas. Allowing for these seasonal adjustments, existing homes jumped over 300,000 to 3.59 million. For those of you looking at how long it takes to sell a home, this represents an 8.2 month supply.

Moreover, while local prices are down over 17%, nationally the median price is $165,000, down 1.8% from last year.

The federal government has many programs assisting the housing market, including questionable mortgages through the FHA (Federal Housing Administration) and its blank-check support of nationalized and money-bleeding Fannie Mae (FNM) and Freddie Mac (FRE), the first-time home buyers credit was the most immediate impetus for increased sales during the second half of 2009. The credit was originally slated to expire on November 30th, but at the last minute was extended to this April 30th and expanded to include non first-time buyers. Nevertheless, sales started to dip after November. It is now clear that the credit merely sped up purchases that were already going to take place and higher sales last fall mean lower sales early this year.

Rumors have abounded that USDA is out of money, and Chris Basset addressed that question in this ActiveRain posting. Plus, there is a lot of debate currently about the Future of Fannie Mae and Freddie Mac - Read the several stories at Yahoo News

Existing home sales peaked in 2005 at 7,075,000. The latest number at 5,020,000 represents an almost 30% drop, and we are now entering the fifth year since the top. The pattern of sales from the homebuyer's tax credit indicates that it was too little to fix what is a massive systemic problem. House prices went too high during the bubble, actually doubling or more in a four-year period in some cities, and they need to come down to market clearing prices. Until this happens, the market cannot recover and grow again, nor can the overall U.S. economy.

Existing-home sales fall for 3rd straight month - MSNBC, March 23, 2010

Looking at the data below, clearly numbers are down from last year. Hard to do in that 2009 was dismal. Our totals for existing home sales were down 17%. Median price fell just under 12%, and the average fell almost 17%.

Days on market increased, but the number doesn't tell the full story. We normally have 1,000 - 1,100 homes on market. We peaked last year over 1,500. This can be attributed to fear. People were throwing their homes on the market. We have seen an increase in REO properties, but not as much as most of us expected. Therefore, days on market were well over a year, with the homes eventually being pulled off the market, going unsold.

One bright spot is that every home I have been associated with that my clients have been willing to rent have been snatched up within a day or two. We do have people moving here, just not buying.

Closing a sale has become a nightmare. Finding financing and passing HUD and bank guidelines has become increasingly difficult.

Home Sales March 24, 2009 to March 24, 2010

Home Sales March 24, 2008 to March 24, 2009

So far, this year, only 130 agents have made a sale in our MLS area. Thank God I am one of them.

Last year, only 211 out of 340 agents made a sale. I was in the top 20%. I would have been in the top 10%, but in an attempt to keep my business partner going, I gave him one of my waterfront sales.

We lost over 100 agents. Who knows how many others are maintaining their license, but not actively selling.

Land sales have not fared much better. With few financial institutions making land loans, sales have fallen to new lows.

Land Sales March 24, 2009 to March 24, 2010

Land Sales March 24, 2008 to March 24, 2009

There is good news. Constructions starts are up, and because of El Nino, we had a warm winter, and luckily, Schweitzer Ski Resort still had a decent year.

Plus, we fully expected to see many businesses go under, but due to efforts by many groups, with continued great efforts to put on the events that feed our community, restaurants and retailers kept their doors open. I worked diligently with Mel Dick on Dine Around Sandpoint, and also worked hard at making Winter Carnival a success.

Plus, also due to El Nino, we are expecting a long, warm summer. With Lake Pend Oreille traffic, our home sales improve.

We are expecting a complimentary article to come out soon about Sandpoint in Country Living magazine, and Sandpoint was featured in December in Where to Retire Magazine. I was prominently interviewed in that article.

We can only work with what we have, and what we have are some of the lowest prices in years, and a place others only dream of visiting. Living here is wonderful, and while the momentary future has its challenges, it is still America's Best Small Town.

This Sandpoint Blog is brought to you by...

Gary Lirette, REALTOR® & host of the radio shows North Idaho Business as well as North Idaho Arts on KSPT & KBFI in Sandpoint & Bonners Ferry. When you need your real estate questions answered...

E-mail Gary or call 208-610-1384 

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