Short Sales Help The Entire Housing Market   American Banker - June 5, 2009.  The U.S. government would rather see troubled homeowners refinance their home loans, modify their loans or, if all else fails, sell their homes in pre-foreclosure transactions to stave off foreclosure and clear the market. The administration's May 14 initiative to facilitate short sales  transactions encourages these attractive alternatives to foreclosure, and it follows efforts by Fannie Mae, Freddie Mac and a number of major banks to resolve default properties via short sales. Major servicers are expecting an eightfold increase in short sales by this summer. The Home Affordable Modification Program guidelines published in March by the Treasury Department mandate that a short sale be attempted if a distressed homeowner does not qualify for a modification by servicers that have or will seek access to federal funding support.  Most people don't realize in many cases short sale is a better alternative for many homeowners than a load modification.  Of those loans that are modified, 61% end up back in Foreclosure, for many of these people a short sale is a better option.    As regulators and many others see it, if just 25% of the current loans in default could be resolved through short sales, it would stave off a million foreclosures (good for homeowners) and replace a million non-performing borrowers with a million performing ones (good for lenders).   Local Short Sale Numbers Short Sale listings set a new record in May 2009!  After an 11% increase from March to April, Short Sales have jumped another 6.4% in May with a total of 2544 Short Sale Listings. There has been a STEEP vertical climb in Short Sales from May 2008 to May 2009!  There was over a 300% increase locally and Short Sales are expected to continue to  increase throughout the year!

Right now is a “perfect storm” of factors that say buy, buy,  buy!  Two of the most important factors that determine how much home you can purchase have come together to create a windfall opportunity that has not been this good in the last thirty years.

The first factor is interest rates.  Right now interest rates are the lowest they have been in 30 years at 4.5% APR.  This means that your purchase power has never been this good.  For example:  A $1,000/mo payment today will get you $196,361 to buy with, compared with $116,393 in 1978.  That is a $79,967 increase or 68.7%.

The other factor, is that prices have never been lower.   Prices are at an all time low.  Good properties are being picked up for thousands less than asking price, which is already thousands less than recent appraisal.   

Warning: This storm will not last forever.  We all know that interest rates will begin going up as inflation begins to go up.(this fall many are saying)  As current  inventories get bought up the prices  will firm up and begin to rise again.

Now is when buyers can make good gains in real estate.

As one who has lived in and around Idaho all of my 57 years, I have a very good perspective on the Idaho Real Estate Investor.

The Idaho Real Estate Investor tends to be more conservative. They take their time and are deliberate in selecting an investment property that fits their taste. They tend to be down to earth, and maybe that is why a larger number of Idahoans own Idaho investment property.

Read more: Idaho Real Estate Investing

I just posted some information on on Boise 4 plexes that investors might want to take a look at. You can get a current list of Boise 4 plexes for sale that is constantly updated from the Intermountain MLS.

Some may remember the late 70's, early 80's when interest rates were in the high teens and low 20's.  The country was in recession and there just wasn't cash in deals. So we got creative.

Thank goodness for that experience. I just helped a seller get out from under a rental he owned and a buyer to get into their first home by recalling some of that old experience. The seller owned the property free and clear, but lived 800 miles away and was tired of low rents, vacancies and repairs. We had tried to sell it, but the market was below acceptability.  The tenant has been at the same job for the past eight years, mad good money, but because of medical collections just were not financable. The perfect storm was about to come together and make both parties happy.

For the seller: he transferred the liability of the property to the Buyers, retains a security interest in the property, obtained his asking price, and created a monthly income much higher than rent.

For the Tenant: They don't have to move any more, can put sweat equity into the property and keep it, save a ton in closing costs, and make monthly payment that is manageable.

Downside: In three years the balloon payment will come due and the tenant/buyer will need to get financing or talk the seller into extending it another period. Over the past several years with financing so free and easy some of these old tools laid rusty in the bottom of the tool box. Now we must get them out and clean them up if we are to be most effective to our clients.

I love selling real estate in Nampa Idaho!

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