Real Estate Home Loans in Boise Idaho, Benchmark Mortgage - Prime Equity Group: December 2010

The Case-Shiller Index posted awful numbers in its most recent reading. Each of the index's 20 tracked markets showed home price deterioration between September's and October's respective report. Some markets fell as much as 2.9 percent.

The drop in values is nothing about which to panic, however. The Case-Shiller Index is just re-reporting what we already knew. It's a common theme with the Case-Shiller Index, actually; a trait traced to the report's methodology.

The Case-Shiller Index is an imperfect housing indicator with 3 inherent flaws.

The first flaw is that the index makes use of a limited data set, tracking values in just 20 cities nationwide. That data set is then projected across the more than 3,100 other municipalities in the United States, including Boise. The "national figures", therefore, aren't really national.

The second flaw is that, even within the tracked 20 cities, not all home sales are included. The Case-Shiller Index only tracks sales of single-family, detached homes, and within that market subset, it only uses homes that are "repeat sales". This specifically excludes sales of condominiums and multi-family homes, and new construction.

The third flaw, Case-Shiller Index's third flaw is its "age". The Case-Shiller Index reports on a 60-day delay, and the values it reports are tied to contracts written even longer ago.  Sales contracts from July and August are responsible for October's closings so when we see the Case-Shiller Index as reported in December, some of the data it's reporting is 5 months old already. That's too old to be relevant.

Looking back at 2010, housing was at its weakest between May and August. Therefore, it's no surprise that the most recent Case-Shiller Index shows significant weakness.  Looking forward, we should expect the report to improve -- especially because of how strong New Home Sales and Existing Home Sales have been since summer.

The Case-Shiller Index is helpful for economists and policy-makers. It's not much good for individual homeowners, however. For accurate, real-time housing data, talk to a real estate professional instead. 

With 2010 coming to a close, the "experts" are out in full force, making predictions for next year's housing and mortgage markets on business television and in the papers.

Predictions for 2011 are wide-ranging:

• Some say home prices will rise in 2011
• Some say home prices will fall in 2011
• Some say mortgage rates will rise in 2011
• Some say mortgage rates will fall in 2011

The problem with housing and mortgage predictions is that -- like all predictions -- they're just educated guesses about the future. Nobody knows what will really happen with the housing and mortgage markets in 2011. All anyone can do is theorize. As laypersons, though, it can be hard to separate theory from fact.

Television can make that task even more difficult at times.

As an example, when a well-dressed economist goes on CNBC and presents a clear, succinct argument for why home prices will fall on 2011, we're inclined to believe the analysis and conclusion. After all, the outcome seems plausible outcome given the facts. But then, immediately after, a different economist presents an opposite argument -- that home prices will rise in 2011 -- and her analysis seems sound, too.

Even Freddie Mac can't see the future.

Last year, the government group predicted mortgage rates to 6 percent in 2010. That never happened, of course. Instead, conforming mortgage rates dropped over a 7-month period this year to levels best be described as "historic".  Freddie Mac couldn't have been more wrong.

So, what's a Boise homeowner to believe?

About the only thing that's certain right now is that mortgage rates remain low by historical standards, and that home prices do, too. Also, that both housing and mortgage markets appear to be riding momentum higher into 2011.  This suggests that it will be more expensive to buy and finance a home by the end of 2011.

Until that time, however, predictions are just guesses.

Like most housing data in November, the most recent New Home Sales report showed sales volume increasing last month, and home supplies falling. According to the U.S. Department of Commerce, sales of new, single-family homes increased to 290,000 in November on an annual basis, a figure equal to the New Home Sales 6-month rolling average, and a 6 percent improvement from October.

At the current pace of sales, the national supply of new homes for sale will be exhausted in 8.2 months -- a strong 0.6-month improvement from October.

This data is consistent with the most recent Existing Home Sales report. It showed sales volume rising 6 percent, too, and a similarly-strong inventory drop.

For the housing market in Idaho, it's another step in the right direction. Since May's post-tax credit plunge, home prices have stabilized and a foundation for growth has been built. Home builder confidence data highlights this point.

Also interesting in the November New Home Sales report is the volume breakdown by price point. Less expensive homes powered the market:

• Homes under $200,000 : 47 percent of all sales
• Homes between $200,000-$299,999 : 29 percent of all sales
• Homes between $300,000-$399,999 : 14 percent of all sales

Luxury homes accounted for less than 2 percent of sales last month suggesting that builders count first-time and move-up buyers as their core market.

As 2010 comes to a close, housing looks poised for a rebound. Sales in all categories are improving, relative to 6 months ago, and the economy is improving. In conjunction with rising mortgage rates, the best time to buy a new home may be now.

I was at a mastermind today where we discussed real estate information for Ada County, Boise, Idaho.  Year over year there has been a 25% decrease in the number of transaction sides.

Short sales make up 16-18% of the total sales and bank-owned (REO) make up another 30%, so almost 1/2 of the sales made in 2010 were distressed properties.

Canyon County, just west of Meridian, Idaho has even bleaker news acoording to Mark Tidd, President of Title One a locally owned and operated title and escrow company.  He said that three out of every four sales is a disressed sale in Canyon County.

Notice of defaults are down this year over last.  4,474, so far as of the end of November 2010 versus 5,346 in 2009, said Tidd.

Projections of more of the same with a slight increase in the number of units sold and probably more noticeable in the second half of the year, but modest gain is 3-5% growth for all of 2011, said Mark Tidd.

Looking for an extra 2010 tax deduction? Consider making your January mortgage payment a few days early.

It's a simple strategy that works because of how mortgage interest works.

Unlike rent which is paid in advance at the start of a month, mortgage interest is only paid after it's been borrowed. Your January mortgage payment, therefore, accounts for the interest that accrued in December.

And for a lot of Idaho homeowners, that mortgage interest is tax-deductible.

By making January's mortgage payment in December, eligible homeowners can apply the interest paid to 2010′s tax returns instead of waiting to claim the same deduction against 2011. Don't cut it close, though. It's best to remit payment prior to the last week of the month, leaving your servicer ample time to receive and process your paperwork.

Most importantly, though, before prepaying on your mortgage, talk to your tax professional.

Not every homeowner is eligible for mortgage interest tax deductions, nor should every homeowner itemize their respective tax deductions. The "pay early" plan could be a wasted effort for you, ultimately, depending on your taxpayer profile.

If you don't have an accountant that you trust, call or email me anytime; I'm happy to make a recommendation to you.

I know we would all like to have the "all cash" buyer with a budget in the millions and they will only look at five homes and then buy one, and it closes in a week.

Well, I like to dream too!

Yesterday, I drove to assist a client referred by a terrific Realtor team in Wasilla, Alaska and we only had to look at three homes, in order to buy one.  It was priced at $75,000 and worth every penny.  It is a short sale, but that doesn't mean we will close in a week.

But my point, if it were lost in the sarcasm, to serve the one you have well and you will get more.

They were pleased with their purchase and it will serve their needs while their son attends college in the nearby community.  Their son was featured, along with his classmates in college, for their work with NASA.

Hopefully, if you have a client that wants to move to Boise, Meridian, Eagle, Star, Kuna or Nampa, Idaho youw ill keep me in mind because I will always watch out for the best interests of my client regardless of the price range.

They all count!

Although recent reports of plans to eliminate or modify the mortgage interest deduction are widely exaggerated, the National Association of Realtors® will remain actively engaged to ensure that the nation's 75 million home owners will continue to receive this important benefit.

The Deficit Reduction Commission has released its recommendations toward reducing the U.S. deficit, which include modifying a number of popular tax breaks, including the mortgage interest deduction. President Obama created the 18-member, bipartisan commission earlier this year to identify ways to balance the budget by 2015. The commission does not have any legislative power, and Ada County Association of REALTORS says that the commission's report is just the first step of a lengthy process.

The MID allows an individual to deduct mortgage interest paid on mortgage debt of up to $1 million. The deduction is available for interest on mortgages for a principal residence and one additional property. Individuals claiming the MID also must itemize their taxes.

The ability to deduct the interest paid on a mortgage can translate into significant savings at tax time. For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year.

According to the most recent IRS tax return data available, 65 percent of families who claim the MID earn less than $100,000 per year. "Home owners already pay 80 percent to 90 percent of U.S. federal income tax, and among those who claim the MID, almost two-thirds are middle-income earners," said NAR's Chief Economist Lawrence Yun. "If the tax break is modified or eliminated, home values could fall 15 percent nationwide, as buyers discount the value of the MID in their purchase offers."

ACAR said the MID saves the average home owner thousands of dollars at tax time and helps American home buyers get into their first house.