Helpful Tips

Affordable Housing:  Are We There Yet?

Jim Haynes, REALTOR©, Century 21 RiverStone 208-255-2244, jim.haynes@frontier.com

The shortage of affordable housing has been increasing in Northern Idaho over the last decade.  Until recently housing prices in the region have risen faster than the national average and more rapidly than the working wages in the region.  In 2007 the median single family home in Bonner County sold for $265,000 but the median household income in Bonner County was approximately $42,000.  At a $42,000 yearly income and with current banking guidelines the maximum mortgage would be something under $200,000, putting most of the housing out of the reach of the average family.

Since 2007 there has been considerable financial volatility.  Through the middle part of this decade lending requirements were relaxed to encourage people to purchase homes that they could not afford.  As defaults on these loans picked up speed, a large amount of foreclosures began to come on the market and put considerable downward pressure on prices.  Now in the third quarter of 2010 the median home price in the United States had fallen to a more affordable $177,000.

Locally, the rate of foreclosures is estimated to double in the near term over the already high rate experienced in the past couple of years.  Many of these “good deals” can be found in the Multiple Listing Service through your real estate professional or by going online to any real estate web site.  Many of the clients who come to me have already searched the area online for below market properties.  I then provide the complete listing details and any other information they may want.  In this way the buyer can search independently and rely on the real estate professional to double check the details.  If a computer is not your style or you want some help along the way, contact your real estate professional.

There are also auction sites on the web that list bank owned properties.  Most auction sites do not require the purchase be made in cash but financing should be in place so talk to your mortgage broker prior to bidding if you plan to finance the purchase.  One can bid directly or have your real estate professional enter the bid for you.  If the bid is accepted you will need to provide earnest money and be prepared to close on the property in 30-45 days.  Each web site is a little different but all provide a place to find properties that are potentially below market prices.  Often these are bank owned properties and have been listed in the Multiple Listing Service for some time with no success.  The bank wants to get them “off the books.”  By going to the auction the banks may not get the best price possible but are relatively sure to sell the properties quickly.

In addition to “good deals” there are historically low interest rates and down payment assistance programs requiring little or no down payment to qualified buyers.  There are loans available through USDA that require no money down and have 5% interest rates.  To qualify requires an adequate credit score and no more than $74,000 household income for a family of two.  Consult your mortgage professional for details.

A larger percentage of people in Northern Idaho can afford to purchase a home now than could three or four years ago.  As an example, I recently worked with a client for whom I placed a bid online that was accepted for a relatively new (built in 2007) single bedroom condominium.  My client was a cash buyer. However, had they financed the property their monthly payment for principle, interest, property taxes and insurance would have been less than $520 per month. 

Even in the best of times, but certainly in these difficult economic times, affordable single family housing is not available for everyone.  However, because prices continue to moderate and interest rates continue to stay at historic lows, the trend towards affordable housing is improving.  Even though you currently do not think that you can qualify or afford to purchase a home, now may be the perfect time to search.  Contact your real estate professional or mortgage specialist.   You may be pleasantly surprised.

Improving Curb Appeal to Help Market your Home

Jim Haynes, REALTOR©, Century 21 RiverStone, 290-7249

As a Realtor in Sandpoint I routinely tour homes that are on the market and provide feedback to the listing agent on the home as to the listing price, structural integrity, presence of offensive odors or smells, and curb appeal.  The price must be appropriate for the market conditions to be successfully marketed, and the structure, inside and out, should be sound and safe and offensive odors will turn off any buyer.  Curb appeal is the appearance as one approaches the house from the street.  It represents the first impression that a prospective buyer gets from all the exterior elements, from the front door and entrance to the lawn and landscaping. 

A focal point for curb appeal is the front entrance.  In a study conducted by NFO WorldGroup it was found that enhanced entrances added as much as 6.6% to the perceived value of a home.  Consider repainting or replacing the front door if it is in need of repair.  Also ensure that the entrance hardware is polished, or if need be, replace the hardware.   Consider placing potted plants at the entrance to add color and interest.

Pressure wash the outside of the house and while you’re at it do the driveway.  Windows should be cleaned and replaced if necessary.  Trim should be clean and if necessary repainted.  Make sure the rain gutters are cleaned.  Sometimes we get used to the house as it is and become blinded to its shortcomings.  This is where your Realtor can help you identify those items that need attention with an eye towards maximizing your return on effort, time and money spent. 

Lighting is important if for no other reason than safety, but properly placed lighting can bring out the positive features of a reworked front door and entrance.  Consider replacing existing fixtures with an upgraded version as well as adding additional fixtures.  If the budget does not allow for new fixtures, be sure to thoroughly clean and polish existing fixtures.  Also put the highest wattage light bulb recommended for the fixture.

Finally, we get to my favorite, lawn and landscaping.  There should be visual interest that takes the prospective buyer from the driveway or street to the front door.  Landscaping and lawns that are left to deteriorate will negatively impact the prospective buyer’s opinion of the overall value of the home.  Conversely, lawn and gardens that are weed free and properly trimmed present an impression of someone who routinely maintains their grounds and by association their house.

As an avid gardener I constantly look for ways to add garden beds and walkways to create visual interest.  This same approach should be used to add curb appeal to your home.  Consider adding stepping stones to guide the visitor from the driveway or street to the front entrance.  Arrange your planting beds in interesting shapes that break up the front lawn and invite the visitor in.  Plants should be arranged tastefully and not placed in rigid rows.  Use a variety of shrubs and plants to maintain year-round visual interest.  Consider long term maintenance when choosing plants and plantings.  Remember just adding a planting is not enough.  One must maintain them to get maximum return.  Trim the grass along the driveway and walkways.  This makes for a clean line and visual appeal.  The same applies for all garden beds.  Make sure the grass is trimmed neatly or place a barrier between the garden bed and the lawn.  Often I have seen homes that have landscaping in place that has not been properly maintained.  The lack of maintenance completely takes away from the landscaping investment.  If you’re not a gardener, hire someone to make things presentable.  Remember there’s only one chance to make a good first impression and in today’s buyer’s market good curb appeal and the resulting good first impression may be the difference between your home selling at a desirable price and your home going unsold.

How Property Assessments Affect Property Taxes

Jim Haynes, REALTOR©, Century 21 RiverStone 208-255-2244, jim.haynes@verizon.net

It is that time of year.  All property owners in Idaho have been sent a notice from the County Assessor on the value the Assessor has determined is the “fair market value” of their property.  For most in Idaho the assessed value (which by law in Idaho is the fair market value) has gone down from previous years because the value of real estate in Idaho has declined.  As my personal assessment has gone down 16% does that mean that my property taxes will go down by the same amount?  Probably not.   The mil rate (the factor that is multiplied by the assessed value, less any property tax exemptions, to determine property tax) is determined by dividing the total net assessed value of the property in a taxing district into the budget of that taxing district.  This means even though my net property assessment went down by 16%, I may not see a decrease in my property tax come fall.  It depends on the overall assessment of property in a taxing district.  For example, if the total net assessment of a taxing district went down more than 16% and the budget for that taxing district is the same, then my property tax will increase.  In a similar fashion if my net property assessment goes down more than the average and the budget remains the same then my property taxes will go down.  Add to this that the taxing districts can raise budgets 3% per year without voter approval and, all things being equal, all property tax payers in a district will see an overall property tax increase. 

What can you do to make sure you are not paying more than your fair share of property taxes?  One way is to make sure that your assessed value is not greater than the fair market value of your property.  This is done by comparing your assessed value to recent sales of like property in your area.  This does not happen by talking to your neighbor and getting his opinion on property values.  One must be able to document the value based on comparable sales of similar property.  One can get an appraisal from a licensed appraiser or consult a local real estate agent or broker for a price opinion.

The second way to make sure you are not paying more than your fair share of property tax is to ensure you are taking advantage of all the property tax deductions to which you are entitled.  The home owner’s exemption is a deduction in assessed value as a result of living in the house.

A second exemption is called the circuit breaker exemption.   This exemption is designed for older, fixed income, individuals and gives them a reduction in their assessed value based on need.  Personally I have talked to seniors who do not know about this exemption and could reduce their property tax burden by applying for the exemption.  It must be applied for every year by April 15 and requires some income and medical expense disclosure.  If you know of someone who may qualify please contact the assessor’s office and obtain the appropriate application.

Our taxing districts provide services deemed necessary by the voters through either direct participation in an election or through their elected representatives.  To maintain these services requires financial support through taxes, in particular, property taxes.  The only way to moderate the overall financial burden to property tax payers is to control the overall budget of these services.  As property tax payers the way to ensure that we are paying only our fair share is to ensure that our assessed value is representative of “fair market value” and that we take advantage of all the deductions to which we are entitled.

Pricing Real Estate, Let’s Start From the Ground Up

Jim Haynes, REALTOR©, Century 21 RiverStone 208-255-2244, jim.haynes@frontier.com

When contemplating the purchase or sale of real estate one of the first questions a seller or buyer is faced with is the value of the property.  In this article we will be looking at what price vacant land sold for in the northern three counties last year and attempt to put values on current properties listed for sale.  Following is a table generated from data compiled from the Selkirk Multiple Listing Service (MLS) and the Coeur d’Alene MLS.

The number of lots sold in 2010 is less than the number of lots sold in 2009.  Concurrently, the number of lots sold in 2009 was less than the number of lots sold in 2008.  The same trend also occurs for the sale prices over that same time period (see real estate statistics in this issue) and is probably not news to most of us.  There has been a definite downward trend of real estate prices and volumes since the beginning of the credit crisis.  This is especially true of vacant land as financing has, and continues to be, a challenge.  With fewer buyers able to purchase an ever increasing number of vacant properties the inevitable result is a continued downward pressure on prices.

So what should one do if they cannot wait for prices to rebound (which could take a decade or more)?  The answer is to price your property appropriately.  Many land owners continue to list their property inappropriately given the current state of the market that in turn leads to disappointment.  The table below was compiled with data from April 2011 for the three northern Idaho counties.  It represents all vacant lot listings one acre in size or larger.

The first thing to notice is the large number of properties for sale relative to the rate at which vacant lots are being sold.  Given the slow rate at which vacant lots were being sold in 2010, there is a five to eight year inventory of vacant lots for sale!  How can the person selling into this flooded market differentiate their property from all the other choices?  Certainly land characteristics and location play an important role but all things being equal price is by far the major factor.  As noted earlier the price per acre of vacant land continues to fall.  By comparing the 2011 listing price per acre to 2010’s price per acre for properties sold, one can see a large disconnect between the price at which property has sold historically and the current listing price.  Vacant lots currently listed in Boundary County are priced 57% greater than last year’s average sales price.  In Bonner County lots are priced 24% greater and finally, in Kootenai County the premium being asked for current listings versus last year’s actual sales price is over 125% on a per acre basis!   **

The bottom line is that prices for vacant land are dropping and that trend shows no signs of changing.  The drop in the number of vacant lot sales coupled with a relatively large number of properties for sale has increased the inventory to five years, much higher than historical norms.  Though the number of sales is down over previous years, vacant land is still selling.  To be one of the sold properties in 2011 and beyond, the seller must price their property realistically to differentiate themselves from the many other properties for sale in this market. 

What about the buyer?  For the buyer the choices may never be greater for buying property priced realistically that may make a good investment for the long term.  Know your market and the land’s value.  As always consult your real estate professional to assist in either selling or buying real estate.  We’re here to help.

**  A single sale in Bonner County skewed the results and was removed for that county’s calculation

Fall Vegetable Gardens

Fall vegetables don't require any special care; in fact, you'll spend less time caring for your fall crops because of the favorable autumn growing conditions. Generally, plants will grow rapidly at first and gradually slow as the days become shorter and colder. Here are some tips and ideas for learning how to grow fall vegetables and what are the 10 best vegetables to grow in fall.

You'll be happy to discover that destructive insects won't be as numerous as the summer months. You will also struggle less with weed control because the weeds will germinate less frequently and grow slower than they do during the warmer growing seasons. Compared to the hot and dry summers, fall usually brings an increase in the amount of precipitation, eliminating another time consuming garden chore of irrigating the garden.

With just a little attention and effort you may be surprised to find that growing fall vegetables in the backyard garden and planters is even more enjoyable than planting a vegetable garden during the spring and summer seasons. Why? It's simple. Cooler autumn temperatures make it a delight to spend time outside in the garden and also provide an advantage when it's time to harvest your fall crops.

Maturing crops including cabbages and root crops will maintain their quality and stand much longer in the garden during the fall season. Leafy greens can be harvested a leaf or two at a time from each plant during the season, leaving the smaller leaves in the center portion of the plant to continue growing and producing new leaves. Or you can harvest all of the leaves at once from the mature plants late in the season.

Following is a list of fast growing, cold hardy crops that are ideal for fall vegetable gardening. These are our top ten vegetables to grow in fall:

·Kale - Nutritious leafy greens on productive plants that surpass winter easily, even in very cold climates.
·Collards - Another leafy green similar to kale, but with larger, stronger flavored leaves are the collards.
·Lettuce - Plant varieties bred especially for growing during the fall season or in cold frames.
·Turnips - Here's a quick maturing root crop that's productive and easy to grow.

·Rutabagas - Larger and sweeter than turnips, plant rutabagas earlier in the summer for a full fall harvest.
·Broccoli - Popular, productive, and much easier to grow than cauliflower. Plus, its high dose of fiber and calcium keeps a body good.

·Mustard - Spicy hot leaves; this is a very fast growing vegetable.

·Cabbage - Grow from transplants (like broccoli and cauliflower) or start seeds indoors under lights.
·Arugula - Fast growing leafy greens for salads or gourmet recipes.

·Leeks - One of the hardiest plants in the garden, leeks can even withstand winter freezes.

Selling Vacant Land in a Falling Market – One Person’s Story

The following story was told to me by a business acquaintance of mine.

The property owner, ‘Tim’ after dividing his property decided to sell off ten acres of land.  Knowing that the market was a buyer’s market he decided to make improvements to the property so as to make it as desirable as possible.  He had the property professionally surveyed, installed a new white limestone gravel driveway and an elevated pad was cleared for the future building site.  The pad also included a 200 amp power service for future use.  He also provided a permitted and pre-engineered set of plans for a 30x40 shop; a newly drilled well with a pump, and paid for a set of septic designs.  The ten acre property was situated beautifully, just off a county road, among a mixture of pasture and trees, with an easterly exposure and only 10 miles to town. 

‘Tim’ decided to list his property with a realtor who determined that the listing would support a price of $225,000. The realtor knew this was at the "upper" end of the price scale, but felt the property offered significant advantages that included an ideal setting plus all the improvements and felt the property would justify the higher listing price.

After 30 days they dropped the price by $15,000 to an asking price of $210,000.  After 30 more days the price was reduced another $11,000 to $199,000.  After yet another 30 days they changed realtors.  ‘Tim’ felt he had been ill-advised by his realtor to list in the upper end of the market and that this poor advice had priced him out of the market and cost him possible sales.

‘Tim’ and his new realtor continued to reduce the price ten more times each time in $10,000 increments, until the property sold, after 17 months on the market for $100,000.  ‘Tim’ appreciated the diligence shown by the second realtor who placed advertisements in different real estate publications showcasing his property.  The first agent had not secured any advertising of the property.  ‘Tim’ had also been proactive by placing his own advertisements in the Sunday paper every week.  ‘Tim’ indicated that his property was one of very few properties sold over that 17 month period and felt his property had sold because he had been flexible with the pricing and aggressive with the marketing.

 It was indeed a buyer’s market and even though ‘Tim’ was not happy about taking less for the property than he thought it was worth, he was happy to sell it.  He felt he had chased the market down and in hind sight had he been more aggressive in the beginning he felt he would have sold sooner and most likely at a greater price.   End of story.

From my seat I wish that more of my clients had the realistic attitude that ‘Tim’ has.  It is still a challenged market and likely to stay that way for the near term.  There are 1616 active listings for vacant land in the Coeur d’Alene Multiple Listing Service with only 268 sales being closed in Kootenai County during the last 12 months.  Based on the last 12 months of sales Kootenai County has 6 years of inventory of active listings for vacant land. For Boundary County this inventory is 7.4 years and for Bonner County the inventory is 7.0 years.  From the buyer’s side there is plenty of inventory from which to choose and prices not seen for nearly eight years (see real estate statistics this issue).  From the seller’s side if you need to sell take this example and get your property in shape, price it correctly and be flexible. Remember that an experienced real estate professional can help with not only pricing your property correctly but also by helping you choose how to differentiate your vacant land from all the others out there.