Treasure Valley housing downturn isn't over yet

Nan Holmes, a senior escrow officer at a title insurer, says her insider's view of the Treasure Valley housing market gave her the confidence three years ago to pay $370,000 for a new home in Boise's Collister neighborhood. She got a price she liked from the builder and 100 percent bank financing.
That was before the bottom fell out of the housing market as borrowers with bad credit began defaulting in record numbers, setting off a recession. Holmes, who had earned $150,000 a year when real estate was booming, saw her compensation shrink by half when business cooled, forcing her to dip into savings and sell jewelry. She stopped paying the mortgage in April and has put the house on the market for $145,000 less than she owes the bank.
"How long will it take for the market to turn so I can just break even?" said Holmes, 55.
Home foreclosures are still climbing in Idaho and some other states, according to real estate data firm RealtyTrac Inc. With 14.6 million Americans out of work and consumer spending declining, further weakness in housing could push the economy back into recession, former Federal Reserve Chairman Alan Greenspan said Aug. 1.
Home seizures soared 822 percent in Idaho in the second quarter compared with a year earlier, and the state now has the nation's seventh-highest foreclosure rate, according to RealtyTrac.
Median home prices have tumbled by more than one-third in the Treasure Valley since their 2006 peak. The median price in Canyon County fell to $89,000 last month, according to the Intermountain Multiple Listing Service. In Ada County, it rose slightly to $160,000. The value of residential transactions in Ada County declined 62 percent in June from the peak four years earlier.
"The housing downturn started late in the Northwest and now it's ending late," said Mark Zandi, chief economist at Moody's Analytics. Idaho, Oregon and Washington lagged behind the national cycle and will suffer declines after other areas stabilize, he said.
New defaults are declining and appear to have bottomed in states where the crisis began, falling 43 percent in California, 37 percent in Florida and 27 percent in Nevada in the second quarter from a year earlier, RealtyTrac's data show.
"The worst is over, but it's going to be a long road ahead," said economist Steven Frable at IHS Global Insight Inc.
But the worst may not be over in Idaho. While one in 397 households nationwide received a notice of default, auction or bank repossession last month, one in 240 in Idaho did. Lenders seized 454 homes in Idaho in July.
Initial jobless claims nationwide rose in July, and unemployment stood at 9.5 percent (8.8 percent in Idaho), near a 27-year high, Labor Department figures show. More than 4.5 million people are collecting unemployment benefits, and an additional 3.9 million are getting emergency and extended payments. Fed Chairman Ben S. Bernanke told Congress on July 21 the outlook is "unusually uncertain."
"The numbers are exploding due to unemployment and economic displacement," said Rick Sharga, senior vice president of marketing at RealtyTrac. "We will see them get a lot worse unless we see some job creation."
In Hubble Homes' Charter Pointe subdivision in South Boise, more than half of the homes listed for sale are bank-owned or "underwater," meaning the property is worth less than the mortgage. Dairy cows wander in a nearby pen, and baling machines grind into the night.
"The neighbors aren't used to living next to farming operations with manure and flies," said Richard Murgoitio, who sold 70 acres to Hubble Homes Inc. in 2001 and would like to sell his remaining land to builders. "We're hoping they take us all out, if the economy ever turns around."
Holmes said her employer, TitleOne Corp., is down to 80 employees from a high of 175 in 2007. Her lender, Bank of America, took the first step toward foreclosure in July.
A divorced mother of two, Holmes put her house on the market in June and has applied for a federal program that offers incentives to loan servicers, investors and homeowners to complete short sales, in which the bank accepts less than what it is owed on the mortgage.
She's asking $225,000. She hasn't had an offer.
A third of real estate listings in her area are distressed properties, with seven months of inventory on the market in Boise at her price.
"I was never raised to be in this position," Holmes said. "I've tried everything I can think of."
The Idaho Statesman contributed.Read more: http://www.idahostatesman.com/2010/08/14/1302722/treasure-valley-housing-downturn.html?at_from=becciep@msn.com#ixzz0wcPKFZFH