Why People Buy a Home

Magic of Montana

By Gerald Vander Pyl, for the Calgary Herald

 

With the continued strength of the Canadian dollar, many Albertans are looking south into the United States for recreation property.
For many, the priority is a warm-weather getaway in a Sun Belt state such as Arizona or California. But buyers interested in four-season recreation often look to our nearest neighbour to the south — Montana.
The Tobacco Valley near Eureka, Mont., has seen its recreation property market supported in large part by Calgary buyers in recent years, says Mike Workman, broker-owner of Century 21 Eureka Land Office.
While prices are down from a few years ago, there’s currently a short supply of recreation-style properties available in the valley, along with a large demand for them, and that’s kept prices from falling to the same extent as those of residential real estate in the area, Workman says.
Property near any of the valley’s lakes is typically about three times the price of a similar residential property in Eureka, while anything with a view of Lake Koocanusa is about double the price.
Some of the most sought-after recreation property in the Tobacco Valley is lakefront real estate on Dickey, Glen and Sophie Lakes. A typical lot with about 30 metres of shoreline sells for close to $1 million.
Barry Ehlert, managing partner of the Windmill Golf Group, which is developing the Wilderness Club near Eureka, says the area has a laid-back Western atmosphere, not unlike Alberta, and is only about 3.5 hours’ drive from Calgary in the midst of a particularly beautiful part of Montana.
“The sheer beauty of Montana is pretty indescribable, and tough to replicate,” says Ehlert.
Lake Koocanusa and its crystal-clear water is a major attraction of the Tobacco Valley, and more than half of the lake’s 145-kilometre length is on the U.S. side, allowing for boating, fishing and access to many great sandy beaches.
More than 12,000 hectares of nearby forest-service land offers access for hiking, ATVing and other land-based activities.
The wonderful weather of the valley means people can be enjoying a beautiful early-summer day while snowmobilers are still out riding trails in the mountains only 35 minutes away, Ehlert says.
The Flathead Valley, and communities such as Whitefish, Kalispell and Big Fork, is another region of Montana that has traditionally been popular with Calgary buyers.
Katie Brown, co-owner and managing broker with Trails West Real Estate, says it’s a buyer’s market for real estate in the area at the moment, and she advises sellers to price their properties attractively.
“We’ve been selling real estate here for 20 years, and this is probably the best inventory and the lowest pricing that we’ve seen in a long, long time,” says Brown.
Some examples include real estate at Whitefish Mountain ski resort, formerly known as Big Mountain, starting at $100,000; a one-bedroom condo in a lakeside development on Flathead Lake in the low $60,000s; and a townhouse on Eagle Bend Golf Course for about $280,000 — a property that would have cost $380,000 a few years ago.
Single-family homes on golf courses are going for about $100 per square foot, Brown says, citing a recent listing for a 5,200-square-foot home at $539,000.
Although the Flathead Valley is in the northern half of Montana, it has a much milder climate than Calgary, with the golf season typically stretching from late March until November.
In addition to outdoor activities like golf and skiing, the region also has a wealth of cultural attractions, with communities such as Big Fork having a thriving theatre scene, art galleries, and even an orchestral group that brings in guest musicians for performances.
“There’s never a lack of activities to enjoy,” says Brown.
MONTANA AT A GLANCE:
• Montana was the 41st state to join the U.S., gaining statehood in 1889.
• It’s the fourth-largest state in area, but with fewer than a million people it has the 44th-largest population, so there’s plenty of wide open space for relaxed living and recreation.
• Montana boasts abundant lakes, trout streams and big game, along with world-class ski resorts.
• Montana has entrances to two famed national parks: Yellowstone in the south and Glacier in the north.
• The topography of the state is roughly half mountains and half prairie, with a wide range of climate and weather.

Web links: c21eureka.com; thewildernessclub.com; trailswestrealestate.com

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

*Information provided by DSNews.com written by Krista Franks Brock.

Is This An Indication The Market Is Turning?

Fewer Phoenix Area Homes For Sale: Prices Up

A surge in buyers and a drop in foreclosures have left a shortage of houses for sale in metro Phoenix, according to a newly released report on the state of the housing market.

The shrinking inventory has prompted bidding wars and pushed up home prices in many communities.

At the end of February, the supply of homes for sale was just under 24,000, down 42 percent from a year earlier, mostly because of a 52 percent drop in foreclosures during the past year, according to the latest monthly real-estate report from Arizona State University's W.P. Carey School of Business.

As banks take back fewer homes through foreclosure, fewer homes go to auction or back on the market.

Tuesday's report, which said that home prices could keep climbing if the inventory of homes for sale remains low, was the most optimistic from ASU since the beginning of the region's housing crash in 2007.

"Supply is tight, in a pretty extreme way, and it looks like it will stay that way for months," said Mike Orr, director of the Center for Real Estate Theory and Practice at ASU.

Orr said that as long as supply is tight and there are more buyers than sellers, Phoenix-area home prices will continue to climb.

Metro Phoenix's median home price has steadily been increasing since last August, when it fell to a 12-year low of $113,000. The region's median for February was $124,500, up 8 percent from a year earlier.

Climbing home prices could entice more homeowners who bought before the boom to try to sell their homes.

More sellers would increase supply, balancing the market and aiding many frustrated buyers who are currently being outbid on foreclosures and short-sale homes.

"Now, I have a ton of buyers and no properties to sell them," said Diane Brennan of Scottsdale-based Keller Williams Integrity First Realty.

"I warned buyers for months they should act quickly. Many didn't pull the trigger before because they were waiting for the bottom," she said.

*Information provided by The Republic (azcentral.com) & written by Catherine Reagor

Buying a Home? The Cost is more important than the Price

We have often advised buyers to look at the COST of purchasing a house more than the PRICE of the home. Obviously, price is part of the cost equation. The other piece, assuming you are not an all cash buyer, is the mortgage rate. The mortgage rate to finance a purchase can have a dramatic impact on the overall cost. Recently, there are more people talking about the possibility that mortgage rates could begin to increase.

HSH.com studies trends in mortgage rates. They explain:

“A better economic climate almost always brings higher rates, and a lessening of the troubles in Europe from massive central bank assistance adds to the movement of money from safe havens to more risky assets, driving rates upward.”

Dan Green of The Daily Market Reports recently stated:

“The Fed sees growth coming faster than originally expected. There’s suddenly less chance that the Federal Reserve will intervene to help keep mortgage rates low. Absent Fed intervention, mortgage rates are apt to rise and Wall Street is now betting that the Fed has bowed out. With no stimulus, mortgage rates rise.”

Lawrence Yun, chief economist for the National Assoc of Realtors, recently wrote:

“Mortgage rates will be starting to rise. From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent.”

Yun explains his logic here.

We do not attempt to predict future interest rates. We leave that up to the experts in the field. However, we want our readers to understand the potential impact on the cost of purchasing a home if they do rise. Here is a simple table that shows, even if the PRICE of a home softens, the COST of a home could increase.

Bottom Line

Many purchasers think they should wait until they are sure that prices have hit bottom. Deciding whether or not to wait should be determined by where the COST of a home is headed.

*Information provided by The KCM Crew on March 19, 2012

Don't forget to Spring Forward (3/11/2012)

You can thank Benjamin Franklin for Daylight Saving Time (DST)... he first conceived the idea when he was 78 years old and in Paris. His concept was to conserve energy and more fully enjoy the benefits of daylight.
At 2 a.m. on Sunday, March 11 most U.S. residents will set their clocks ahead one hour for the beginning of Daylight Saving Time. However, not all states go on DST. Arizona, Hawaii, Puerto Rico and the Virgin Islands will not.
Around the world, about 75 countries and territories have at least one location that observes Daylight Saving Time. 164 do not change time at all.
So, before you go to bed this Saturday night, set your clocks ahead one hour. But don’t worry; you can get back to normal time next November 4th.

*Information provided by Trails West Real Estate Blog.

Negative Equity Increasing

Negative Equity Increasing

Last Week, CoreLogic released their Negative Equity Report for the fourth quarter of 2011. The report delivered some important news. Let’s go over the key findings in the report.

What Is Negative Equity?

When a home’s current value is less than the existing mortgage on that home, the house is said to be in a ‘negative equity’ situation (other terms used to describe this situation are ‘underwater’ and ‘upside down’).

How Many Homes Are in a Negative Equity Situation?

The CoreLogic report stated:

“11.1 million, or 22.8 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2011. This is up from 10.7 million properties, 22.1 percent, in the third quarter of 2011.”

This is important because studies show that people in a negative equity situation are more likely to default on their mortgage payments than people who have equity in their homes. 

How Many Homes Are Approaching Negative Equity?

According to the report:

“An additional 2.5 million borrowers had less than five percent equity, referred to as near-negative equity, in the fourth quarter.”

Many experts believe that housing prices will soften in the first half of 2012. That will cause a percentage of these homes to fall ‘underwater’.

Bottom Line

History has shown that a percentage of those 2 million+ homes will enter the distressed property category as some families decide it no longer makes sense to pay their mortgage. Any increase in short sales or foreclosures will impact prices in an area.

*Information provided by Keeping Current Matters.