The real estate market is getting hotter and hotter. The local Boise market is no exception. Hereâs your monthly update on whatâs happening.
Data from Intermountain MLS from December 1, 2020 to December 31, 2020.
Monthly Sales
According to data from the Intermountain MLS, Boise home sales are dipping monthly but higher year-over-year. At 1,245 units sold, there were 91 fewer monthly sales in December than in November, a 6.8% decrease. This follows seasonal real estate trends. Looking at yearly changes, there were 28 more homes sold in December 2020 than in December 2019. Thatâs an increase of 2.3% from last year.
Data via Intermountain MLS.
Sale Price
At $452K, Idahoâs average sale prices continued to rise last year. The average home price in December 2020 was $87K, or 23.7%, higher than in December 2019. The monthly trend follows the yearly move upward. Average home sale prices were up by $3.7K, or .8%, from November 2020.
Data via Intermountain MLS.
Days on Market (DOM)
Homes in Boise are going off the market faster than ever. Decemberâs average number of Days on the Market was 18. The previous monthâs average DOM was 17, so the average DOM has stayed steady with a one day, 5.5% increase. The average DOM in December of 2019 was 48. That means a 30-day (a whole month!) decrease year-over-year–a staggering drop of 61.9%. Homebuyers will need to jump to make an offer quickly when they find a home they like.
Data via Intermountain MLS.
Analysis from Max Coursey, Homie Head of Idaho Real Estate
âBoise is one of the fastest growing cities in the country. Since COVID-19, this trend has only accelerated. There are roughly 2,000 (79%) fewer houses on the Boise market now than there were last year, and we already had a housing shortage a year ago. I have personally never seen numbers this low in my 18-year career in the Treasure Valley. This lack of homes for sale and tremendous population growth has led to a very strong seller’s market. It’s not unusual to hear of a seller receiving 20 offers on a property.
Because of the fierce competition and lack of inventory, many homes are selling significantly above the asking price. To sweeten the pot further, buyers often waive inspections and appraisals and offer generous seller leasebacks and other concessions. Sales price data typically lags, as it usually takes 30 days for a home to close after listing, and reports come out monthly. I believe Boiseâs median average home prices are actually higher than the numbers stated in the reports.
The good news for buyers is that interest rates are at or near their lowest levels in the last 40 years. This has made home buying more affordable. Buyers can procure a strong hedge against future inflation by securing low interest rates that are fixed for 30 years. If inflation ever comes back, these buyers will be repaying depreciating dollars. In other words, they get more bang for their buck.â
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The post Homieâs Boise, Idaho Housing Market Update December 2020 appeared first on Homie Blog.
Buying a house is a big decision, but it can feel especially overwhelming to place an offer on a home less than 24 hours after seeing it for the first time. Plus youâre under pressure to outbid several other buyers â or risk losing the house.
While these circumstances might sound extraordinary, theyâre not. With housing inventory nationwide at an all time-low â down 22% from last year according to the National Association of Realtors â itâs no wonder buyers are competing for the same few houses.
I was in this exact position last fall. Here are seven key takeaways from my experience buying in a sellerâs market.
Get a Pre-Approval Letter
In order to be competitive in a hot sellerâs market, you will need to line up your financing in advance.
Besides all the usual suspects, like saving up for a down payment and improving your credit score, youâll also want to get a pre-approval letter from your bank. It states that a bank would approve you for a mortgage of a certain amount, and acts as a guarantee to the seller that you can actually afford to buy their house.
This is where it helps to know your budget up front.
âItâs important to understand that the strength of financing is a key consideration a seller takes into account when selecting an offer,â said real estate developer Bill Samuel.
No seller wants to risk accepting an offer that might fall through. Aand since pre-approval letters can take some time to get, have one ready before you find your dream house.
Be Friendly With Neighbors
This might sound crazy, but making a good impression on your new neighbors can actually make a difference when it comes time for a seller to review offers.
Since youâll likely be visiting the home at least once before making an offer, be prepared to talk to any neighbors you might run into. In close-knit neighborhoods, or ones where people share resources (like an HOA), sellers might care a bit more about the type of person they sell the house to.
If you happen to meet a neighbor when visiting the home, introduce yourself and make a good impression. You never know how much their opinion of you might factor into any final decisions.
Submit an Offer Quickly
After youâve seen a house, and decided you love it, be prepared to submit an offer quicklyâ as in, ASAP.
Work with your real estate agent to determine how many other offers the seller already has (or expects to get) and then be prepared to draft something up that day. In our case, we toured our home for the very first time at 11 a.m. on a Monday â it came on the market the evening before â and made an offer by 4 p.m. that same day.
If that sounds fast, it is. But by the time we submitted our offer, the seller already had three others. This is where it helps to have a great real estate agent on your side.
âHaving a realtor who can get your offer submitted quickly is crucial,â said Erik Wright, owner of New Horizon Home Buyers. âYou want to get your offer in front of the seller first, and make it strong. Purchase price is the obvious factor and in a competitive market, houses often go for over asking price. However, a strong offer has several factors and it depends on whatâs most important to the seller.â
Work with your real estate agent to find out what matters most to the seller â is it money, closing quickly, something else entirely? Then make sure your offer addresses their needs.
Minimize Your Contingencies (Within Reason)
Another way to win over your seller (and prevail in any bidding wars) is by keeping your contingencies to a minimum.
Contingencies are the contractual stipulations buyers and sellers must meet before the deal can close. Unsurprisingly, sellers donât like to have too many of them to deal with. Contingencies can include such things as requesting a seller to make certain repairs, getting a home inspection, or even the fact that youâll need to sell your old house before being able to buy the new one.
âIn a really aggressive sellerâs market, a home buyer who has to sell a current property should do so before placing an offer on another home,â said Jason Gelios of Community Choice Realty. âDonât always assume that the seller will take the highest price. Other conveniences can play a factor in gaining the sellerâs attention, especially things like faster closing times and less restrictions.â
While my partner and I didnât make the highest offer on our house, we did have the fewest contingencies â mainly, we didnât ask too much of our seller in the way of repairs, or have another house to sell in order to afford the new one.
All that said, there are certain contingencies you should never forgo, and a home inspection is one of them. Getting your home inspected is hugely important, since inspectors will often find things even the sellers werenât aware of. No matter how much you love a house, donât be afraid of exercising your right to an inspection.
According to buyer protection laws in most states, sellers are required to report any findings in home inspections to subsequent buyers. In other words, if an inspector finds something wrong with the house, the seller will have to deal with it one way or anotherâ either with you, or the next buyer should you choose to drop out of the deal.
FROM THE HOME BUYING FORUM
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Make a Generous Earnest Money Deposit
When trying to woo your seller in a competitive market, it helps to make a generous earnest money deposit. An earnest money deposit is a good-faith deposit requested by the seller when you enter into a contract to buy the house and typically run anywhere from 1% to 3% of the sale price of the home.
When deciding how much of an earnest money deposit to include in your offer, keep in mind that whatever amount you give comes off the price of the home (and is returned to you if the deal falls through). In other words, thereâs no reason to be cheap. If you can, go slightly above the sellerâs requested deposit amount. Even if itâs just a little more than what theyâre asking, that gesture of good faith might just be what gets you the house.
Offer Above Asking Price
Wait. Why would anyone make an offer thatâs above asking price? Because the competition did it first, and in a hot sellerâs market, offering above asking price is often what it takes to even be considered.
Upping your offer may not break the bank as much as youâre fearing. âWith interest rates so low these days, offering more than what the seller is asking may not make a drastic difference in your overall monthly payments,â real estate agent Pavel Khaykin of Pavel Buys Houses said.
Letâs say the listing price on your dream home is $320,000 and youâre able to put down a 6% down payment. That leaves you with a mortgage of roughly $301,000. For a 30-year fixed mortgage at an interest rate of 3%, that translates into $1,269 monthly payments. Now letâs say you decide to bid a little higher on the home and offer $10,000 over asking price. This would only bump up your monthly payment (assuming you qualify for that low interest rate) by $42.
Lace Up Your Running Shoes
In a hot sellerâs market, youâve got to be ready to move fast. Often this is more of a change in mindset than anything else. When my partner and I first started looking at homes, we considered ourselves casual buyers â that is, until our dream home came on the market late one Sunday night. From there, things moved quickly. We saw the home, made an offer, were under contract by morning, and spent the next month and a half going through the process of closing on the house.
If youâre serious about finding your dream home in the next few months, the best thing you can do is know what you want from the outset, and get your ducks in a row to make a compelling offer when you find it. Maybe this means making a list of your must-haves in a house, and working to improve your credit score. It might also mean reaching out to a real estate agent before you need one, and getting that pre-approval letter in place.
Although inventory is low, new houses come on the market all the time.
Larissa Runkle is a contributor to The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Although there is no free version of Mvelopes, you can sign up for a 30-day free trial of Mvelopes Premier â the appâs most popular option â to test out the service with no financial commitment.
One disadvantage of this app, however, is that itâs not free, like the budgeting apps Mint or Clarity Money. Also, if youâre looking for a tool that tracks more aspects of your financial life, such as your net worth and where you stand with your investments, you might want to consider an app like Personal Capital. This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017. Mvelopes is a budgeting app from Finicity, a fintech company owned by Mastercard. Itâs based on the cash envelope system, so all of the categories you set up in your budget are essentially your digital envelopes.
Mvelopes can sync with over 16,000 financial institutions, so most users can track their spending with minimal effort. Keeping your spending in check means you can free up more money to go toward saving or debt.
The Mvelopes Learning Center has online video lessons on topics like mastering your spending, creating an emergency fund, insuring your future, home buying and how to have stress-free holidays. With the Debt Reduction Center, you get support to create a tailor-made debt payoff plan.
What Is Mvelopes?
The Mvelopes app is a great option for fans of the cash envelope method who are looking to digitize their money management.
It is also a good choice for people looking to nix overspending, because the app keeps you up-to-date with how much funds you have left to spend in each budget category.
Mvelopes offers three tiers of service. Mvelopes Basic costs .97 per month or per year and lets you set up your budget by syncing to all your financial accounts. The next step up is Mvelopes Premier, which costs .97 per month or per year and includes access to the Mvelopes Learning Center and Debt Reduction Center.
Pro Tip
In this Mvelopes review, weâll explain how this app works to help you keep your spending in check.
How to Get Started with Mvelopes
Fortunately, there are ways to adapt the cash envelope budget for cashless shoppers. One of the solutions is to use a budgeting app, like Mvelopes.
New to cash envelope budgeting? Hereâs how the cash envelope system works. Source: thepennyhoarder.com
According to the company, Mvelopes has helped users save an average of ,175 and pay off an average of ,425 of debt.
The appâs top tier of service is Mvelopes Plus. This plan connects you with a real-live personal finance trainer for one-on-one virtual sessions four times a year. Youâll also get higher priority customer service support. Mvelopes Plus costs .97 a month or 9 a year.
Once you assign the transaction to its appropriate envelope, youâll automatically see how much money you have left to spend in that category. And if you do happen to use cash for something, you can manually enter that info in the app.
You can download the Mvelopes app for your Apple or Android mobile device â or you can create an account and manage your money straight from your computer.
By signing up for the free 30-day trial, youâll have a month to decide whether Mvelopes is the right choice for you.
Thereâs one significant flaw in this budgeting method though: What if you donât shop with cash? Many people opt for online shopping or use a debit or credit card rather than dollars and coins.
Mvelopes syncs to your financial accounts, so whenever you pay a bill, shop online or swipe your debit card, that transaction shows up in the app. The app uses bank-level encryption to keep your information safe.
Additionally, Mvelopes can help you boost your personal finance knowledge via online courses or pay down debt with a tailored payoff plan. Nicole Dow is a senior writer at The Penny Hoarder.
Feeling overwhelmed? Create a budget that works for you with our budgeting bootcamp!
The cash envelope budgeting method can be a very effective way to control your spending.
The premise is simple. You come up with spending limits for your variable expenses, like groceries, eating out or entertainment. Next, you fill up envelopes with cash to match what youâve budgeted for each category. As you shop throughout the month, you can only spend the amount of money in your envelopes. Once youâve run out of cash, youâve got to freeze spending until itâs time to fill the envelopes again.
Thereâs a lot that goes into buying a new home, starting with finding the right one all the way down to finalizing the paperwork. Somewhere in that process, youâll likely find yourself trying to decipher myriad new terms and figuring out what they mean for you.
Weâve compiled this list of seven key numbers youâll need to know when buying a home â plus the details on how understanding these terms can help you land your dream home.
Here are seven all-important home-buying numbers to know.
1. Cost per Square Foot
One of the first numbers youâll encounter when shopping for homes is cost per square foot. While this number is based on a relatively simple calculation, itâs an important one to understand since ultimately it helps you determine how much house youâre getting for your money.
âCost per square foot is simply the list price divided by the number of livable square feet,â said Tyler Forte, founder & CEO of Felix Homes. âThis number is important because it allows a homeowner to compare the relative price of homes that are different sizes.â
But thereâs more to consider, he said. âWhile cost per square foot is an important metric, you should also consider the layout of the home. In many cases, a home with an open floor-plan may seem larger even if it has a smaller livable square footage.â
Forte defines livable square footage as any interior space thatâs heated and cooled, which is why a garage wouldnât necessarily fit the bill. One of the best ways to understand how much home you can afford is to break it down by cost per square foot, which will vary from city to city and neighborhood to neighborhood.
Work with your real estate agent to understand the differences in cost for various properties to map out what areas and homes are within budget.
2. Earnest Money Deposit
Once youâve found a home you like enough to bid on, youâll quickly start hearing about something called an earnest money deposit (EMD). This is a type of security deposit made from the buyer to the seller as a gesture of good faith.
The amount of the EMD is set by the seller, typically running anywhere from 1% to 2% of the homeâs purchase price. The key thing to keep in mind about EMDs is that they represent your commitment to buying the home, and can be useful in making a compelling offer in a competitive sellersâ market.
âAn earnest money deposit is very important because itâs the skin in the game from the home buyer,â said Realtor Jason Gelios of Community Choice Realty. âIf a home buyer is up against other offers, the EMD can make or break them getting the home.â
âIâve seen lower offers won due to a higher EMD amount, because sellers view the higher EMD as a more serious buyer,â he added.
The money you put toward your EMD comes off the purchase price for the home, so thereâs no reason to be stingy. If you really love the house and have the available cash, you might even consider offering more than the deposit amount your seller is asking. Either way, be sure to start saving up for your EMD early and factor it into any other cash you set aside for your down payment.
3. Interest Rates
Since most home purchases involve a mortgage, youâll want to familiarize yourself with current interest rates. Interest rates dictate how much youâll pay your lender every year to borrow the amount of your mortgage, so youâll want to shop around for the best deal.
âYour interest rate is the annual percentage rate you will be charged by the lender, and the lower the rate you receive, the lower your monthly payment,â said real estate developer Bill Samuel of Blue Ladder Development. âYou should speak with a handful of lenders when starting the process and get a rate quote from each one.â
While interest rates are mostly determined by your creditworthiness (aka credit score) and the type of loan youâre getting, theyâll still vary between lenders. Even a half-point difference in rates can amount to a big difference in your monthly mortgage payment â as well as the grand total you pay for your house.
FROM THE HOME BUYING FORUM
Mobile Home purchase 1/15/21 @ 4:16 PM
Previous Foreclosure on a Home Loan 1/12/21 @ 9:47 PM
What the banks don’t want new homeowners to know! 10/16/20 @ 2:07 AM
See more in Home Buying or ask a money question
4. Credit Score
Speaking of credit scores, youâll want to know yours before you get serious about buying a home. Since your credit score helps determine the type of mortgage (and mortgage rate) you qualify for, you need to meet the basic minimum credit score requirements before diving headlong into buying a home.
Forte broke down the term a little more: âA credit score is the numerical grade a rating agency assigns to you,â he says. âCommonly referred to as a FICO score, this grade is made up of many factors such as credit utilization, and the length of your credit history.â
If your credit score is low (under 600), spend some time figuring out why and how you can boost it. Just remember, the better your credit score, the better your interest rate â and the more money youâll save in the long run.
5. Debt-to-Income Ratio
Another personal finance term that comes into play when buying a home is your debt-to-income ratio (DTI). Much like creditworthiness, this number is used by lenders to determine how much of a loan you qualify for and at what rate.
âWhen looking to get approved for a mortgage, a buyer should know what their debt-to-income ratio is,â said Gelios. âThis is the amount of debt you owe per month as compared to your gross monthly income.â
For example, if you earn $6,000 per month but have to pay $3,000 in bills, this would be a debt-to-income ratio of 50%. Gelios says lenders typically view any DTI above 40% as high risk, and with good reason. If over half of your income is accounted for in bills, that would make it significantly harder to make a big mortgage payment every month.
Understanding your DTI isnât just good for lenders, it also helps put your personal finances in perspective when deciding how much house you can afford.
6. Down Payment
The all-important down payment: Many homebuyers use this number to help them determine when theyâre actually âreadyâ to buy a home â based on how much of a down payment they have saved up.
âA down payment is the amount you contribute to the transaction in cash,â said Forte. âMost home purchases are a combination of cash in the form of a down payment and a loan from a mortgage company.â
The old rule of thumb on home purchases was to put down 20%. If that sounds like a lot of money, it is. (Home price $250,000, time 20% = $50,000. Ouch.) For many buyers, a 20% down payment just isnât feasible â and thatâs okay. Forte said the down payment can be as low as 3% of the sales price with a conventional loan, although 10% is more typical.
Remember that any amount you pay up front will ultimately save you money in interest on your mortgage â and putting more money down will lower your monthly payment. Take some time to calculate what your monthly mortgage payment will be based on various down payments. That way youâll know exactly what to expect and how much of a down payment you should aim to save up.
Pro Tip
Keep in mind that for any down payment of less than 20%, you may be required to pay private mortgage insurance (PMI), another expense that adds to your monthly payment.Â
7. Property Taxes & Other Expenses
Long before you close on a home, you need to be ready for ongoing expenses such as property taxes, homeownerâs insurance and any potential HOA fees. These expenses tend to slip through the cracks, but itâs important to know about them before you become a homeowner.
âOne of the most overlooked and underestimated numbers when buyers actually locate a home and win an offer on it is the tax amount,â said Gelios. âToo many times, Iâve seen real estate agents list what the seller is paying in taxes at that time. If time allows, a home buyer should contact the municipality and ask for a rough estimate as to what the taxes will be if they closed on the home in X month.â
Since taxes almost always increase when homes change ownership, itâs good to get an updated quote before those payments become your responsibility.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
