Share this:

By Dani Grigg
Mike Pennington comes across as an optimist, but not a blind one.

Not overly hopeful and assuredly not too cynical, he takes caution when speaking about the trends he sees in his work as new homes sales manager for John L. Scott Real Estate in Meridian.

“There are so many elements at work I don’t think anybody can accurately guess,” he said last week, as he glanced through the statistics he follows meticulously.

“I think we’ll spend the rest of the year cleaning up this foreclosure/short sale thing,” he said.

But even with foreclosures at levels that were unheard of a few years ago, he thinks home prices are bottoming out.

He acknowledges the rising national sentiment that the real estate market is beginning to turn around.

“I think that’s probably generally true,” he said. “I think this thing has been squeezed down so tight for the last three years that I don’t think there’s a lot of room to go, unless there’s a total economic collapse – and I don’t think that’s going to happen. I think we’re at the bottom. You see that nationally and you see that in Boise.”

Pennington is just one of several businessmen looking at the most recent numbers with a curious realism infused with both gloominess and hope.

He sees a good sign in pending resale numbers. On April 10, there were 614 resales pending in Ada County, up 122 units from the previous month. Pending resale numbers haven’t been that high in 18 months.

He said in 2008, the average pending resale number, checked monthly, was around 431. He called the rise to 614 “fairly dramatic” and “exactly what we need” to clean up the distressed properties on the market.

Charlie Nate, president of foreclosure-tracking company IdahoDataProviders.com, said he doesn’t expect any improvement in the Treasure Valley housing market until the record number of foreclosures is whittled down substantially, which he thinks will probably start to happen in late 2009 or early 2010.

Until then he thinks foreclosures will continue at a plateau of between 600 and 800 a month, a wild contrast to the about 100 a month that was normal for 2007.

“Once we see those foreclosures stop hitting the market, we stop seeing an influx of new houses, then the bottom is close and we’ll see that turnaround,” he said. “If you see 800 a month coming on the market, that puts a screeching halt to new build jobs.”

Nate said he’s not convinced that the federal government’s efforts to rescue distressed property owners with loan modification incentives will make a big difference. He said the initiative will only help a small percentage of people, and if historical precedent holds true 50 percent of those who do receive a loan modification will be back in foreclosure in a couple years.

Still, the Federal Housing Finance Agency recently reported that a February uptick in home prices nationally marked the first consecutive monthly gain in two years.

Though the Treasure Valley didn’t see that rise, the jump in number of sales recently has led to some cause for hope – as demand increases, inventory will fall and home prices will begin to climb.

The immediate critique for any month-to-month change in real estate numbers is that it’s all just part of the yearly cycle, which hits a high in the summer and a low in the winter, rising in the spring and falling in the fall.

Ask Greg Manship, CEO of the Intermountain MLS, which tracks residential real estate transactions across Idaho, and he’ll shy away from declaring the uptick anything more than a cyclical upswing.

“We had an uptick in March, and whether or not that’s a short-term uptick or if it’s a long-term uptick, I don’t have a crystal ball,” he said. “But I will say that there are a lot of incentives in this housing market that are going to bring buyers.”

And Joe Kunz of the Building Contractors Association of Southwestern Idaho said the feeling among home builders is “kind of a mixed bag.”

The level of optimism varies “depending where you look and what the day is,” he said. “Some days we’re feeling really optimistic, some days we’re still questioning.”

He echoed Manship’s sentiment, the one most residential real estate agents or builders are quick to recite: Now is a great time to buy. Prices are low, interest rates are low, there’s an $8,000 tax credit for first-time home buyers and there’s a lot to choose from.

On the other hand, the market is still moving pretty slow, he said. And though the building rate has not been falling in the last couple months, it hasn’t been picking up, either.

Pennington said the Treasure Valley hasn’t yet approached the inventory levels necessary to encourage new building. At the end of March, Ada County had 3,013 homes on the market, according to his numbers. Somewhere around 1,500 is a healthy level, he said.

Homebuilder Steve Martinez of Tradewinds Building Co., which builds high-end homes, took a positive stand. He said the homebuilding industry has thinned out so much that he can’t see it getting any worse.

And he’s seen a rise in calls lately that he’s happy to embrace.

“Cyclical or not, I would hope the uptick in general will kind of gain some momentum and keep going,” he said. “The general sentiment is that things will pick up.”

Advertisement