Foreclosures have impact beyond their neighborhoods

Anyone living in a neighborhood where foreclosed properties proliferate has seen their impact. If you have a home for sale and right down the block is a foreclosure, it can be difficult to sell yours for a fair price. The bank that owns the foreclosure is more interested in getting rid of theirs than getting full market value for it. After all, bank regulators look for cash reserves, not real estate assets, when attempting to determine the health of a bank.

A lot of the information in this weekly column has had to do with values and often takes the buyer's perspective. That is the easy way with foreclosed properties readily available and interest rates hovering slightly above and slightly below the 4 percent range. Obviously, as evidenced by investors re-entering the market and often paying cash, it is a buyer's market.

Encouraging too, is that we have seen some reduction in housing inventory in the past several months. The last statistics from the Coeur d'Alene Multiple Listing Service shows that we have fewer listed properties than at this time last year. With a 9.4 percent reduction in all types of real estate listings and a 7.7 percent reduction in housing inventory we are encouraged.

Although we are encouraged we are also cautious about the immediate future of our local real estate market. When Bank of America announced that they were freezing foreclosures, we anticipated the floodgates opening at some future date, burying the market in foreclosure inventory with one fell swoop. Last week's news that B of A had had a change of heart alleviated this fear somewhat, but the news was tempered by the observation that the pursuit of foreclosures was only in 23 states, Idaho and Washington NOT included.

Then Friday, an Associated Press article reported that the Fannie Freddie bailout could cost us $259 billion. But that is not the worst of it. The article presents its "worst case" scenario that predicts housing prices could fall an additional 24 percent with the increase in projected un-recoverable foreclosure funds. The "best case" projects that home prices will remain flat for the next two years.

While this may be good news for buyers, it rightfully causes prospective sellers some concern. However, we feel that at least some of the good news for buyers is also good for sellers. Namely, low interest rates today mean buyers are active. Our current prices are stabilizing, at least for the time being, as we watch the declines of the last three years slowly peter out.

If you are waiting for the market to return to the highs of 2005-06 you may have a long wait. If you are interested in getting the most for your property in a shorter time frame, now may be the best time because of the low interest loans. These loans, some with zero down, provide an opportunity for buyers and sellers to exchange property.

If your motivation for selling is to change homes, that puts you in a beneficial buyer's position as well since you will be buying your replacement home for less than you could have a couple years ago, but more importantly, you will have a loan that is among the lowest in your lifetime. Even when the market improves, increasing the value of your new home, your loan will remain at the lowest of low interest rates.

We don't know if there will be a flood of foreclosures or if recent reports of improved prices in some areas indicate a trend that will envelope the market and make the world wonderful. Today however, seems to be the time to make a move for buyers and sellers if only because the future is so unpredictable.

For a safe trip home, call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary.