Jeff Martel

WHATTTTT? Forbes wrote that Boise Idaho was in the top 25 weakest housing markets! the article only makes a small mention here:

"Provo, Utah, and Boise City, Idaho, are also headed down with the drop in nearby ski home sales, says Mark Zandi, chief economist for Moody's Economy.com."

Ok - first off I obviously have no idea where I live because I NEVER KNEW I LIVED IN A RESORT TOWN! Boise, Idaho isn't a second home ski resort town. Companies like HP, Micron, Simplot, and Boise Cascade have huge presences here. This is a technology town. This is the town that will pioneer green energy sources. There are more patents per capita in Idaho than any other state. This is not a ski bum town. There aren't multi-million dollar McMansions along the ski runs... we live by the foothills - not the mountains. The closest ski resort is 45 minutes from town. The median price for a nice home in Boise is around $200,000 - not $2 Million like in ski resort towns. I think the Mark Zandi needs to take a trip to Boise so he knows what he is talking about.

Check this movie out to see what I'm talking about: http://www.youtube.com/watch?v=X4tmsogmVqM&eurl=http://www.newconstructionboise.com/video/&feature=player_embedded

This morning I thought of an idea that may be worth thinking about. What if we create a program for Veterans of Iraq and Afghanistan where Soldiers receive access to Foreclosed homes. What I'm thinking we do as a country is this - Homes that are going into Foreclosure can be purchased with the TARP funds. Then returning soldiers get to purchase these homes at WELL below market value using a mortgage funded by the US government - in essence the Tax payers become equity partners in these homes. These soldiers would also receive the additional benefit of not having to make ANY payments for two years. They did an incredible job for our country - WE OWE THEM.

Now, think about this - not only did our soldiers serve us well, they can now help to stabilize our country. By purchasing these homes before they affect market values, we stabilize housing. We also provide a way for our soldiers to return home and begin life again without the financial pressures of having to make the mortgage payment for 2 years. Eventually as housing stabilizes, values will go up. The government backed loans will begin to be paid back in 2 years, and as these homes eventually get sold, the government (ie taxpayers) receive a return on investment.

I haven't heard of a program like this, but I think if enough people get behind an idea like this we really could make a difference in our soldiers lives - and the lives of every american currently affected by the housing downturn.

It is said that the United States needs to produce approximately 1 Million housing units annually just to keep up with demand. Demand comes from Marriage, Divorce, migration, immigration, etc. This year the United States has built the same number of units as in 1959. In 1959 the US had 179 million people. We now have about 310 Million.

Boise adds approximately 8,478 new residents every year. It is projected that our population will be around 762,981 by the year 2020 (in 2006 we were at 559,095).

What does all this mean? Well, the basic rule of supply and demand is this - all shortages are followed by gluts... and all gluts are followed by shortages. We are about to experience a massive housing shortage across the entire country. I see us having a "rush" to buy in the following 120 days. Why? Because interest rates are incredibly low now and may go even lower. We are going to be under supplied on housing once the Obama administration implements some sort of housing stimulus that will be of a huge magnitude - some say they may offer a $20,000 tax credit for buying a home. So cheap money coupled with free money and a reduced supply = housing appreciation.

If you are trying to sell a home - hang on a little longer - things will get better for you. If you are looking to buy a home - strike now - this has to be the bottom. If you are unsure what to do - well you are in good company - there are lots and lots of folks sitting on the fence waiting for the sign to get in. It happens fast - like a light switch going on so you better be ready to move!

This morning I read an article in the Idaho Business Review that discussed home price value declines. It states that Idaho is "in the middle" in terms of home price declines. There were 24 states that declined as much or less than in Idaho and there were 25 states that fared worse or had higher price declines.

The Boise-Nampa area was reported as having fallen 6% from a year ago.

Now compare that to other investment vehicles and you can see why housing is still a good investment:

S&P - was down 39.3% from a year ago as of yesterdays close

NASDAQ was down 41.5% from a year ago as of yesterdays close

DOW was down 35% from a year ago as of yesterdays close

So, lets take a look at your investments and see what was a better bet. Lets say you bought a $200,000 home on January 1st, 2008 and you put 20% down ($40,000). Now lets say you out $40,000 in stocks on January 1st, 2008.

in stocks today you would have the following (this is on average people, not exact!)

S&P = -$15,720, $24,280 left

NASDAQ = - $16,600, $23,400 left

DOW = $14,000, $26,000 left

Real Estate - down 6% or -$12,000

But all of these are PAPER LOSSES. If you leave your money in the stock market, eventually it will come back. But, here is the big thing to consider - stocks are easy to liquidate. In times like these you can get scared and make rash decisions... like sell sell sell! But houses don't work that way. You cant click a button and sell it. Which makes people uncomfortable because they WANT to make that rash decision and sell it. But, when you sell it you LOCK IN YOUR LOSS. There is a good chance that if you made the investment above in stocks - you would sell it and lock in your loss. Since you live in a house - and you have to live somewhere - you are more apt to keep it and wait for the market to come back so you WILL NOT LOCK IN YOUR LOSS. It is a good thing that Real Estate is not liquid. It takes a lot to buy and it takes a lot to sell - not just a click of a button.

Real Estate still is a good long term investment. And there is something that everyone must keep in mind right now. There is one similarity between an up market and a down market - they both feel like they will NEVCER end when you are in the middle of them... but they always do.

HAPPY NEW YEAR - 2009 is going to be a GREAT year!