Part 1 of a two-part series.
For years, Judy Friedemann and her husband, Ralph, dreamed of living in the Wood River Valley.
House hunting dissolved their dream into a delusion.
The Friedemanns had visited the area many times since moving from San Diego to Jerome—60 miles south of Hailey—in 1978. Only a few years back did they make their first official house-hunting trip to the valley. They were retiring teachers eager to buy a small Wood River Valley home. And they weren't asking for much.
"We just wanted a two-bedroom, two-bathroom house with a little ground around it," Ralph said.
But they soon discovered houses like that were running from $300,000 to $400,000.
"That to me was preposterous," Judy said. "Even the people who lived here thought the prices were overblown.
We're both retired school teachers. And school teachers here would even tell you they couldn't afford to live here."
So they put their dream aside. And that's where it stayed.
Until now.
Sitting on a plush leather couch at an open house in Hailey, Judy held a stapled list of houses that fit the couple's price range.
"Some of these are the very same houses we looked at years ago," she said, gently waving her stapled packet in one hand. "But now they're affordable."
She flipped through the pages of her packet until landing on a yellow, 900-square-foot house. Two bedrooms, one bathroom and listed for about $219,000.
"I remember this exact same house being more than $300,000," she said.
Prices have dropped valleywide, for big houses and small, said real estate agent Sonja Huntsman, president of the Sawtooth Board of Realtors. All 300 or so real estate agents in the valley belong to the board.
"People are getting into homes they weren't able to a few years ago because everything was so excessive," Huntsman said.
Jim Figge, Sun Valley Associates broker, compiled a report for the Idaho Housing and Finance Association in August and found that Hailey's median home price had dropped about $90,000 in a year's time. In 2008, the median price was $363,500; this year, it dropped by 25 percent to $276,000.
The story in the north end of the valley is the same, with median prices dropping by $487,750 in a year's time, from $1.8 million in 2008 to $1.3 million—a 27 percent plummet.
And many real estate agents are saying that this significant drop in house prices—coupled with low interest rates of 5.08 percent for a 30-year fixed mortgage—has spurred a short string of sales. Even though interest rates are above the record low of 4.78 percent reached in the spring, it's still an attractive level for people looking to buy, Huntsman said.
And the stats show that valley sales have gradually increased, but not with any foreseeable trend. Month to month, sales are up, down, up, down.
Monthly sales in the valley for the year are as follows, starting with January: nine, 17, 15, 29, 17, 33, 19, 29.
On the national level, Blaine sales increases are more of a steady climb than Blaine County's peaks and valleys. For the first time since June 2004, sales of existing homes have increased for four months in a row, according to the National Association of Realtors. The latest figures released—for July—show a 7.2 percent monthly increase in sales, the largest increase in a decade.
But in the West, sales dipped by 1.7 percent in July. The Northeast and Midwest felt most of the surge, gaining by 13.4 percent and 10.9 percent, respectively. Sales in the South climbed 7.1 percent.
Even though the nation's market is gaining ground, sales for the year still lag behind last year's by 1.9 percent.
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In the Wood River Valley, home sales are lagging a lot further behind, at a 34 percent difference with last year's. Only 168 homes have changed hands. But 56 sales are pending, meaning the paperwork just needs to be approved by both parties. If those all make it through, the valley will only be trailing last year's sales figures by a few percentage points.
"Things aren't drying up," Huntsman said. "People are snapping up the inventory."
Nevertheless, the fact that houses are still selling is misleading. Houses are selling at a rate within reach of last year, but the same kind of money isn't being made.
County house sales have pulled in about $72 million less this year compared to last, according to the Sawtooth Board of Realtors. That's a 39 percent drop in money made. Last year more than $183 million worth of homes were sold, while this year's sales reached only about $111 million.
The gap in revenue could be wider than this since not all sales between January and September in 2008 were disclosed, said Amanda Ornelas. Disclosure of sales prices to the board was voluntary until July 2008 when state law said sales prices were no longer confidential.
"The news isn't great," said real estate agent Figge, "but it isn't a total downer either."
Even though the money of previous years isn't being made, Huntsman and other real estate agents see the recent increase in the number of homes sold as the first patch of blue sky in the storm.
But is this recent bump in sales a foothill before the mountain or just another bump in the sand?
"It's nice to report that there's activity," Figge said, "but I don't know what that means."
Unlike other agents, he's not so quick to claim that lower house prices are driving up sales.
Sales did increase to 29 in August from 19 in July, but Figge said that's common. Sales usually peak in August because summer is when most buyers are on the prowl. It's how the cycle works, with the lowest number of sales happening in the spring.
"Whether this upkick of activity reflects an increase in buyers' confidence or simply that it's August is hard to tell," Figge said.
But he's pleased that houses are selling, even if it's at a loss, a situation especially common in Hailey where foreclosures are skyrocketing.
"Banks are putting out these houses at prices upside down to the loan," he said. "It's the first wave of things we need to get through."
Figge explained that to get back to a more healthy market, the "most distressed houses must be sifted through."
And the majority of the valley's home sales are coming from foreclosed homes at slashed prices.
"That area of the marketplace is seeing the greatest activity," Figge said. "And it's the only area seeing greater activity than last year."
Analysts warn that a flood of foreclosures could derail a recovery for the housing market. The Wood River Valley is definitely drowning in default notices, as is the rest of America.
As the number of houses sold nationwide increased by 7 percent in July, so did foreclosures. The Wood River Valley saw 36 new default notices handed out to homeowners in July with 29 more issued in August, according to Peggy Pyle, Sun Valley Title department manager. A year ago, only 11 notices were handed out in August.
"We're seeing more and more every day," she said. "It's a really sad situation."
There are two sides to this coin. On one side, houses are selling to people like the Friedemanns who couldn't afford to buy here just a year ago. On the other side, a downpour of foreclosures is fueling the real estate market with rock-bottom house prices. Anyway you flip it, someone's going to lose.
The Friedemanns know the feeling.
They're finally able to find a house within their price range, but they're hesitant to buy. Purchasing a new house means selling their old brick house in Jerome at a tremendous loss.
"Ours is going to be a hard sell," Ralph Friedemann said.
They're thinking of buying a house in Hailey on a loan and sitting on their Jerome property until prices improve. But it could be a long wait. And they completely own their Jerome home. Taking on a mortgage for a Hailey home is a risk they'd prefer not to take, low interest rate or not.
"It's a good time to buy up here," Ralph said, "but we'll probably end up back in Jerome."
(Editor's note: Part 2 of this series will run next Wednesday, Sept. 16. It will delve into the seller's side of the market, where foreclosures run rampant and homeowners in a pinch short-sell their homes to avoid the pain of a foreclosure on their credit score.)
Trevon Milliard: trevon@mtexpress.com
Numerous houses in the Wood River Valley have sold this year, but the median home price has dropped considerably.
