Wood River Valley homes are selling at double the rate of last year, according to the Sawtooth Board of Realtors, which represents all valley real estate agents.
As of the end of April, 59 homes had sold during 2010. By the same time last year, home sales tallied only 30. And the tally of all land sales has increased 59 percent compared to 2009, jumping from 71 sales to 113.
More houses are selling, but has the rising tide of foreclosures waned? Have plummeting house prices snagged a ledge and started to climb back up?
Daryl Fauth, president of Blaine County Title, said the foreclosure pace of 2010 has been one new defaulted home every business day. That's no different from 2009, which saw 277 defaults, or a little bit more than one default every business day.
"We're on pace to beat the number of defaults of last year," Fauth said.
Idaho has the eighth highest foreclosure rate in the country, according to RealtyTrac's March Foreclosure Market Report. One in every 259 Idaho households is in default. Nevada is the worst off with one in every 76 households in default.
Real estate agent Debra Hall said that even though homes are selling, new foreclosures prevent prices from recovering. It's simple. When one home has a foreclosure-sale sign on the lawn, the neighbors' market values dwindle.
"We haven't seen the bottom yet," said Hall, agent for Windermere-Sun Valley.
Sawtooth Board President Mike Murphy agreed, saying buyers still have all the power. He recently sold a Hulen Meadows home for $595,000. It had been listed for three times that at $1.7 million.
"If the price comes down far enough, there's a buyer," he said. "People are looking for a hell of a deal."
Even though house prices are still depressed, more money is being made than in 2009. To date for 2010, property sales have accumulated about $72 million, compared to $46.6 million at the end of April 2009. And the price per home sold has increased by 21 percent compared to last year at this time. The average home sale is $695,000. That average was $574,000 at the end of April 2009.
Hall said she's one of the "fortunate" agents seeing this money.
"I'm very busy," she said, later adding, "I primarily represent the banks on foreclosure sales."
Foreclosure and short sales represent many of the valley sales in 2010's spike. Murphy said calculating the contribution of these distressed-property sales to the total is currently impossible. He said the board doesn't track this information.
One thing is for sure, said Jim Figge, agent with Sun Valley Associates and past Sawtooth Board president—a lot of brokers have stepped into working "short sales."
< <
A short sale in real estate occurs when sale proceeds fall short of the balance owed on a mortgage. It's done when a lender decides that selling the property at a moderate loss is better than attempting to collect mortgage payments. Both parties consent to the short-sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrower. However, the sale does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
Real estate agent Levie Smith said she always tries to get that obligation waived for her short-sellers.
Smith, a Re/Max agent, has been working in the valley for 12 years and said she now devotes "99 percent" of her efforts to selling distressed properties.
"It's something I wouldn't have been able to do five years ago," she said.
Back then, there weren't enough distressed properties to keep one agent busy. That has definitely changed, as has the attitude of some lenders that are beginning to open up to the idea of short sales, according to Smith.
"Just a year ago, not many banks were willing to approve a short sale," Smith said.
This recent attitude adjustment is somewhat due to the U.S. Treasury Department's new program implemented April 5, called the Home Affordable Foreclosure Alternatives Program. The program gives incentives to lenders who work out alternatives to foreclosure, such as approving a short sale or loan modifications. The program, usually called HAFA, lasts until the end of 2012.
"The goal is ... no more foreclosures," Smith said, adding that troubled homeowners should call their lenders to see if they qualify.
However, Hailey attorney Michael Kraynick said, the loan modification program has been a "dismal failure," obvious by simply looking at the pace of foreclosures, which hasn't slowed down a bit this year despite HAFA.
"It's still a terrible problem. This has only just begun," said Kraynick, who recently completed the Idaho Foreclosure Prevention Clinic at Boise State University's Dispute Resolution Program, to help his clients.
He said banks might finally be willing to consider short sales, but not for the good of homeowners.
"After two and a half years, they ought to be," he said.
With foreclosed properties flooding the market and driving down values, he said, banks are struggling to sell these homes. Plus, the bank is stuck with a hefty fee for every foreclosure.
"I'm not sure (homeowner) retention is their attention," Kraynick said.
Banks may just realize that short sales benefit both parties.
Sandra Pastrana owns a home in Hailey's Woodside area, and is stuck with an "underwater mortgage," meaning she owes more on the house than its current market value. She doesn't qualify for a mortgage modification and is therefore relying on a short sale to dig her out.
Since putting her house on the market in August, she's worked through two short sales with Bank of America. She said the first fell through because of the buyer's bad credit. She said it took five months of working with the bank to get through the short-sale process that first time.
"It was a really slow process," Pastrana said.
She said the second time around has been easier, with the process streamlined into a month. But she hasn't completed the sale yet. Pastrana's waiting for the bank to say it will forgive her debt. She would be selling the house for about $85,000 less than what she owes.
Her agent, Smith, said obtaining a release from mortgage debt isn't automatic but a negotiation.
"But we have successfully done it," she said.
Smith has created a website, shortsalesmadesimple.org, as a short-sale guide.
Trevon Milliard: tmilliard@mtexpress.com
A foreclosure sale notice is taped to the door of a Saddleview condominium in Ketchum, located off of Saddle Road.
Photo by Willy Cook
