Teton Realty Blog

Assumable Loans

January 16, 2017 By Tayson Rockefeller Leave a Comment

Most of us in the industry know that interest rates have already begun to rise, and while they are nowhere near historic levels, they are approaching levels we started to see prior to the recession. Average 30-year rates dipped into the low 3s at the bottom of the 2008 downturn, and held at these levels for some time.

While the recession was detrimental to most of us, many first-time home buyers with undamaged credit were able to purchase at very affordable prices, with very attractive interest rates. FHA loans also came back in full force due to their less stringent requirements for credit and other reasons.

FHA loans tend to have their ups and downs. More recently, the requirement for mortgage insurance to be carried until a debt ratio of 78% was reached was further implemented to stay with the loan, for the life of the loan. On the other hand, almost all FHA loans are assumable. This may afford new buyers the opportunity to inherit some of these FHA loans that were written while interest rates were abnormally low. Also, during much of this time, mortgage insurance was not required to stay for the life of the loan. These buyers may have the opportunity to assume the existing loan, and carrying a second loan at the higher rates for the difference. For loans held for a long period of time, there could be significant cost savings for these new buyers.

In case many of you are wondering, there’s really only one other loan product that is assumable, or at least the majority of the time. That product is the VA product. While the VA loans are almost always assumable, they can have a negative effect for that Veteran and their ability to borrow using the VA product in the future. VA loans have guarantee periods with dollar amounts associated with those periods of time. These dollar amounts are associated with how much the Veteran can borrow using the VA product. That amount has been just over $104,000 since January 1st of 2006. This number represents 25% of the total borrowing power. If the Veteran doesn’t use the entire borrowing power amount on one loan, they can use the remaining balance to borrow using the same loan product for another loan. However, if that loan is assumed, that borrowing power still counts it against the Veteran until it is assigned otherwise. This is an important element for those using this loan program to remember in the event the opportunity arises for this loan to be assumed.

For these opportunities to be a benefit to the buyer and the seller, all parties need to be aware of the current loan conditions, and if the seller has interest in allowing their loan to be assumed. This should also be explained to any real estate agents involved with the transaction, particularly the seller’s agent so it can be used as a marketing tool.

FHA Loan limits are increased in Teton County Idaho, currently at 625,000.

December ’16 Market Stats & Year End Report

January 7, 2017 By Tayson Rockefeller Leave a Comment

Teton Valley 2016 Overview

Teton Valley including Alta saw nearly 200 residential single-family sales in 2016, an improvement from 2015, even though inventory remains low. Condo and townhouse sales were on par with the year prior, though prices have increased in various sectors in the Valley. The number of building site sales in the Valley increased by 10% in 2016, and the average sale price ended at over $120,000 for the month of December 2016.

Residential Snapshot

Homes in Driggs saw a 24% Improvement in absorption ratess, a 12% increase in the average sale price, and a 33% decrease in the average number of days on Market.

Victor saw similar similar absorption when compared to 2015, and a 10%increase in the average sale price. The average number of days on Market decreased by about 19%.

The Tetonia area also performed well with an 4% Improvement regarding absorption, and a 39% decrease in the average number of days on Market. Average sales prices were slightly lower than 2015, by about 2%.

Alta, WY sale price information is skewed due to the lack of available sales as with most years, and this is due to the number of available listings which has diminished as the market improves.

Teton County, WY 2016 Overview

Teton County Wyoming ended it’s year with a bang, with nearly 400 residential sales including condos, townhouses and timeshares.

Residential Snapshot

The Town of Jackson saw a small increase in terms of absorption rate change, and the average sale price did increase, but only by about 2%. The number of days on Market was almost identical to the year prior, around 4 months on average.

Wilson, WY saw a decrease in the number of days on Market, and also a decrease in the average sale price. Like the Alta, WY market, the Wilson market is small, and easily skewed by high dollar listings, or low inventory.

Congratulations to the team at Teton Valley Realty, closing 140 transactions in the Teton Valley Market in 2016, over 50% more than it’s closest competitor.

Here’s to a successful 2017!

Real property vs Real Estate and the Bundle of Rights

January 1, 2017 By Tayson Rockefeller 1 Comment

Alright, commonly we hear the term real estate and just assume it is just that. Property, house, something associated with improvements on land or just bare land. This is correct, any buildings that are permanently attached to the property (note that a shed on skids would be considered personal property) are referred to as improvements. Real estate normally includes resources or minerals that are under the land or water rights, unless they are specifically excluded, usually at the time of transfer. The same goes for the air rights, or the space above the surface of the Earth. This can also be limited to a certain distance as we start to think about airplanes and their right to travel over your property. Even though you may own the space, it can also be limited by County height limitations, and this can be further convoluted when high-rise buildings or condos come into play. In these instances the homeowner’s association may own the building footprint, while you own the inside of the condo.

Now that we have a general idea of what is inclusive with regards to real estate, we start to understand that real estate typically refers to physical elements. So what is Real Property? What is the difference?

Real property is basically an expanded concept in terms of real estate. Not only does it include everything I mentioned above, but also what we refer to in the real estate industry as the “Bundle of Rights”, or simply, Real Property Rights.

So, Real Estate + Bundle of Rights = Real Property.

In order to conclude, we need to understand what the Bundle of Rights are. While Real Estate would be considered physical, the Bundle of Rights are not. This is a legal element. In Real Estate training, have all these weird acronyms to help us remember the different elements for various terms. The acronym for the bundle of Rights is DEEP + C, or:

Disposition – Essentially, this right protects the owner’s ability to transfer ownership, either permanently by virtue of a sale or temporarily by leasing the property.

Enjoyment – This one’s pretty self-explanatory, it gives you the right to enjoy or to participate in activities that the owner of the property enjoys.

Exclusion – This gives the owner of the ability to limit who can access the property. No trespassing…

Possession – Another right that is seemingly self-explanatory, it gives the owner the right to possess the property.

Control – Allows the owner to use the property the way they see fit.

It is important to remember that the above bundle of rights do not go without restriction. A good example is possession. Usually, if you do not pay your property taxes, the county can take possession of your property. If you are in a platted subdivision, you cannot control every element of your property as there are restrictions in place that you agree to when you take possession of the property. There are of course many other scenarios in which the above rights can be limited.

In any case, at least now we know the difference!

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