Ron Wieczorek, as always, has some great info for you about home loans. Today’s topic: Disposable Income. While Dave and Thom are talking about new construction across the valley.
Dave Burnett: This is the Idaho Real Estate Buzz. He is Thom Dallman, the co-owner, Associate Broker at CoreGroupRealty.com. Core Group Realty at eXp is the company's name, CoreGroupRealty.com is the website, and of course the phone number, 208-933-7777. You know, Thom, so much of the Treasure Valley as it grows, it just astounds me. When I drive south of the city, east of the city, go north up toward Avimor, go west, construction is going on everywhere.
Thom Dallman: So much new construction. Such a prevalent part of our community right now and so much of our home sales.
Dave Burnett: Yeah.
Thom Dallman: There's just so much of it going on, and so many new builders popping up here and there, and stuff like that. And taking advantage of the great opportunities here of growth that's happening. I know there's a lot of people out there that don't care for our growth, but it's happening. We continue to hit the top of the list for affordability, livability, best place to bring up kids, best place to be able to go out and do outside activities all year long, and things like that. So as that happens, more and more people are moving into the area, and with the continued low inventory of resale homes, new construction's where it's at.
Dave Burnett: It is.
Thom Dallman: Lots of new homes out there.
Dave Burnett: And you have some figures for different towns here in the valley?
Thom Dallman: Yeah. I was doing a report for another company out of California that was asking me for our stats and stuff like that for a webinar that I'm going to be doing in June. It made me very interested in the new construction, because we always talk about new construction, and last year it was kind of around that 31 percent of the home sales were in Ada and Canyon County or new construction, so I started out with kind of that. We're at 33 percent, so we've gone up another two percent. 33 percent of our home sales are new construction year to date. That's our year to date number.
Dave Burnett: A third of all homes.
Thom Dallman: Of the homes sold. 33 percent of them are new construction with Ada and Canyon County combined. 50 percent of the active listings are actually new construction, so exactly 50 percent as of this week of the homes that are on the market are new construction. New homes that have never been lived in, are under construction, or are projected to be built.
Dave Burnett: In your time here in the Treasure Valley, what has kind of the average been? What percentage would you say it's around?
Thom Dallman: The average is usually around, I'm going to say between 10 and 15 percent in a stable
Dave Burnett: That's five times that.
Thom Dallman: Yes. Exactly.
Dave Burnett: I mean, I sit here. You can't see it, but I'm just shaking my head. That's just astounding.
Thom Dallman: It's crazy, crazy. Yeah, it's a crazy time, and it's a great time for the builders, and that's the main reason why we're seeing all these new builders coming into town. And new construction's a great option for people that can afford it, and have very specific needs that they want. An example is that I have some clients who are looking for duel master bedrooms, and there's just not much out there with that, and so they're looking at new construction right now, because you could have a builder kind of build that into a house with this almost... A little bit above what you'd pay for a resale house, but you get what you want. You know? You have the option to kind of work with the builders, certain builders out there, to get what you want in the house when you get in.
Dave Burnett: What towns would you say are the hot spots?
Thom Dallman: All right. That's a good question.
Dave Burnett: I kind of wanted to get to that.
Thom Dallman: Because I did break it down in between Boise, Meridian, Kuna, Eagle, Star, Nampa, and Caldwell are kind of major kind of cities around the metro area. Which one do you think came out the highest?
Dave Burnett: See, my initial reaction would be Star Middleton, but I go that direction personally more often than not. I haven't been to Kuna in quite a while, but I've been told Kuna's going nuts.
Thom Dallman: Yep. Kuna's going nuts. Kuna actually is at the very top.
Dave Burnett: Are they top?
Thom Dallman: 56 percent year to date. 56 percent of the homes sold were new construction in Kuna.
Dave Burnett: Man.
Thom Dallman: Yeah. And that just goes to show that it's a smaller township that just doesn't have a lot of resale options, and a lot of people like it, because it's just so close to town, so easy in commuting to get to town. But yeah, far enough out to where you feel like you have that kind of-
Dave Burnett: At least for now.
Thom Dallman: Yeah, right? Exactly. As more and more goes along Meridian Road.
Dave Burnett: I was going to say, I felt that way in Eagle when I built my home in Eagle, but that's not the case now.
Thom Dallman: Yep, yep.
Dave Burnett: Wow.
Thom Dallman: So Kuna rings at the top at 56 percent year to date of their sales are new construction, and then Star and Meridian are actually tied for second place at around 52 percent.
Dave Burnett: Mm-hmm (affirmative).
Thom Dallman: 52 percent of the sales year to date have been new construction. So that leaves Boise, Eagle, Nampa, and Caldwell. Any guesses on who's next?
Dave Burnett: I'm going to probably put Boise at the bottom of the list.
Thom Dallman: Boise's at the very bottom. 16 percent.
Dave Burnett: Just because there's just not much room-
Thom Dallman: See, you're good at this.
Dave Burnett: -within the city. Well, I've been listening to you, so-
Thom Dallman: Yeah, right.
Dave Burnett: -listened to you week to week, so I'm going to have to say probably Nampa.
Thom Dallman: Boise's at the bottom with 16 percent. Only 16 percent of the sales in Boise are new construction, which if you think about it, there's not a lot of space for new construction.
Dave Burnett: So I would say next to Boise would probably be Caldwell, because it's further out and then Nampa above that.
Thom Dallman: It's actually switched. Nampa's 27 percent, so second to the bottom, and then Caldwell is actually 31 percent. Caldwell has a little bit more new construction going on than Nampa. Not a lot. They're very close.
Dave Burnett: But they both have existing homes-
Thom Dallman: Correct.
Dave Burnett: -that are thrown in the mix, so it's not like new area.
Thom Dallman: Exactly. And then Eagle, right there in the middle. 47 percent of the home sales are new construction.
Dave Burnett: I guess when I look at this... Because you look at it from the real estate side of what's happening. The pluses for... You think about furniture companies, you think about the Home Depots of the world, the landscapers of the world. These companies are all just benefiting off of this, because all these new homes need new stuff.
Thom Dallman: Oh, yeah. If you think about the economy and the trickle-down into those things, and how it kind of feeds back into the economy, it's great for everything that's happening in the Treasure Valley, and gives job opportunities. It gives a way for the economy to stay stable, and to be good for our community and stuff.
Dave Burnett: Now, the downside of it, people are going to go, "Too many people," which is true, because it's taxing on the schools, law enforcement, firefighters, roadways, because the bottom line is, we could do a whole hour on it. We're not built for the roadways to handle the traffic coming, and a lot of it can't be fixed.
Thom Dallman: Exactly.
Dave Burnett: It can't be expanded enough.
Thom Dallman: Yeah. And the cities are working their hardest to try to accommodate stuff like that. We're seeing expansion everywhere. Ustick Road, State Street. They're putting in all kinds of new stuff to try to accommodate with the new traffic patterns and stuff like that, but yeah, it's a continual struggle that I think we'll see for a few more years as we continue to grow, and more and more people are kind of flocking to our neck of the woods because it's a great place to live at the end of the day.
Dave Burnett: Okay. Let's play a game. All right?
Thom Dallman: All right. Oh gosh.
Dave Burnett: If you were to be buying a home today, which one of these communities do you think you'd buy a home in for you?
Thom Dallman: My personal opinion would be, if I was to buy a new home, I'd probably focus on either Eagle or Meridian.
Dave Burnett: Mm-hmm (affirmative).
Thom Dallman: Just because I do like the commute of being downtown, and come down to downtown Boise. We spend a lot of time eating out downtown, so if I was to sell and move, it would probably be to the Eagle or Meridian, and I feel like that's where you're going to get your most bang for your buck as far as longevity of affordability and growth of your equity and so forth. That's my own personal point.
Dave Burnett: When I first moved to town back in... What was it? '86. We bought a home out at Five Mile Ustick [inaudible 00:08:16], and everybody said, "What are you buying land, a house, way out in the country for?" Because at that time, Meridian was just still a dairy town, and not very big. Within later, in... What was it? '97. We built a place in Eagle, and I think now if I were to sell, if I were to stay in Treasure Valley, I'd probably move up to Middleton.
Thom Dallman: Yeah?
Dave Burnett: And just try to get a little further out!
Thom Dallman: Oh, yeah? You like that little further out role kind of feel of just smallest town and stuff, which a lot of people do. And there's a reason why people are kind of moving out that way, like we said, for Kuna, and for Star, and for Middleton, and the growth that's happening in those areas because of that fact. People don't want to live in town where there neighbor's right next to them and stuff, and like that small-town feel.
Dave Burnett: Little more elbow room, and then I'll go into town for my entertainment.
Thom Dallman: Exactly. But that's what I love about our area is that we still have those options, but you still have an easy 20 minutes, 20, 25 minutes to get downtown if you really want to and stuff like that.
Dave Burnett: And we didn't really even get into the aspects of areas that have had zoning permits issued, like the Avimor area up Highway 55. They're going to be adding more there.
Thom Dallman: Oh, yeah.
Dave Burnett: I believe there's somewhere out between Star and Middleton, there's another big area that's been approved for a substantial size in subdivisions.
Thom Dallman: Oh, yeah. There's all kinds of new stuff going in everywhere.
Dave Burnett: I don't think your numbers are going to change much.
Thom Dallman: No.
Dave Burnett: Not anytime soon, anyway.
Thom Dallman: I don't think so either.
Dave Burnett: Thom, if somebody wants to get a hold of you to talk about purchasing a home... Maybe they're out of the area or have family out of the area moving to this area, how do they get a hold of you?
Thom Dallman: Well, if you just want to have our help interviewing and talking to builders, if you're in that realm where you're looking at new construction, we've talked to a lot of these builders. We have a lot of interaction with builders and stuff, so give us a call at 208-933-7777, or give us an email, email@example.com. Go visit our website, CoreGroupRealty.com, as well. We can help you. We can help you set up those interviews. We can get you in with these builders, and kind of give you some guidance on who's building in your price range, what their quality is like, and stuff like that.
Dave Burnett: Very good. Flagstar Bank is one of the sponsors of this program. Ron's going to be in to talk to us, so he can talk to you about a new home loan as well, and some options for you there. One of the sponsors, along with the folks at Core Group Realty. Call today. 208-933-7777. Find out why they say, "You get more with Core."
Dave Burnett: This is the Idaho Real Estate Buzz. He is Thom Dallman, the co-owner, also designated broker with Core Group Realty at EXP. CoreGroupRealty.com, the website, 208-933-7777, just keep dialing the sevens.
Thom Dallman: I'm gonna throw in a little correction there. I'm no longer the designated broker. I'm just a regular associate broker.
Dave Burnett: You're an associate broker.
Thom Dallman: Oh, yes.
Dave Burnett: You are welcome to correct me when ever because-
Thom Dallman: We changed over to EXP last fall-
Dave Burnett: ... an associate broker.
Thom Dallman: And I gave up my designated broker, so I can focus on helping my agents, and my clients have better experiences with us.
Dave Burnett: Very good. That is probably only the second mistake I've made this hour. I'm doing all right so far. We get a chance to talk to Ron with the Flagstar Bank each and every week about finances, about what's happening in the world of finances, and home mortgages. Ron, back again, and we've been running the past several weeks on Ron's potpourri. Are we continuing today?
Ron Wieczorek: Well, it's just potpourri as a purpose, I think.
Thom Dallman: Oh, potpourri with a purpose. Interesting.
Ron Wieczorek: Who ever said I wasn't quick?
Dave Burnett: The three Ps. Here we go.
Ron Wieczorek: Today I'm going to talk about, and I'll segue into another topic, but where do homeowners have the most money leftover after their mortgage payment? Now, we're talking about disposable income, right? And what disposable income is, let's say you make $5,000 a month gross, and all your bills add up to $2,000. After taxes, you're going to have a certain amount of money left over to eat, entertainment, whatever you want to be done. I'm focusing more on the mortgage payment side of it.
When I look at these numbers, and do these studies on reading, I'm more focused on metro areas. That kind of excludes Boise, but Boise's in the mix, because I always bring it back to where are we stack up with those, the 35 largest Metros, and those are metro areas that have over a million people in them. The one that surprised me is who has the most income leftover, and maybe it shouldn't surprise me because of the traffic of politicians that hang their hat there. So, I gave it away. Where are we talking Dave?
Dave Burnett: Must be, District of Columbia.
Ron Wieczorek: Washington, D.C. In Washington, D.C., they have the most income left over, after their mortgage payment has been made. Ironically, most people that work in Washington, don't live in Washington. So you're talking about a very small population, even though I said over a million, that metro area, they count some areas, but a lot of people drive from different parts of Virginia to get into Washington, D.C.
Dave Burnett: True.
Ron Wieczorek: But I'll digress. Where do they have the least amount? Well, you're probably trying to pick which part of California right now is, probably going through your head. But, it's a major city in California, and there's a lot of sports teams there now.
Dave Burnett: Now. He said, now.
Thom Dallman: Now.
Dave Burnett: You must be talking about LA.
Ron Wieczorek: Los Angeles, right. You're reading into what I'm saying. So yeah, Los Angeles has the least amount, and that's no surprise that California is on that list. When we talk about that annual gross median income, those in D.C. have $7,000 left, after a monthly paycheck, which I thought it was a big number, because that means that in order to have $7,000 left, you have to make at least $7,000 after taxes. In that case you're in the mid-six figure incomes to do that, because we've already paid our mortgage.
Dave Burnett: Not unless our government employs them. Holy mackerel.
Ron Wieczorek: Now, now.
Dave Burnett: All right.
Ron Wieczorek: That could take up the whole segment, and you guys limit my time.
Dave Burnett: We don't have time for that.
Ron Wieczorek: So, Los Angeles has less than half of that, after the mortgage payments have been paid.
Dave Burnett: Wow.
Ron Wieczorek: It's only $3,400, and that's just after the mortgage payment. I'm not talking about, there's a lot of vehicles.
Dave Burnett: I was going to say, just commuting time.
Ron Wieczorek: Commuting time. That budget has to shrink pretty quick. After, when you get down to the variables of a what's left over for entertainment or anything else, it's a small number for your average-
Thom Dallman: It's almost nothing for savings.
Ron Wieczorek: And you're going one step further, Thom, and I liked that you did that, because when you talk about savings, they're just not saving. That's not even part of the game plan. It's surviving, more than it is saving. We always talk about trade-offs where we live, and our quest for happiness, there's that satisfaction you must give up to live in a certain place you want to live in. I don't know who wants to pay to live in Los Angeles, to go through that-
Thom Dallman: To go through that.
Ron Wieczorek: But, that's where a lot of the good paying jobs are, in those coastal... we talk about San Jose a lot, we talk about San Francisco and the Bay Area, and you're talking about some of those good paying jobs, which we think are good paying jobs, but after you dive into those numbers, you see that they're just not coming out at the end of the day with a lot of money in their pocket. Maybe it's more about experiences and getting that under their belt before they do move to other areas, if they get enough under their belt, and they can have the same wage and live somewhere else, which I'll talk about in future episodes.
Dave Burnett: But when you're talking cost of living, I just looked very quickly, we complained about the cost of gas here. If you're in California, you're paying anywhere from $3.80 to $4.00 a gallon for gas right now.
Ron Wieczorek: Right, yeah.
Dave Burnett: Man.
Ron Wieczorek: And you're sitting in your car for an hour.
Dave Burnett: It's not a 10 minute drive to work a lot. Right?
Ron Wieczorek: I live on the outskirts, a little bit of Boise, and my commute's 20, 25 minutes
Dave Burnett: And that's a long commute.
Ron Wieczorek: That's what everyone says. But I do it. I don't even finish the program I'm listening to. I've got to sit down in front of my work, waiting for it to finish, so that to me is not a long commute. But when you're talking about $4.00 a gallon, and that's, that's an extra, that's not a necessity, and you're talking about a 45 minute to an hour, you're burning gas at a rate that's, I'm surprised they don't have people on the road with gas tanks to fill you up, mid-commute.
Dave Burnett: They might.
Ron Wieczorek: But in our industry, we talk about what does that mean for your debt ratio? Because you have to qualify for a mortgage in order to get one of these homes. The typical US homeowner, this is now nationwide, is 17% of their medium income goes to their mortgage payment, and that's up from 15.4 in 2017. Meanwhile, a typical renter paid 27% of their income that went to their rent.
Dave Burnett: Wow.
Ron Wieczorek: That shows you kind of that disparity of the have and the have nots, and that gap is getting bigger and bigger, unfortunately. Those wages are lower. The rent has gone up, but now it hasn't gone up to a point where it's one and a half times what mortgage payments are. It's just that that pool of money is smaller. It's cyclical in that aspect. If you're already not able to, or apparently, make your rent payment, you're not saving, and you're not positioning yourself to become a homeowner, so that's where that, that gap becomes higher and higher.
We have areas like St. Louis, Detroit, Pittsburgh, Cincinnati, and Annapolis, they're still considered extremely, extremely inexpensive. You're talking under 13% of their total income goes to their mortgage payments. And then you go to the flip side, the expensive places like New York is 27%, and then you get into California, which is 43%.
Thom Dallman: Wow, 43% of our your income
Ron Wieczorek: ... of your income goes... That's before taxes, right?
Dave Burnett: Wow.
Ron Wieczorek: That's where that disposable income number comes from. San Fran's worst at 44, and San Jose is at 50%. It begs the question, how do you live? How do you live when 50%-
Dave Burnett: Paycheck to paycheck, barely.
Ron Wieczorek: There you go. And the left over income after making your mortgage payment, annually, in Pittsburgh is about $54,000. After you add up the whole year and you take out that mortgage payment, it's 54, then in San Jose it's 62,000. There's still that disposable factor, but what doesn't get told in that story is the tax rates. So, you have the tax rate and you have the other expensive gas. In Pittsburgh, it's probably half that. Pittsburgh is one of the most inexpensive cities just to live in, period. So you have, everything's running at a lot cheaper rate. When they talk about disposable income of $62,000, that goes a lot quicker than $54,000 in Pittsburgh. It's mind blowing to me how paycheck to paycheck. Right? And what does that mean and how do people survive, and live in that?
There's another article that I read about professionals, doctors, that can't afford homes in those areas of California right now. They're getting paid over 200 grand a year-
Dave Burnett: And they can't afford it.
Ron Wieczorek: And they can't afford to live there, much less teachers. You have your other professionals, teachers and first responders have to live so far out, that they basically live at the fire station, and that's how they do shifts, because they can't live and breathe where they serve, because they can't afford it. What caught my attention was doctors, more than often than not, because the tech people are making so much money, they're out-pricing the doctors by all.
Dave Burnett: The doctors, who you would think are living the life of luxury.
Ron Wieczorek: And they're not. In California, if you're a doctor you might have a roommate, which is extraordinary.
Thom Dallman: It's a foreign concept, yeah.
Dave Burnett: So really the only place... I'm just trying to think. The only place in Idaho where you see that happening is in the Hailey area, up Sun Valley, Hailey, where the people who work there really can't, unless you're longtime residents, they can't afford to live there. They live out of the area, commute into work.
Ron Wieczorek: And not Hailey, this doesn't happen in Hailey yet. In the bigger cities, what now you see when it becomes unaffordable is, you see where the government actually can step-in and do good things, and make home affordable areas, opportunity zones, where you have to make under X to live at this place, and we'll subsidize that living area, so not everyone has such a harsh commute. You can live and maybe breathe in the same community that you're serving.
Dave Burnett: As we wrap up here, Ron, I'll throw this out to you. You may not be prepared for it, but in Idaho what kind of a percentage are we looking at of disposable income, in the Idaho area?
Ron Wieczorek: It's right in between. It's better than Pittsburgh, not as much as San Jose, because of that wage is so much bigger, so that number is kind of skewed. But I think it was like $58,000 after you pay your... And that's annually, and it's household income, that's not non individual, and that's only the mortgage, and or the rent. That's not covering any of our other bases.
Dave Burnett: If you would like to talk to somebody about getting a loan for a home, refinancing a home, anything to do with financing for your home, Ron is available for you, with the folks at Flagstar Bank, equal opportunity loan lender. Ron, how do they get hold of you?
Ron Wieczorek: First, before I get there, that was based just off homeowners. That doesn't count renters. Renters is much lower across the board. My cell phone's always on me. It's 208-869-9154.
Dave Burnett: Very good, or you can go to CoreGroupRealty.com, check out the website, the a preferred vendors list that is there. You can get a hold of Ron that way, as well. Or, call 208-933-7777. Flagstar Bank and Core Group Realty bringing you the Idaho Real Estate Buzz. Find out why they say, "You get more with Core."