September’s real estate statistics for Ada County continue the trend we have seen most of this year—supply is falling steeply and the number of homes sold is growing but prices have not rebounded accordingly. 606 homes were sold in Ada County in September, an 11.2% increase from 2010. Pending sales, an indicator of future sales activity, rose 23.8%. Looking at the 3rd Qtr vs 2010 the numbers look even stronger, sales were up 32% and pending sales were up 26%. Similarly the average days on market dropped to 78, the lowest in over a year. Based on the current rate of sales there are 4.3 months of inventory. Anything under 6 months is generally considered healthy and we have been under 5 since March after peaking at 8 months in January. By comparison, a year ago there were 7.6 months of inventory. Please scroll down if you are interested in seeing the detailed graphs.
Sales activity and inventories look healthy, so what about prices? As has been the case for quite some time, they apparently didn’t get the memo…although there was some slightly encouraging news. The average price per square foot actually increased 1.6% year over year and at $91 was the highest since August of last year. If you look at the 3rd quarter though, it was still down 3.1% versus 3Q 2010. And if you look at the average sales price things look bleak. At 175,000 the average sales price was -6.9% from September 2010 and has declined pretty steadily after “peaking” at $184K in June. In previous months I have discussed the hangover from the end of the Homebuyer Tax Credit program, and while sales activity seems relatively unaffected, prices have declined every month since the program ended after rising for 4 straight months leading up to the end of the program. So did the program work? Hard to say how bad things might have gotten without it, but the aftermath has certainly not been what the industry had hoped for at least here in Boise. Don’t tell that to sellers though, because ironically, while prices have dropped almost 7% in the last year ASKING prices have actually jumped over 10%. They must be reading all those articles about the housing market recovering…somewhere…but as we all know, Real Estate is local.
Oh and let’s not forget about distressed sales. 39% of the closed sales this month were either Bank Owned or Short Sales. That is still a huge number but is actually improved from 2010 and early this year when the number was hovering around 50%. Expect to see distressed sales continue to be a major factor although those in the know see a shift away from REOs (bank owned) back to short sales. The good news there is that in many cases the banks are starting to figure out short sales and the process has gotten somewhat shorter and smoother. Still not a good option if you need to be moved in 60 days or less, but worth looking at if time is not critical. And there are some deals too! The average sold price for distressed properties was $132,000 (25% below that for non distressed). Of course, a lot of that has to do with the types of properties that end up as distressed so you can’t assume that any given house will sell for 25% less if it becomes distressed. Distressed properties tend to be in the lower price points anyway. 72% of all closed sales last month were under $200K and 47% of those were distressed (versus 39% overall). If you look at sales under $125K (36% of all sales) the rate of distressed sales rises to 58%. Distressed sales also take longer to sell largely due to the delays inherent to short sales. Average days on market is over 100 for distressed properties and 66 for conventional—about 1/3 less. Bank owned properties in the sweet spot of around $125K are still getting snatched up almost immediately however.
Not to sound like a broken record, but I don’t foresee any real recovery pricewise in our market until unemployment drops below 6% and consumer confidence rises. Even with interest rates that dipped below 4% last month and prices that are roughly half what they were 5 years ago we are just putt putting along.
As always I welcome your comments and questions and greatly appreciate your referrals. Please feel free to share this market report with anyone you like and I look forward to hearing from you soon.