January’s numbers show a continuation of the trends that have taken shape over the last several months in Ada County: stabilizing prices and sharply reduced inventory. 413 single family residential sales closed in January, a 4.8% increase from last year. Sales dropped 22.7% from December, but that is fairly typical as January is generally the slowest month of the year for closings. Pending sales, a good indicator of future market activity, were up 19.7% from 2011 while inventory continued it’s free fall to the lowest levels in years and was off over 30% with only 2201 homes available versus 3150 last year. There is speculation that the $25 billion settlement with the Big 5 banks this past week may unlock the shadow inventory that many feel the banks have been holding back until they knew where they stood. There may indeed be a resurgence in foreclosures although some provisions of the settlement were clearly intended to keep that from happening including the possibility that some “underwater” homeowners will actually be allowed to refinance rather than default. Personally I think the shadow inventory fears are overblown, at least here in Ada County. I think it may be a bigger issue in neighboring Canyon County though.
Prices continue to stabilize but show no real signs of a significant increase despite the tight inventory and continued near record low interest rates. Distressed properties continue to steer prices while persistent high unemployment and difficult access to credit keeps the size of the buyer pool in check. Many potential buyers still lack confidence in the market and their personal financial situation and are content to rent for now. Also recently it has been trendy in the media to disparage the dream of homeownership and sing the praises of renting vs owning. The rental market continues to be brisk in all segments to say the least. So while the average sold price per square foot at $84 was the lowest since March, it was actually unchanged from a year ago. Just as the number of homes sold varies seasonally there is also a seasonal component to prices. Prices the last several months have held true to those “normal” fluctuations. We should start to see prices tick up again in April. The average sales price at $167,000 has generally followed the same path, but was down 2.3% from a year ago. In general I continue to believe we are bouncing around the bottom and both a long way away from any serious recovery and still vulnerable to external market forces.
I’m trying to keep it brief this month so won’t dig into the details about distressed sales and days on market/months of inventory other than to say that there were no significant developments in either of those areas but I will continue to look at them and provide updates as needed.
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