Boise (Ada County) Real Estate Report for March 2012

March was another encouraging month as prices showed solid year over year gains for the second month in a row.  The lack of affordable inventory continues to deepen and may be helping put pressure on prices.  In addition, strong growth in the number of closed sales is occurring in new construction and in homes priced over $200,000.  The number of closed distressed sales, particularly REOs (bank owned) has started to drop and was below 40% this month aver hovering on either side of 50% for the last couple years. Pretty good trends if we can sustain them into summer.

561 homes sold in Ada County in March which was actually 7.3 below 2011 and is particularly surprising given the high number of pending sales reported in February. Closed sales did increase 13.3% from February 2012 though, which is consistent with the usual ramp up to the spring selling season.

Year Pending in February Closed in March Pending in March
2011 504 605 740
2012 655 561 813

Pending activity in March was the highest since April 2010 and at 813 looks good for sustaining the current trend and possibly beating last year’s numbers in April. This seems to be driven by new construction as the number of pending resale properties dropped 4.7% while new construction pendings soared +126.8%.  There also seems to be a dramatic shift towards non-distressed properties where pendings were up 76.3% versus down 40.7% for distressed properties.

Also interesting was that the number of resale closings dropped 11.2% to 470 while new construction closings surged 19.7% to 91.  Both REOs and Short Sales also had fewer closings, particularly REOs which dropped 51.9%.

Type # Active % change vs 2011 # Sold % change vs 2011 # Pending % change vs 2011 Months Inventory % change vs 2011
All Single Family 2058 -32.1 561 -7.3 813 +9.9 3.7 -26.7
New Construction 619 -16.1 91 +19.7 186 +126.8 6.8 -30.0
Resale 1439 -37.2 470 -11.2 627 -4.7 3.1 -29.3
REO (bank owned) 43 -86.1 111 -51.9 88 -66.8 .4 -71.1
Short Sale 606 -30.9 108 -11.5 161 +3.9 5.6 -21.9
Non-Distressed 1409 -23.5 342 +35.7 564 +76.3 4.1 -43.6

Inventory, as has been the case for the last 2+ years, declined sharply (-26.7%) to 3.7 months versus 5 months in 2011 and 4.3 months in February 2012.  If you look just at resale properties, excluding new construction, the numbers fall to 3.1 months of inventory.  REO inventory is nearly non-existent at .4 months with 111 sold versus only 43 active listings in March. Not surprisingly Average Days On Market also declined 24.4% to 99 from 131 and sellers on average realized 96% of their asking price versus 91% last year. Builders got 99% of their asking prices versus 95% last year.

Prices were a pleasant surprise again in March with the average price per square foot coming in at $90, tied for the highest since August 2010, and a 10.5% increase from 2011.  The average sold price was $174,000, an 11.5% increase from 2011 and a 6.1% increase from the same quarter last year.  Both $/sf and average sale price still trail 2010 numbers by 2.8% and 5.9% respectively and for all types of single family properties except new construction prices are still below 2010.

March 2012 Prices

Type $/SF % change 2011 Average Price % change 2011 % change 2010
All Single Family 90 +10.5 174,000 +11.5 -5.9
New Construction 107 +6.9 217,000 +.9 +23.3
Resale 86 +10.3 166,000 +12.2 -10.8
REO 72 +10.6 129,000 +12.2 -20.9
Short Sale 78 +1.9 156,000 +.6 -16.1
Non-Distressed 98 +2.7 195,000 +.5 -1.5

Also of interest is that distressed sales dropped to 39% of closed sales in Ada County which is a significant improvement compared to the high 40’s to low 50’s that have been the norm for the last few years.  Spurred on by record low rental vacancies investors have returned to the market buying both multi family and single family properties.  The current investors are a slightly different breed than we saw 5-7 years ago.  They tend to be more market savvy and cash rich and are following a strategy of buying and holding properties with cash or low debt that will be cash flow positive in the near term until values recover.  The buy and flip model that was very popular at one time is difficult to pull off with prices as low as they are.  The Wall St. Journal reports similar trends nationwide for both rental and vacation homes.  According to Tony Koonce of Park Place Property Management, vacancies are currently around 4.5% with rental prices averaging 84 cents/sq foot.  He also points to growth in Ada County of 5995 jobs in 2011, after several years of losses,  which should help both rental and for sale properties.

While the market continues to be heavily weighted on the low end there have been increases in sales in mid to higher end properties reflective of job growth and increased consumer and lender confidence. The number of pending sales in the $200-299K range is the highest in over 2 years. The table below shows the trends:

Price Range # sold 3/2012 % of total sold % change 2011 Active vs 2011 Pending vs 2011 Months Inventory
Under $150K 284 50.6 -22.6 -49.1 -12.5 2.4
Under $200K 400 71.3 -14.3 -43.5 -2.5 2.7
$200-299K 107 19.1 +20.2 -17.7 +50.4 4.4
$300-399K 33 5.8 +6.5 -.4 +28.9 6.8
$400K + 21 3.7 +16.7 -8.6 +63.0 12.7

 

In summary for the second straight month we have seen strong year over year price increases and new construction and non-distressed sales seem to be driving growth.  In addition the number of properties selling above $200K is showing strong increases.  The dominance of distressed sales, particularly REOs seems to be diminishing somewhat which should further aid price recovery.  These strong price indicators coupled with continued declining inventory, near record low interest rates, improved consumer confidence, and slightly better employment figures seem to be pointing towards gradual recovery although my guess is even though Real Estate is local, particularly in an election year, there may still be some bumps in the road.  We look to be well positioned to beat 2011’s numbers but are still lagging behind 2010 pricewise except in new construction.

For those of us that have been watching, or as in my case, weathering the market for the last 5 years it is exciting to finally see some positive news.  Please don’t hesitate to contact me with comments and questions and your referrals are, as always, the highest compliment you can give.  I look forward to hearing from you soon.

Cam Johnson

 

Posted on April 10, 2012 at 3:26 pm
Cam Johnson | Category: Uncategorized

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