Boise (Ada County) Real Estate Market Report for August 2012

August proved to be hot and smoky in Boise in more ways than one.  Our mean temperature for the month was 10 degrees above average and we had high temperatures over 90 degrees on 25 of 31 days.  In addition a very active fire season, not only in Idaho but in surrounding states as well, led to smoky conditions and air quality alerts on and off throughout the month.

In real estate parts of the market continue to be hot but  what is happening in other market segments seems to be somewhat obscured by the smoke and mirrors which the media has chosen to promote.  As I have been saying for the last several months the impressive rise in average sales price here in Boise does not directly relate to property value appreciation for any given property.  You’ll see what I mean in my latest version of a “Tale of Two Cities” below.  The media loves headlines like “Home Prices Up 15%!” and “Boise #2 Real Estate Recovery Market in US!” and the market has definitely taken a dramatic positive turn in the last 9 months or so but once again I want to caution those of you who own homes that you can’t just mentally tack 15% on to what you think your home is worth because of a headline, although in certain specific instances, one of which I will illustrate below, you wouldn’t be terribly far off.

First a brief look at the Boise market overall:

 

Type

# Sold

% +/-

% of Total Sold

# For Sale

% +/-

% of Total For Sale

$/SF

% +/-

Average Sold Price

% +/-

Days on Market

% +/-

Months Inventory

All

741

+9.1

100

2289

-15.6

100

$102

+15.3

$206K

+15.1

68

-29.2

3.1

Non Distress

604

+45.9

81.5

1750

-3.9

76.4

$107

+9.6

$220K

+9.5

58

-27.5

2.9

REO

32

-79.2

4.3

46

-69.5

2.0

$80

+8.5

$166K

+12.9

45

-33.8

1.4

Short Sale

105

-5.4

14.2

493

-35

21.5

$76

+3.8

$134K

-6.9

131

-32.5

4.7

New Construction

155

+42.2

20.9

631

-8.4

27.6

$114

+4.7

$248K

+3.3

86

-44.5

4.1

Percentage change is versus 2011.  Does not include manufactured homes.

 

Pretty much all good news here.  Sales are up overall 9.1% but short sales and bank owned properties continue to decline rapidly and I think it is fair to say are no longer driving the market as they did for 4+ years.  Only 18.5% of closed sales were distressed last month versus 20.9% for surging new construction.  Overall inventories are still very low with only 3.1 months overall.  While this means some buyers are having difficulty finding a home in their price range, that’s not such a bad problem to have because it underscores the fact that people are actually buying homes!  Average days on market at 68 continues to be very healthy.  And prices, as you have heard, have surged over 15% from a year ago.

As I have pointed out in previous months some of the price increase is due to increased demand by buyers but some is due to a change in the product mix away from distressed properties and into traditional sales and new construction.  That being said the question I am often asked is, “How much have homes actually appreciated in the last year and how much has my house appreciated?”  A difficult question at best and unless you have bought and sold your house in the last year, probably impossible to answer for a specific property.  I decided to take a stab at it with two different types of homes in two different Ada County cities.  The difficulty is in trying to compare apples to apples as no two properties are exactly alike.

“A Tale of Two Cities” (sort of) August 2012

Comparison of 3 bedroom, 2 bath, 2 car garage, 1300-1600 sq. ft. homes built between 2004 and 2007 in SW Boise and Meridian sold from June 1- August 31. 

 

Year

# Sold Total

Average Sold  Price

Price per Sq. Ft.

Days on Market

# Sold Non-Distressed

Average Sold Price

Price per Sq. Ft.

Days on Market

% Distressed

2011

24

$120,608

$84.40

68

11

$121,690

$85.52

34

54.1

2012

16

$135,643

$93.84

53

8

$134,737

$96.90

21

50

% Change

-33.3

+12.5

+11.2

-22.1

-27.3

+10.7

+13.3

-38.2

 

I chose these parameters because to me they represent a typical house in the sweet spot of the Ada County market price wise ($100-150K).  The results were somewhat surprising, and despite the small sample size I believe provide a pretty accurate look at where that type of property is headed in the current market…up!  I broke it down by all properties and non-distressed properties but the results were pretty similar.  Looking at all 40 properties that met the criteria in 2011 and 2012 shows average sale price and $/sf increases approaching the 15% total market increase that I have been saying was completely misleading.  Well, at seems at least for this type of property the 15% isn’t so far off.  Hmm…these properties are increasing in value quickly and also typically make good rentals.  No wonder the investors have been snatching these up so fast.  Average days on market for the non-distressed properties in this sample was only 21 days in 2012.  Even including short sales the average days on market was only 53.

Comparison of 2500-4000 sq. ft. properties built between 2004 and 2009 in Eagle sold from June 1-August 31

 

Year

# Sold Total

Average Sold Price

Price per Sq. Ft.

Days on Market

# Sold   Non-Distressed

Average Sold Price

Price per Sq. Ft.

Days on Market

% Distressed

2011

17

$325,953

$103.02

103

8

$365,963

$119.57

47

52.9

2012

22

$336,006

$106.60

77

20

$332,927

$106.75

79

9.1

% Change

+29.4

+3.1

+3.5

-25.2

+250

-10.0

-10.7

+68.1

 

The second city in our tale is Eagle where I had to broaden the criteria a bit.  I used all homes of 2500-4000 sf built 2004-2009 as I feel this is a fairly typical Eagle home.  On the one hand the results were what I expected.  Average sales price and $/sf for all the properties increased a much more modest 3.1% and 3.5% compared to the SWBoise/Meridian sample above.  This is about what I believe the market as a whole is actually appreciating. What threw me for a loop was

when I broke out the non-distressed sales prices actually dropped 10% from a year ago.  Blame the small sample I guess.  What was interesting was the dramatic shift away from distressed sales in these Eagle properties over the course of the last year.  In 2011 52.9% of the sales of this type of property were distressed but this year only 9.1% were. That alone is an encouraging trend.

So a lot to chew on here but I think the conclusion is not necessarily that surprising.  Certain types of property in certain areas are appreciating much faster than others.  In this case lower priced SWBoise/Meridian homes are out pacing their larger pricier rivals in Eagle by a wide margin but even in Eagle we are seeing positive appreciation and an overall healthier market due to the rapid decline in the number of distressed sales.

 

Maybe next month I’ll try to tackle older homes in say, the North End.

As always your comments, questions, and referrals are very much appreciated. 

 

Posted on September 17, 2012 at 3:25 pm
Cam Johnson | Category: Uncategorized

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