After February’s Hiccup the Boise Real Estate Market is Back on Track
After a 12.4% drop in February due to December and January’s extreme weather, closed sales in March rebounded nicely in what I believe to be the start of a very active selling season. There were 862 closed sales in March, up 1.9% from 2016. This was also a 57% increase over February 2017. The two main things holding the market back from even stronger numbers are inventory (lack of), and increasingly, prices. Inventories have been low for a long time but they keep getting lower even as sales increase. There were 1598 homes listed in Ada County in March a 14.5% drop from a year ago. This translates to 1.9 months of inventory at the current rate of sales. Average days on market dropped to 55 (-19.1% vs 2016), from February’s 65 days. Not only are more homes selling but they are selling faster. This is the case nationally as well. According to the National Association of Realtors in December of last year inventory hit its lowest level since 1999, the year they started tracking it. There were more homes for sale nationally by February but inventories were still 6.4% below February 2016.
This has a predictable effect on prices both locally and nationally. In the Boise market the average sales price in March was $282,000, up 6.4% from a year ago while the average price per square foot stood at $139 (+8.6%). Nationally as reported in the Wall Street Journal, prices in January, the most recent data available, were up 5.9% the fastest rate of increase since 2014. According to The WSJ, “The accelerating gains are being driven by job growth, a large demographic of people entering their 30’s and looking to buy homes and limited supply of homes on the market.” I would wager that all these factors are in play in our market as well. I can’t speak as to the number of “Thirtysomethings” in our market but we know inventory is low and Idaho’s unemployment rate is sitting at a very healthy 3.8% statewide and 2.6% in Boise according to the Bureau of Labor Statistics. The concern many analysts have is that increases in home prices continue to far outpace wage growth and eventually something has to give. Some buyers are already being priced out of the market. However our current price increases are far below the pace set during the 2004-2006 bubble and while we are probably due for a slowdown fairly soon, especially if interest rates put additional pressure on buyer’s buying power, it does not appear the market is headed for a collapse.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR MARCH 2017
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
So while the short term future for the Boise real estate market looks very bright we should never lose sight of the fact that real estate markets are cyclical and we have been on a pretty fair run starting in 2011. Given how much prices have risen especially relative to incomes, and expected continued increases in interest rates I would suggest in the next 6-12 months there is the possibility to see the early signs of a slowdown. Because our inventories are so low even as the buyer pool starts to contract it may take a while to be reflected in prices. And strong continued in-migration especially from more expensive areas on the West Coast could keep demand high even as some buyers are forced to the sidelines. It will be interesting to see how it plays out especially in 2018.
Please note that while this report is focused on the Boise (Ada County) market, for comparison’s sake I have added a line on the Chart above for Canyon County. A quick snapshot of the similarities and differences. As always thank you for taking the time to read this report and your questions, comments, and referrals are always much appreciated.
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702
|Number of Homes For Sale vs. Sold vs. Pended (Jan. 2016 – Mar. 2017)|
|Average Price per SQFT (Sold) (Jan. 2016 – Mar. 2017)|
|Avg CDOM & SP/Orig LP % (Jan. 2016 – Mar. 2017)|
Average Price of For Sale and Sold (Jan. 2016 – Mar. 2017)
Months of Inventory Based on Closed Sales (Jan. 2016 – Mar. 2017)