The Leaves May Be Falling But Prices Keep Rising
The Boise real estate market remained a strong seller’s market in October as tight supply continues to translate into higher prices. Closed sales (1013) were 6.6% ahead of last year while the number of homes for sale (2008) was 7.3% lower than October 2016. While these numbers are both lower than for September, this is a reflection of the normal seasonal slowdown in the fall and winter, not a market shift. While the months of available inventory ticked up from 1.9 to 2.0 this month, this is still an historically low figure especially for October. And homes continue to sell quickly with the average days on market dropping 22.4% from a year ago to 38 days. The average days on market hovered right around 30 for a few months this summer but the current figure of 38 days is still far below the 60 days that is considered normal for a “stable” market.
It is no surprise given the low inventory position we are in that prices continue to rise. What is interesting is that prices have moved in a positive direction since the market recovery began in 2011 and if anything the pace seems to be picking up in the last few months. Current prices are at or above the all time record high points that we reached this summer. The average price per square foot stands at $151 up 9.4% from a year ago and up 1.3% from September. This is a new record. Meanwhile the average sales price in Ada County is $310,000, an increase of 10.3% year over year and tied for the record that we first hit in June of this year. For the short term these trends are likely to continue. At some point affordability, or the lack thereof, may force some buyers out of the market and cool things off a bit. However the continued strong in-migration to the Boise area, low interest rates, and unemployment (2.8%) at or near record lows may allow prices to continue their upward path longer than one would normally think possible. Many economists including Windermere’s Matthew Gardner are still predicting a mild recession in 2019 but he adds that the cause of the recession will probably not be the housing market, especially locally, and the effect on the market here could be minimal.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR OCTOBER 2017
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
The national media is sending conflicting signals on the outlook for the housing market for the short to mid-term. For a few years we have been hearing about the “Millennial” generation and how they were growing up slower than previous generations, valued experiences over possessions, and were not as keen on homeownership. This, they explained, helped fuel the rental housing market as it came back to life after the Great Recession. Some recent articles continue to argue for this while others including the Wall Street Journal have started singing a different tune. They cite recent research which concludes that the Millennials are now grown up and that in fact they do want to own homes and are starting to turn away from rental housing and buy their first house. It’s hard to say how much of an impact Millennials have on our market. What I can report is that as described above the home sales market in our area is booming but at the same time our rental market remains as tight as it has ever been. According to Park Place Property Management here in Boise, who puts out a very informative quarterly vacancy report, the third quarter vacancy rate for rental properties in Ada County was 2.2%. 5% vacancy is more typical of a healthy rental market because of the normal “churn” that exists with leases. Of course a lot of this points back to in-migration, regardless of age group, and very low unemployment. Talk to renters and buyers alike and they will all tell you finding a place to live is tough right now.
Please feel free to contact me with your questions and comments and have a great Holiday Season.
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702