New Construction Buoys Sales, Prices Still Sizzling
July was another scorcher in the Boise Real Estate Market despite the lack of pre-existing homes on the market. Supply woes continue to both keep sales from rising to meet demand and to keep prices soaring for those homes that do hit the market. New construction is helping stabilize the market but we remain in an epic seller’s market. Total homes sales in Ada County (1191) were up 3.5% from a year ago but sales of existing homes (906) dropped 1.6%. Lack of inventory continues to be the issue. While overall inventory of homes for sale dropped 24.4%, existing home inventory dropped 32.5%. Days on market numbers paint a similar picture—overall we are at 29 average days on market but for existing homes that number drops to 19 days. Either number would be considered historically low. Based on the current rate of sales we have 1.3 months of overall inventory but only 1.0 months for already built homes. The numbers in Canyon County are similar but even more extreme in some cases: overall inventory there is off 37.8% despite a 10% increase in sales.
As a result, prices continue their march upward throughout the Treasure Valley. The average sales price in July was essentially unchanged from June but was up 17.3% from 2017 while the average price per square foot ticked up to $167 a 13.6% annual gain. This is making it tougher and tougher for buyers, especially first time and/or Millennials to afford a suitable place to live. We all have stories to tell about this but some of you may appreciate a recent story from NPR that focused on the problem by featuring Boise. Also, for more details on the market statewide please see the latest Gardner Report from Windermere’s Chief Economist, Matthew Gardner. Matthew will be coming to Boise in October to give a detailed report on the Boise economic and real estate outlook. More details about this event to come.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR JULY 2018
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
So in the short term things remain rosy for sellers and really tough for buyers, but as I have mentioned previously there is some consensus building among the experts that a change is coming. The Wall Street Journal recently featured a story on the front page with the headline “Home Sales Extend Slump Despite Economic Strength”. Nationally, the report says, home sales have dropped on an annual basis in five of the first 6 months of the year with high prices, low inventory, and rising interest rates being to blame. The article also cites examples of the market slowing already in nearby cities such as Portland and Seattle due to buyers becoming more cautious especially at the high end of the market. The article isn’t all doom and gloom though, saying at least for now demand isn’t the issue in most markets, supply is. Bloomberg News took a different approach—a shovel to the face. Their recent story was titled: The U.S. Housing Market Looks Headed for Its Worst Slowdown in Years. Rising interest rates and high prices are stretching buyers to where they just give up. The famous economist Robert Shiller is quoted in the story as saying, “This could be the very beginning of a turning point”. The story goes on to cite rising inventories in nearby cities: San Jose +12%, Seattle +24%, and Portland +32%. It still too soon to say what and when a change will come to Boise but if history is a guide we tend to lag 6-12 months behind our larger neighbors so I am guessing we will see some sort of a shift sooner than later.
Please feel free to contact me with any questions or comments and stay cool!!
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702