In Spite of Rising Supply Prices Hit New Record in March
Good news and bad news for home buyers in the Boise Real Estate Market in March. After years of record low inventory, supply has started to build, giving Buyers more choices. In spite of this and a recent trend of lower sales volume, prices continue to go up and reached new record highs in March thus reducing Buyer’s buying power.
There were 877 closed sales in March in Ada County a drop of 6.6% from a year ago. This continues a generally negative sales trend that began last July, after several years of increasing unit sales volume. Meanwhile, the number of homes for sale (1489) was up 20.4%, marking the 5th straight month of year over year increases and the 3rd month of double digit percentage increases in supply. Inventory at 1.7 months based on the current rate of sales, is still below the 2 month threshold that the market has struggled to top in the last two years and while inventory is increasing we are still in what is considered a strong seller’s market. You may remember, 6 months of inventory is considered a stable market where buyers and sellers have roughly equal leverage in negotiations. We haven’t seen that much inventory in at least 5 years. The average days on market, reflecting higher supply and lower sales, has also been on the rise, and at 51 days is 15.9% above last March. This is approaching the 60 days that many consider indicative of a “stable” market.
Any additional leverage buyers may have gained in the last few months because of the rise in supply is not being reflected in prices so far. The average price per square foot in the Boise Real Estate Market jumped 11.5% to $174/sf, a new record high. Similarly, the average sales price jumped to $375,000, a 10% increase over last year and also a new record high. The average sales price jumped $16,000 from February although this was probably the result of a handful of high dollar closings in March rather than a true reflection of the market. The only good news for buyers as far as pricing goes is that interest rates remain near historical lows and the consensus is that they will remain relatively stable for the remainder of this year. Lenders also seem to be getting creative as far as offering new products that will help buyers getting squeezed by higher prices find an acceptable alternative to a “vanilla” conventional loan. Fortunately we are not seeing a widespread return to the types of irresponsible lending that occurred during the 2004-2007 boom.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR MARCH 2019
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
New construction continues to drive the market even as supply of existing homes starts to tick up. While overall sales of homes were down 6.6%, sales of new homes surged 19.9% and represented 37.1% of all sales in March. Supply is also rising with 819 new homes listed (+19.7%) representing 55% of all available homes for sale. Despite all the apartment building going on there seem to be plenty of buyers for new single family homes. As summer approaches expect new construction to continue to flourish.
Overall, buyers have more properties to choose from but continue to feel the pressure on affordability and buying power as strong demand causes prices to keep rising. Expect more of the same as 2019 rolls on although I do expect a gradual flattening in the price curve if the current trend towards higher supply and lower sales continues. With the spring and summer selling season kicking into gear things will continue to be challenging for buyers particularly in the under $300k segment of the market. Please feel free to contact me with your comments and questions.
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702