Sales Slowdown Continues in August
The number of homes sold in Ada County dropped 10% in August versus a year ago to 1113 homes, continuing a trend that has been with us for almost a full year now. Year to date sales are off 2.5% and while supply continues to increase (+2.9% in August) I still believe the primary constraint on market volume is lack of affordable supply not lack of demand. And while the average days on market was up 30.8% from a year ago it is still at only 34 days, just over half of the 60 days that is considered indicative of a stable market. At the current rate of sales there is only 1.6 months of available inventory, well into “Strong Seller’s Market” territory.
The key words in the last paragraph were “affordable supply”, because even as unit sales have dropped prices continue to increase steadily at a rate significantly higher than overall inflation. Unfortunately prices are also still rising faster than average wage growth in our market and an “affordability crisis” is looming (or already here). The average price per square foot in August was $180, up 7.1%, while the average sales price jumped to a new record of $398K (+8.2%). For more and more buyers, especially first timers and/or Millennials, buying a home in Ada County is out of reach. The net effect of this continues to be muted by the influx of cash rich out of state Buyers but as the markets where those Buyers tend to come from slow down, as they are doing, we may see a further drop off in sales, that is more demand driven. As pointed out in one of my recent reports, the “sweet spot” for the market has moved up to around $350K. That is already too high for many buyers who already live here. With real estate prices rising 8-10% per year and wages only going up 3-4% there is bound to be fewer qualified buyers as time goes on. Low interest rates have helped the situation but we can’t count on them to stay low forever, even though they have done so far longer than most experts predictions.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR AUGUST 2019
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
One interesting note that would tend to support the theory that lack of affordability may be starting to have an adverse effect on sales in Ada County, is that in Canyon County, where prices are significantly lower, sales were up 5.7% ( as opposed to -10.0% in Ada County). And not only were unit sales up but prices were way up. The average price per square foot ($152) was up 16.0% while the average sales price ($285K) was up 16.8%. Compare those to Ada County where the numbers were 7.1% and 8.2% respectively, about half the rate in Canyon County. Of course if prices keep going up at that rate it won’t be long before Canyon County has it’s own affordability crisis.
Please feel free to contact me with your comments and questions.
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702