The End Of The New “Normal” For Boise Real Estate?
It’s no secret that the Boise real estate market has been on somewhat of a roller coaster the last 15+ years. Since the “Liar Loan” fueled peak in 2006-7 and the collapse in 2008-10 the market has risen steadily and has been firmly in record territory for the last couple years. Rising prices and low inventory have been happening for so long in our market that to many it has become the new “normal”. Traditionally however, a “normal” or stable market has meant price increases were keeping pace with inflation and wage growth and were thus “sustainable”, and inventory was around 6 months. A neutral market where neither buyers or sellers had undue leverage in negotiating a sale. Unless you have been in the business for over 20 years you have never really seen “normal”. Based on recent events related to the COVID-19 virus it is likely that even the new “normal” won’t last. While it is too soon to accurately predict how drastic or long lasting the effects on real estate will be, no one is denying that change is coming. Recently Windermere’s Chief Economist Matthew Gardner provided an updated outlook on the 2020 housing market. He feels the impact will be significant but relatively short lived as there is nothing systemically wrong with the housing market. Both buyers and sellers may pause due to uncertainty and fear but once the outbreak has largely peaked things will quickly get back on track as far as real estate goes. I guess it really will depend to a large degree on the length and severity of the outbreak. That prognosis is changing daily with one report earlier today indicating the federal government is now planning for an 18 month pandemic. If this lasts 18 months I would suspect the market impacts to be pretty severe as opposes to a 3-6 month disruption.
In the meantime, February’s numbers, prior to Coronavirus becoming an issue in the US, saw a continuation of the new normal—steeply rising prices and very low inventory. Overall home sales rose 3.6% in February versus 2019 with 757 homes sold. New construction continued to lead the way with a 14.3% increase. Lack of inventory continued to be the prime constraint on the number of homes sold. There were 1201 homes for sale in February (-17.3%) which based on the current rate of sales is 1.6 months of inventory. A very strong seller’s market.
Prices continue to reflect the tight supply and strong demand. While inventory was down 17.3% pending sales were up 24.2% meaning that assuming those sales close we should have a strong March and upward pressure on prices would continue. The average sale price in Ada County was $406K up 13.4% year over year while the average price per square foot was $189, up 10.5%. Both of these numbers are at or very near all time records, as they have been for over a year. The Canyon County market showed similar trends. The average sale price ($291K) was up 14.1% while the average price per square foot ($154) rose 8.5%. Expect inventory of existing homes throughout the Valley to remain very low, although there is some uncertainty as far as how much COVID-19 will affect the demand side. While closings of homes that went pending before the outbreak hit may make for a strong March in terms of overall sales all bets are off after that. I will be watching the numbers closely in the coming months to see how this all unfolds.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR FEBRUARY 2020
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
I encourage all of us to stay calm, stay safe, and stay healthy in these unprecedented times. Please feel free to contact me if you have any comments or questions about the information in this report.
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702