CAM JOHNSON

May was another impressive month for the Boise real estate market. Sales were up, prices were up, and even inventory was up! While still below last year’s levels, there were  1984 active listings in May, over 100 more homes for sale than in April. Part of the rise in inventory is the normal Spring seasonal increase but after watching inventory actually drop from March to April, the gains in May are reassuring.  We still are running very tight though with only a 2.3 month supply of homes available.  Six months of inventory is considered a stable market.

A big reason that number is so low is because people are buying homes like crazy.  There were 871 closed sales in Ada County in May, an astounding 37.2% increase from 2012.  May’s numbers even surpassed the peak month of 2012, August, by almost 14%. While overall sales were up 37.2% the number of short sales (-42.7%) and REO’s (-51.1%) continue to dwindle and they collectively only accounted for 10.3% of the total sales. New construction now has almost twice that volume (19.7% of total) with 172 new homes sold in May.

Prices also continue to show very healthy gains, however, things thankfully have moderated slightly. We are starting to go head to head with some pretty strong 2012 number so as many, myself included, had predicted the percentage gains are starting to level out a bit.  That being said, the average sales price was up 8.5% in May.  If you recall a few months ago the percentage gain was around twice that and everyone cringed thinking another bubble was here.  While there is some danger of the market overheating, two factors may keep us from going there.  One interest rates have started to rise—over ½ a point in the last month or so.  This reduces people’s buying power and forces some buyers out of the game.  Secondly, lending standards are much tighter now than they were during the free for all period 8-10 years ago.  This will sharply reduce the number of people able to get loans and down the road mean less likely defaults out there.  If the number of buyers drops it stands to reason that upward pressure on prices will also drop. That’s not to say that prices can’t rise beyond the true value of the market but I think overall we are in a much more stable scenario than we were in 2005-2006.

Ada County stats for May 2013.  See graphs below for more information.

Given tight inventory I thought it might be interesting to see just how tight it is by price segment.  Overall the average Days on Market in May was 53, while 80-90 is more typical. Looking just at non-distressed property the number drops to 46, while for short sales, not surprisingly, it jumps to 141.  I often talk about the sweet spot of the market,  the price point where things are really flying.  It seems like lately that has been in the $150-175K range as far as number of sales.  Looking at the available non-distressed inventory by price range however it becomes clear that while there may be more volume in the sweet spot, the tightest inventory is in the price point just below it–$100-149K. The average days on market is only 21 and there is 0.7 months of inventory.  I thinks it’s fair to say houses in that price range are literally jumping off the shelves right now. Predictably the numbers go up as the prices rise.  But they are still quite respectable all the way up to the $750K point.  For homes priced between $500-750K, there is 5 months of inventory and the average days on market is 72.  Remember that a “stable” market typically has around 6 months of inventory.

Non Distressed Inventory by Price

As we head into what promises to be a very hot summer for real estate I would encourage Buyers to buy now since both prices and interest rates are on the increase.  For sellers, especially those who have resisted listing because they were underwater on their homes, it may be time to look at the market again and see if prices have risen to the point that selling makes dollars and sense. 

As always your comments, questions, and most of all, referrals are welcomed.  Have a great summer!

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

Check out my listings here: http://www.camjohnsonhomes.com

P Please consider the environment before printing this e-mail.

April was another very strong month in the Boise Real Estate Market.  Closed sales surged 10.2% above last year while inventory continued to have problems keeping up.  Closed sales had been at or below 2012 levels so far this year ostensibly due to the low inventory making it more difficult for some buyers to find what they were looking for but that does not seem to have held true in April. Total residential inventory (not including manufactured homes) dropped 11.8% from 2012 levels to 1873 units  As a result overall inventory fell to 2.5 months which is very tight when compared to both historical averages, and the 6 months of inventory widely considered to indicate a stable market. Average Days on Market dropped to 66 days from 86 in March and have dropped 27.5% since 2012.  Even more dramatic was the 93 days on market for new construction, a 40% drop from 2012.

Prices continue to rise quickly although we may have started to see the gradual flattening of the sales curve that I have been predicting for the last few months. This may help calm those (myself included) who fear we are at risk of a new price bubble if things don’t settle down. For example the average price per square foot was up a very healthy 11.5% in April vs 2012, but this compares to March which was up 19.4% vs 2012. Similarly the average sold price was up 16.2% in April but 28.3% in March vs 2012.  And both the $/sf and average sold price actually dropped slightly from March 2013.  I don’t see that as meaning that prices have peaked as the March numbers seemed to spike a bit from the general trend in the previous month.  I would like to see the market end up 2013 with price gains in the 8-10% range, still well ahead of inflation but not likely to create a buying panic or wild speculative investing.  We do have a big hole to climb out of so I think 8-10% is a sustainable growth rate for 2-3 years anyway.

Another factor that may help dampen the surge in prices is that the number of distressed properties that sold in April, while still well below 2012,  was up vs March 2013.  REOs went from 29 in March to 43 in April  (+48.3%) and Short Sales went 68 in March to 86 in April (+26.5%).  This bears watching but I don’t see it as a trend yet.  I think sellers who are close to emerging from being under water for 5+ years are going to hold off on selling if they can until prices rise to the point that they won’t have to short sell and damage their credit. As for the rise in REOs, I am not convinced that this is the start of a release of properties held back by the banks—the so called ghost inventory.  I am more apt to believe this is due to chance or other smaller facors but it also bears watching.

Market stats for Boise (Ada County) Residential Property April 2013 compared to 2012

This month I also wanted to zero in a little more on where the tightest inventory is price wise and location wise. Location wise, surprisingly, the areas that are generally considered the most desirable and that command the highest average prices also had the highest inventory.  Overall inventory in Ada County is at 2.5 months while Eagle comes in at 4.9 months, Star at 3.5 and Boise’s North End at 3.4.

If we break down Ada County by prices another picture appears that is more predictable.  Inventories are extremely tight in the more affordable price ranges and gradually tick up to the higher end.  For homes priced above $750K there are a boatload of choices available compared to the rate of sales.

All this talk of rising prices and low inventories has to have many of you wondering what your home is worth.  If you are considering selling now or in the near future and are curious, please contact me and I will be happy to provide you my estimate of your homes current value and marketability.  If you do decide to list your property based on the estimate I provided I will do a more in-depth market analysis as well a provide highlights of a marketing strategy appropriate for your location and style of home.  As always, thank you for your feedback and questions and most of all your referrals.  Have a great summer!

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

March was another interesting month for Boise Real Estate as prices continue to soar and inventory remains very, very low.  The average price per square foot rose 19.4% to $107 while the average sales price rose 28.3% to $222,000 versus 2012.  It is tempting to say this is the beginning of another bubble because prices rising that quickly are unsustainable.  However the rise in prices is still somewhat misleading as we continue to shift the product mix of what is selling away from lower priced distressed properties and towards new construction and “traditional” re-sales.  If you look just at non-distressed properties the price per square foot was up only 11.9%–still very positive but not quite as scary as 19.4%.  I think that 11.9% number is a much truer reflection of what the average home’s value has risen in the last year.  New construction average price per square foot was up 7.6% reflecting not only strong demand but also rising prices for materials.

Inventory, at 1892 units continues to be as low as it has been in many years and this is certainly helping to pressure prices upward even as we start to compare to some pretty strong numbers from 2012. Overall inventory was down 7.2% mainly due to the sharp drop in short sale inventory (-45.7%), while REO inventory actually shot up in March  but on a very small base (3.6% of total inventory). Looking at months of available inventory we are at 3.2 months overall, but only 3.0 months for non-distressed properties.  Remember, 6 months is considered a stable healthy market. Average days on market for non-distressed properties has also dropped significantly to 74 days (-21.3%), compared to 188 days for short sales.  Apparently that process is still taking as long or longer even as their numbers dwindle.

Market Stats for Ada County Single Family, Condo, and Townhomes:

Not surprisingly, as prices have increased over all the sweet spot of the market has moved up as well.  It had been hovering around $125K and it now seems to be more in the $175K range as the table below illustrates.  Also of note is the sharp drop in the number of sales under $150K and the corresponding sharp increase in the number of sales above $150K.  Even the “high end” of the market is showing vigorous growth—sales of homes priced above $500K in March were up 118.2%!

While low inventory is hampering some buyers, it is still a great time to buy as interest rates remain solidly below 4%.  Buyers should be prepared for multiple offers, price escalations, and/or bidding wars on the most desirable properties but it may be worth jumping into the fray sooner than later as prices are definitely still rising and interest rates are forecast to be as much as a full point higher by year’s end.

Your questions, comments, and above all, referrals are always appreciated.  Bring on Spring!

Graphs below for those interested in more details

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

For the second month in a row the number of closed sales was slightly lower (-2.4%) than a year ago but pending sales continue to be ahead of 2012 (+4.8%). I believe the low number of closings is more a function of very low inventory (-14.3%) than the number of willing and able buyers.  The other trends we have been watching unfold over the last year: dramatically increasing prices, a new construction renaissance, and the sharp drop in distressed sales all seem to be on track.  I do expect the percentage increase in prices to level off somewhat in 2013 as we start going against some of the 2012 numbers when prices started to take off.  For example the average sales price in February was only up 15.9% (Only!!) compared to +27.1% in January, and prices actually dropped slightly in February from the previous month.  I think you will continue to see the year over year price increases get smaller and hopefully they will plateau in the 7-10% range.  Prices normally do rise somewhat as the Spring selling season gets going so February’s slight drop from January should not be of concern.

New construction continues to flourish and represented 21.9% of the total sales in February, more than Short Sales and Bank Owned combined.  Prices for new homes also have started to take off and were +16.2% from a year ago. Over a third of total inventory is now new construction but the days on market for new homes has dropped 21.3% indicating sales are brisk.

26 Bank owned properties sold in February (-76.4%) and they are now just 5.4% of the total closed sales.  Similarly, short sales have also dropped way off to 68 closed sales (14.0% of total).

Prices for distressed properties continue to drag behind traditional sales and new construction and are also not showing the gains that the rest of the market is seeing.  Prices for Bank Owned properties actually dropped 5.3% from a year ago while Short Sale prices were up a measly 1.7% compared to $15.9% for the market as a whole.

It’s too early to tell whether Sequestration and other anxiety inducing macro-economic conditions will have a significant effect on the Boise market or not.  There seem to be plenty of buyers for now and if interest rates stay low as predicted I think we should continue to see a solid market here.  I am curious to see how many sellers decide to list as the Spring selling season hits in April.  As I have mentioned previously, I think a big part of our low inventory problem is caused by sellers who would like to sell but are still underwater on their homes.  As prices continue to rise we should see more and more of those sellers gain the confidence to list.

Market Stats for Boise (Ada County) Single Family, Townhouse, and Condos February 2013 vs 2012.

As always I welcome your comments, questions, and referrals!  I am looking forward to a great 2013.

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

Homes sales typically drop off a cliff in January, and this year was no exception. There were 374 closed single family residential sales (including condos and townhomes) in January compared to 547 in December, a 31.6% drop.  No real surprise there.  What was surprising was that January closings were 10.7 below January 2012.  Monthly sales through all of 2012 had  been strong and shown healthy increases over 2011 even in the face of very low inventories.  So what happened in January?  January closings for the most part are the result of contracts that were signed in November and December.  So the question is really, “What happened in November and December?”.  Hard to say if factors such as the election, low inventory, lower consumer confidence as indicated by the tepid sales of Christmas gifts, fiscal cliff fears, or as some fear, that the economy in general is starting to sputter again had any effect. Maybe.  But the good news is pending sales, an indicator of future closings,  look strong and were up 2.5% versus 2012.  Remember things really started to ramp up at the beginning of 2012 so if we can post strong year to year numbers in the first quarter of 2013 we should have another good year.

Boise (Ada County) Market Stats for January 2013

So while closed sales were down in January the other two major market indicators, inventory and prices continue their recent trends.  Inventories are very low and continuing to drop and prices are surging at a worrisome rate.  Inventory dropped to 1762 in Ada County which is lower than at any time since at least 2005, which is as far as my database goes back. Distressed properties were 23.9% of available inventory and were 20.6 of all closed sales compared to 48.2% last year.  There are only 39 bank owned properties available currently compared with 104 in January of last year.

Prices quite frankly are scary right now.  The average price per square foot was up an incredible 25.9% while the average sales price was up 27.1%! This continues to be partly due to the diminishing numbers of distressed properties and the new construction renaissance.  Certainly the very low inventories have to, as any student of economics would expect, be causing upward pressure on prices as well.  The question, eerily reminiscent from 2005-6, is how sustainable is this rate of increase?  We have a lot of ground to make up after tumbling for 5 years but is it desirable to make it all up in just a couple years? Most would say that type of volatility is not good for the long term health of the market and I would have to agree.  Higher prices may start to force some buyers out of the market thus correcting itself.  Fewer buyer means more inventory and downward pressure on prices in theory. That is something that didn’t really happen in 2005-6 because of the ability of just about anyone with a pulse to get a loan.  Lending requirements are much tougher now so there is a good chance things will start to cool down a bit.  Also investors who flooded into the rental market when the cost to buy versus what they could rent for was strongly in their favor may start to back off as the math doesn’t pencil so well.

The next six months could very interesting indeed.  For buyers this continues to be a good time to buy as prices are still well below the peak and interest rates remain very low.  Low inventory is making it difficult for some buyers to find desirable properties in their price range though.  For sellers, things are definitely looking up, although in many cases, they are still unable to sell without being underwater.  This may be part of the blame for such low inventories right now.  There are sellers who want to sell but are keeping their properties off the market until they feel they can get a price that will prevent them from coming to closing with cash or short selling.

As always your questions, comments, and above all, referrals are welcome. 

December, traditionally one of the slowest months of the year for real estate, was definitely quieter than recent months but fortunately the positive trends the market has been showing for most of 2012 continued albeit on lower volume.  Prices continue to rise, some say too quickly. Inventory is the lowest it has been in many years and distressed sales continue to be less of a factor in the market while new construction makes healthy gains. Prices overall were up an impressive and somewhat scary 21.3% from December 2011 while inventory at 1907 was off 15.7%.  This represents 3.6 months of inventory at the current rate of sales. Distressed properties made up just over 23% of all closed sales while new construction was 22.1% of closed sales. Inventory of distressed sales continues to drop sharply and is 23.6% percent of all inventory while new construction inventory also dipped slightly because of strong sales in the segment—up 47.5%.

Boise Market Stats for December 2012

The outlook for both buyers and sellers looks good in Boise in 2013.  While buyers have to contend with scarce inventory and higher prices interest rates continue to be historically low and with the prospect of future appreciation buyers are starting to feel more confident in purchasing.  Sellers who have weathered a 5 year beat down are starting to see the benefits of rising home values not the least of which is that as values rise some owners who need to sell are no longer underwater on their homes and are now able to sell whereas before their only option was to short sell. Seeing as it appears we have avoided the worst of the fiscal cliff, barring some unforeseen macro-economic or political event, I think we will continue to see a healthy market in 2013.  It will be interesting to see how yesterday’s announcement that SuperValu has sold Albertson’s affects the local economy, however I don’t expect it to have a major impact on the real estate market.

As always your questions comments and referrals are welcome. Hope you all have a fantastic 2013!

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

November was another very encouraging month in the Boise real estate market. While the market sales volume slowed somewhat versus October, which it typically does due to the seasonal nature of home sales, supply remains very low and prices continued to surge almost across the board.  Overall the average sales price in Ada County was $209,000, a 20.1% increase from 2011!

Only short sales showed a decrease in prices versus last year (-2.1%).  The product mix is dominated by “traditional” sales and new construction (78.3% of all sales), continuing the dramatic shift away from distressed sales that started about a year ago.  Bank owned properties represent just 6.4% of all sales and only 2% of all inventory.  Those number are down 65-70% from last year.  Similarly, the number of short sales sold is down 17.3% versus +60% for new construction sales.  The inventory of available short sales is also down -35.1%.

Overall inventories remain at just 3.5 months based on the current rate of sales.  Some buyers are having a hard time finding suitable options in this environment. Sellers are on average getting 97% of their asking price, a slight improvement over last year.

The table below gives a pretty good summary of the current trends.  Please note percentages are November 2012 vs 2011 and I do not include mobile/manufactured homes. For a graphical view of the overall number please see the graphs at the bottom of this report.

I also thought it would interesting to look at how various parts of Ada County are doing as far as prices.  Not surprisingly the areas with the highest prices and those that were somewhat less affected when the market crashed are showing more modest, but still strong, price increases while areas that were hardest hit have bounced back stronger.  For example, North and East Boise had by far the highest prices and the historically lowest rate of distressed sales and prices there are up 11.2%, while on the Bench and in Star, both very hard hit by distressed sales prices are up 25.4 and 26.7% respectively.  Only Eagle (+7.4%) and SE Boise (+8.4%)are not showing double digit increases.  For this comparison, in order to smooth out the swings caused by relatively small sample size I compared quarterly results versus the same three months last year (Sept.-November).

So with these impressive price increases the questions that begs is are we headed for another bubble?  Is this too much too fast?

Hard to say.  But here are a couple things to consider.  Prices in many areas dropped 50% or more from their 2006 peak.  While what was initially seen as a needed correction went so much further than anyone hoped or imagined, did prices drop too low?  Maybe not at the time but given the current, albeit shaky, recovery do prices need to correct up now?  Corrections tend to happen faster than sustained growth or downturns so maybe the market can tolerate the current hyper growth for a short period.  At some point soon, to avoid swinging too far, the market will need to moderate hopefully settling in at somewhere near the 5% annual appreciation that many feel is sustainable in a healthy market.  I hope so!

Thanks, as always for your comments, questions, and most of all your referrals.  2012 has been a strong year for our market and for me personally so I am looking forward to continued success for all of us in 2013.

Cheers!

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

So much for a slowdown!  Last month I noted that while the overall positive trends we had seen so far in 2012 continued there was a definite slowdown in certain indicators either due to normal seasonal variables, decreasing demand due to continued economic uncertainty and weakness, or possibly even pre-election jitters. Well in October none of those factors were able to keep the market from making a strong showing virtually across the board.

As the table and graphs below illustrate October was a very strong month for residential real estate in Boise.  Distressed properties continue to wither away, new construction continues to grow rapidly and prices are up almost across the board, in some cases substantially.  Low supply continues to be a problem for some buyers in some parts of the market however.  Overall the average price per square foot was up 13.6% while the average sales price jumped a whopping 18.9%.  There is still  some disparity between this number and actual appreciation due to the “Apples vs Oranges” shift in product mix that I have alluded to in previous months.  But in some segments of the market, including recently built production style homes, that were especially hard hit during the downturn, there has been real appreciation I believe.  For some other types of property…not so much. See the “Snapshot” tables below for a few examples using data for the 3^rd Qtr (not October).

ADA County 2012 vs 2011

A few highlights from the table above:

REO (Bank Owned) properties were only 6.1% of the total solds and represent only 1.7% of available inventory.

Combined with Short Sales those numbers are 21.1% and 22.8% respectively.  Still a factor, yes, but far less menacing than when they were hovering around 50%+ of all closed sales (and 70%+ in neighboring Canyon County) as recently as a year ago.

Conversely, new construction is up to 25.2% of the sold market.  Put another way, 1 in 4 houses sold in October was new construction compared to almost zero a couple years ago.

Interestingly enough though the average price per sq ft of new construction was virtually unchanged from a year ago but builders are getting 100% of their asking price on average.  Are they building less expensive models?  Building materials costs continue to be pretty high for things like concrete and dry wall so how are their margins doing?  Some of the bigger builders control land that they were able to ride through the downturn with or picked up on the cheap during the crisis so they may be better positioned.  Anecdotally, I am hearing from smaller to big size builders that they are having trouble finding lots to build and that land prices are starting to rise partly because the biggest builders control most of the suitable land.

Treasure Valley Snapshots 3^rd quarter 2012

SW Boise/Meridian ,3bed ,2bath, 1200-1700sf, built 2004-2008

Ada County New Construction Regardless of Size

Boise North End Regardless of Size

Eagle, 3+ bed, 2+ bath, 2500-4000sf, Built 2004-2008

Report Prepared by Cam Johnson-Windermere Access Realty

So while all this news is encouraging for both sellers and property owners, buyers don’t despair.  Although some buyers are definitely having a hard time finding suitable property due to low inventories, and are watching prices spiral up in the neighborhoods they find desirable, overall it is still a great time to buy.  Prices, while rising are still far far below their previous peak and interest rates continue to be at near record lows, and are at least 2 points lower than they were for most of the 2005-2006 peak.  If you are interested in what the market is doing in particular areas or particular types of property please feel free to contact me.  As always your questions, comments, and above all, referrals are greatly appreciated.

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

Check out my listings here: http://www.camjohnsonhomes.com

The major news in the Boise Real Estate Market in September was a slow down, but general continuation, of the positive trends that have emerged earlier in the year.  Inventories are still very low, but are edging up a bit.  Average sales prices are still rising but not quite as quickly as they have in the last few months.  Short sales and REO properties are less and less of a factor in the market each month but the drop in market share has stabilized a bit.  New construction continues to surge versus 2011 but slowed versus August 2012. 

A large part of the slowdown may be due to the Spring-Summer selling season winding down in the fall and winter months as it typically does.  The trends were similar in 2011.  We may also be seeing a general stabilization of a market that in some segments was starting to overheat, for example the $125K “Sweet Spot” I have alluded to in previous reports.  There may also be a bit of election year uncertainty especially among investors.  Regardless, for the most part the numbers still look very solid.  The one number that jumps out as being of concern is the total number of closed sales in September, which at 579 was an 8.1% decrease from 2011.  However pended sales, an indicator of future closings, were up 3.3%.  Price per square foot continued to show solid increases from 2011 but were generally down a few percentage points from August 2012.  And while days on market, at 64, continued to be way below 2011 (-29.7), months of inventory crept up to 4.0, the highest since February, but still way below the 6 months of inventory most analysts consider a stable market.

New construction continues to be a particularly bright spot, with sales up 40.7% versus 2011, although the number of closed sales dropped 18.5% from August 2012.  Prices of new construction have also continued to rise.   The average sales price of new construction in September was $263K (+15.9%) and the average sale was at 101% of asking price, probably due to buyers opting for more upgrades. Distressed properties represented just over 20% of all closed transactions compared to 39.4% at this time last year and close to 50% at times in 2010 and early 2011.

Overall, with interest rates continuing to hover at near record low rates and the job numbers slowly improving the outlook is good.  It not only remains a great time to buy if you can find the right home, but sellers are getting some relief from the relentless price drops and competition from distressed properties that was the name of the game for over 4 years.  Please feel free to contact me with you questions and comments.  Also please share this report with anyone you think might be interested and as always, your referrals are greatly appreciated.

Cam Johnson

Realtor®

Windermere Access Realty

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

August proved to be hot and smoky in Boise in more ways than one.  Our mean temperature for the month was 10 degrees above average and we had high temperatures over 90 degrees on 25 of 31 days.  In addition a very active fire season, not only in Idaho but in surrounding states as well, led to smoky conditions and air quality alerts on and off throughout the month.

In real estate parts of the market continue to be hot but  what is happening in other market segments seems to be somewhat obscured by the smoke and mirrors which the media has chosen to promote.  As I have been saying for the last several months the impressive rise in average sales price here in Boise does not directly relate to property value appreciation for any given property.  You’ll see what I mean in my latest version of a “Tale of Two Cities” below.  The media loves headlines like “Home Prices Up 15%!” and “Boise #2 Real Estate Recovery Market in US!” and the market has definitely taken a dramatic positive turn in the last 9 months or so but once again I want to caution those of you who own homes that you can’t just mentally tack 15% on to what you think your home is worth because of a headline, although in certain specific instances, one of which I will illustrate below, you wouldn’t be terribly far off.

First a brief look at the Boise market overall:

Percentage change is versus 2011.  Does not include manufactured homes.

Pretty much all good news here.  Sales are up overall 9.1% but short sales and bank owned properties continue to decline rapidly and I think it is fair to say are no longer driving the market as they did for 4+ years.  Only 18.5% of closed sales were distressed last month versus 20.9% for surging new construction.  Overall inventories are still very low with only 3.1 months overall.  While this means some buyers are having difficulty finding a home in their price range, that’s not such a bad problem to have because it underscores the fact that people are actually buying homes!  Average days on market at 68 continues to be very healthy.  And prices, as you have heard, have surged over 15% from a year ago.

As I have pointed out in previous months some of the price increase is due to increased demand by buyers but some is due to a change in the product mix away from distressed properties and into traditional sales and new construction.  That being said the question I am often asked is, “How much have homes actually appreciated in the last year and how much has my house appreciated?”  A difficult question at best and unless you have bought and sold your house in the last year, probably impossible to answer for a specific property.  I decided to take a stab at it with two different types of homes in two different Ada County cities.  The difficulty is in trying to compare apples to apples as no two properties are exactly alike.

“A Tale of Two Cities” (sort of) August 2012

Comparison of 3 bedroom, 2 bath, 2 car garage, 1300-1600 sq. ft. homes built between 2004 and 2007 in SW Boise and Meridian sold from June 1- August 31. 

I chose these parameters because to me they represent a typical house in the sweet spot of the Ada County market price wise ($100-150K).  The results were somewhat surprising, and despite the small sample size I believe provide a pretty accurate look at where that type of property is headed in the current market…up!  I broke it down by all properties and non-distressed properties but the results were pretty similar.  Looking at all 40 properties that met the criteria in 2011 and 2012 shows average sale price and $/sf increases approaching the 15% total market increase that I have been saying was completely misleading.  Well, at seems at least for this type of property the 15% isn’t so far off.  Hmm…these properties are increasing in value quickly and also typically make good rentals.  No wonder the investors have been snatching these up so fast.  Average days on market for the non-distressed properties in this sample was only 21 days in 2012.  Even including short sales the average days on market was only 53.

Comparison of 2500-4000 sq. ft. properties built between 2004 and 2009 in Eagle sold from June 1-August 31

The second city in our tale is Eagle where I had to broaden the criteria a bit.  I used all homes of 2500-4000 sf built 2004-2009 as I feel this is a fairly typical Eagle home.  On the one hand the results were what I expected.  Average sales price and $/sf for all the properties increased a much more modest 3.1% and 3.5% compared to the SWBoise/Meridian sample above.  This is about what I believe the market as a whole is actually appreciating. What threw me for a loop was

when I broke out the non-distressed sales prices actually dropped 10% from a year ago.  Blame the small sample I guess.  What was interesting was the dramatic shift away from distressed sales in these Eagle properties over the course of the last year.  In 2011 52.9% of the sales of this type of property were distressed but this year only 9.1% were. That alone is an encouraging trend.

So a lot to chew on here but I think the conclusion is not necessarily that surprising.  Certain types of property in certain areas are appreciating much faster than others.  In this case lower priced SWBoise/Meridian homes are out pacing their larger pricier rivals in Eagle by a wide margin but even in Eagle we are seeing positive appreciation and an overall healthier market due to the rapid decline in the number of distressed sales.

Maybe next month I’ll try to tackle older homes in say, the North End.

As always your comments, questions, and referrals are very much appreciated.