CAM JOHNSON

Two headlines in the Wall Street Journal caught my eye recently.  On Friday April 27th the Journal’s front page trumpeted, “Stunned Home Buyers Find The Bidding Wars Are Back” followed 3 days later by a more sober, “Housing Ends Slide but Faces a Long Bottom.”  While real estate is local rather than national, and I tend to discount any national media reports on real estate as “not relevant to Boise” in this case there is truth to be found in both these headlines.

Bidding wars are back here in Boise albeit in a fairly narrow segment of the market  (mostly under $150K) and they are hardly ubiquitous.  Nonetheless many of my colleagues have already declared that the Buyer’s Market is over.  In many ways it is, as inventory is very low and prices are rising finally. I certainly am finding that properties the buyers I’m working with are considering are selling much more quickly than even a few months ago. But the relatively positive trends in the last 4 months here in Boise will undoubtedly experience a few bounces along the bottom and it may still be months before we are in full recovery mode. For example even as overall prices increased in April vs 2011 for the 4^th straight month, in the new construction segment, where the number of homes sold is surging, prices were actually down 1.3%. Prices also continue to drop for short sales (-2.8 vs 2011) even as the number sold increases (+20.3%) and for non-distressed sales (-2.8%).  In fact the only segment where prices increased in April was REO/Bank Owned which rose +25.7%.

So the strong overall price increases in April are somewhat misleading as it is partly due to the product mix of what is selling moving away from the lowest price segments such as REO/Bank Owned and towards the high price segments such as New Construction and non-distressed properties.  So while overall the average sales price in Ada County was up 13.4% versus 2011 and 10.5% vs the same qtr last year, I don’t think those percentages would apply to the exact same house if it sold in April 2011 and then again in 2012. In April distressed sales only made up 32.1% of closed sales, down from around 47% in March and  above 50% in much of 2011.  So while we are selling more high priced oranges than less expensive apples lately, in real estate it is hard to get an accurate read on how the prices of individual apples and oranges are faring over time because in most cases the same house doesn’t sell again for many years in which time both the condition of the property and the desirability of the location may have changed.

This chart shows the “ false” increase in prices very well. Sales of non distressed properties are surging causing prices overall to increase even though the average price of non-distressed properties dropped, while sales of REO’s are plummeting (due to lack of available inventory) but prices for them are skyrocketing.  The much talked about “phantom inventory” that the large banks supposedly have on their desks would come in handy right now as there are loads of buyers, both investors and owner occupants, in the market all competing for a much smaller selection of properties.

A few more quick bullet points of note:

1)      Sales of homes priced over $200K were up 41.1% and pendings were up 59.3.  31.2% of all homes sold were over $200K up from 23.9% in 2011.  This jives well with the points discussed above.  I believe there would be an even stronger trend here if buyers looking to trade up weren’t hindered by being upside down in their current homes and therefore unable to sell.

2)      Appraisal issues are becoming more common especially in the higher price brackets.  As we know appraisals are based on history not predictions of the future so they can often lag behind a bit when the market turns.  Plus as noted above, prices in all categories except  REO/Bank owned aren’t actually rising.

3)      If you have the flexibility and patience to deal with the process short sales are becoming increasingly attractive.  Banks have improved their processes somewhat, seem willing to pre-approve prices in some cases, and are accepting deals more often.  At $73/sf average vs $102/sf for non-distressed properties there is a strong financial incentive to consider short sales when buying although they aren’t for everyone.

4)      Interest rates are back down below 4%.  One lender was offering 3.75% for a conventional 30 year fixed.  It seems like most people able to refi have already done so, and the mortgage companies I have talked to say almost all their current business is purchases…because it’s a great time to buy.

5)      Inventory at 2123 homes edged up in April after hitting an almost historic low in March.  This is probably more due to the usual spring uptick in listings more than a market shift.  We still only had 3.2 months of inventory (the lowest in over 5 years) versus 5 months this time last year.

So overall the news continues to be good, with a slight sugar coating that I hope I was able to show above.  Sorry for the late date of this report, but I was on vacation in Hawaii last week!  As always, I welcome your comments, questions, and above all your referrals.  Please feel free to share this information with your friends, families, and colleagues.

March was another encouraging month as prices showed solid year over year gains for the second month in a row.  The lack of affordable inventory continues to deepen and may be helping put pressure on prices.  In addition, strong growth in the number of closed sales is occurring in new construction and in homes priced over $200,000.  The number of closed distressed sales, particularly REOs (bank owned) has started to drop and was below 40% this month aver hovering on either side of 50% for the last couple years. Pretty good trends if we can sustain them into summer.

561 homes sold in Ada County in March which was actually 7.3 below 2011 and is particularly surprising given the high number of pending sales reported in February. Closed sales did increase 13.3% from February 2012 though, which is consistent with the usual ramp up to the spring selling season.

Pending activity in March was the highest since April 2010 and at 813 looks good for sustaining the current trend and possibly beating last year’s numbers in April. This seems to be driven by new construction as the number of pending resale properties dropped 4.7% while new construction pendings soared +126.8%.  There also seems to be a dramatic shift towards non-distressed properties where pendings were up 76.3% versus down 40.7% for distressed properties.

Also interesting was that the number of resale closings dropped 11.2% to 470 while new construction closings surged 19.7% to 91.  Both REOs and Short Sales also had fewer closings, particularly REOs which dropped 51.9%.

Inventory, as has been the case for the last 2+ years, declined sharply (-26.7%) to 3.7 months versus 5 months in 2011 and 4.3 months in February 2012.  If you look just at resale properties, excluding new construction, the numbers fall to 3.1 months of inventory.  REO inventory is nearly non-existent at .4 months with 111 sold versus only 43 active listings in March. Not surprisingly Average Days On Market also declined 24.4% to 99 from 131 and sellers on average realized 96% of their asking price versus 91% last year. Builders got 99% of their asking prices versus 95% last year.

Prices were a pleasant surprise again in March with the average price per square foot coming in at $90, tied for the highest since August 2010, and a 10.5% increase from 2011.  The average sold price was $174,000, an 11.5% increase from 2011 and a 6.1% increase from the same quarter last year.  Both $/sf and average sale price still trail 2010 numbers by 2.8% and 5.9% respectively and for all types of single family properties except new construction prices are still below 2010.

March 2012 Prices

Also of interest is that distressed sales dropped to 39% of closed sales in Ada County which is a significant improvement compared to the high 40’s to low 50’s that have been the norm for the last few years.  Spurred on by record low rental vacancies investors have returned to the market buying both multi family and single family properties.  The current investors are a slightly different breed than we saw 5-7 years ago.  They tend to be more market savvy and cash rich and are following a strategy of buying and holding properties with cash or low debt that will be cash flow positive in the near term until values recover.  The buy and flip model that was very popular at one time is difficult to pull off with prices as low as they are.  The Wall St. Journal reports similar trends nationwide for both rental and vacation homes.  According to Tony Koonce of Park Place Property Management, vacancies are currently around 4.5% with rental prices averaging 84 cents/sq foot.  He also points to growth in Ada County of 5995 jobs in 2011, after several years of losses,  which should help both rental and for sale properties.

While the market continues to be heavily weighted on the low end there have been increases in sales in mid to higher end properties reflective of job growth and increased consumer and lender confidence. The number of pending sales in the $200-299K range is the highest in over 2 years. The table below shows the trends:

In summary for the second straight month we have seen strong year over year price increases and new construction and non-distressed sales seem to be driving growth.  In addition the number of properties selling above $200K is showing strong increases.  The dominance of distressed sales, particularly REOs seems to be diminishing somewhat which should further aid price recovery.  These strong price indicators coupled with continued declining inventory, near record low interest rates, improved consumer confidence, and slightly better employment figures seem to be pointing towards gradual recovery although my guess is even though Real Estate is local, particularly in an election year, there may still be some bumps in the road.  We look to be well positioned to beat 2011’s numbers but are still lagging behind 2010 pricewise except in new construction.

For those of us that have been watching, or as in my case, weathering the market for the last 5 years it is exciting to finally see some positive news.  Please don’t hesitate to contact me with comments and questions and your referrals are, as always, the highest compliment you can give.  I look forward to hearing from you soon.

Cam Johnson

February’s much anticipated numbers are in and they were the best I have seen in probably 5 years!  There is lots to talk about this month and almost all of it is good for once.  I still believe we are bouncing along the bottom but February was one of the good bounces.  And while there may continue to be setbacks to the market’s long term recovery, there are lots of positive indicators that indicate that we have laid a strong foundation for stable to modestly rising home values in 2012.

But even with all the good news to talk about the word that is on everyone’s mind is “inventory”, specifically the lack of it in the sweet spot of the market–below $150,000 and in certain neighborhoods.  Currently, there is 3.3 month supply of homes priced under $150K, which is just over half of the 6 months that experts consider “normal”.  Granted it is a nice problem to have because it means things are selling and it seems odd to add “lack of inventory” to the list of things stifling recovery but I believe it is true.  There are ready willing and able buyers out there who want to buy in that price range who are having trouble finding a suitable home.  Multiple offers, bidding wars, and selling prices above asking price, all eerily reminiscent of 2005, have become fairly common but almost exclusively in that price range.  Jump to the $150-200K range and inventory jumps up to 4.7 months.  Over $200K there is 6 months of inventory, still considered a healthy number.  Total inventory for all prices stood at 4.4 months a 38.5% decrease from last year’s 7.4 months.  Similarly the average days on market dropped 27.5% to 103 days.

Inventory has been falling for a long time, everyone knows that.  But what is interesting is that for as long as inventory has been falling, it continues to drop at a very steep rate while sales and particularly pending sales continue to surge.  There were 2201 homes (single family, townhome, condo) for sale in Ada County last month, a drop of 32.7% from 2011, while sales for the month, at 482, rose 9.5% and pended sales, at 687, rose 36.3%.  I do acknowledge that we had an extra day this February, but feel these numbers are still indicative.  Sales normally pick up heading into summer as do inventories.  It will be interesting this year to see if there is enough new inventory to cover the seasonal sales spike.

Now to the good part of this month’s report—prices.  As I have been known to say, one month does not a recovery make, but we have seen prices stabilize and even had a few tiny increases in the last several months.  Then along comes February!  The average sales price in February was $177,000 which was not only a 6.6% increase from 2011 but also from January 2012.  The 3 month average of sold prices (12/11-2/12) increased 2.4%.  After 5 years of drops those are pretty impressive.  Similarly, the average price per square foot at $90 was 10.5% above 2011 and the 3 month average was up 4.3%.  Sellers averaged 95% of their asking price in February up from 90%  (+5.6%) from last year.

So are the increases we saw in February across the board?  No there were definitely differences in the results if you look at different types of properties.  Here is a simple table to illustrate what I mean:

Percent changes are vs February 2011

New Construction—After sitting on the sidelines for the last several years, new construction seems to be returning to a place at the big kids table.  With 86 sold in February versus 50 a year ago, it could soon overtake REO properties in terms of number of sales. Not only were closed sales up 72% but pended sales were up 93.1% (+68.9% for the three month average).  However, prices, while higher on average than for existing homes, are not rising as quickly as the market as a whole.  I would imagine part of this reflects builders adjusting their product mix more towards the hot segment of the market—under $200K.  Continued high materials prices have probably kept the trend towards lower price points in new construction from being as noticeable as it would be if margins weren’t already pretty well squeezed.  Nationally housing starts, particularly of multi-family, are being fueled by the strong rental market, which also exists here in Boise.

REO/Bank Owned – Supply is dwindling in a big way from a couple years ago when it seemed REOs dominated the market.  In February there were only 73 (-80.6% from 2011) available while 109 sold (-33.9%) and 119 were pending (-39%).  That represents .7 of one month of inventory, the lowest since June and the 12^th straight month of 2 months or less inventory.  As a result it is performing strongly as a category on price and the banks have responded with higher asking prices. At this time last year the average sold price was actually above the average list price.  And while sold prices were up 3.9% in February, the average REO asking price shot up 28.2% from 2011.

Short Sales— Overall distressed sales of REO’s and Short Sales still represented 45% of all the closed sales in Ada County. While the supply of short sale properties has also been declining steadily over the last year, in step with the overall market, the number sold has remained somewhat steady, and there is still a far greater supply than of REOs.  There were only 73 REO’s available and 109 sales in February, while there were 641 short sales available and 104 sales.  This is somewhat misleading as the majority of the 641 were actually “contingent short sale” awaiting 3^rd party lender approval.  All those “contingent short sale” properties drive the average days on market way up on short sales due the banks continued inability to deal with these properties expeditiously.  Short sale days on market averaged 165 days (after being above 200 for a long period) as compared to non distressed properties at 96 days and REOs at 60.

Price Breakdown—As mentioned the so called Sweet Spot of the market has been around $125K, and the overwhelming majority of all market activity is in the lower price point in general.

Sold percentages are of the total number sold in February of 482 and of the total of 687 pending properties

You may have seen the recent press putting Boise in the top 10 real estate recovery markets, and while the numbers I have presented above do suggest stabilization and recovery I think there is as usual, some hype involved in those media reports.  Idaho still is ranked number 7 in the country in terms of negative equity—the percentage of properties either under water or within 5% of being there. And unemployment and difficult access to credit continue to prevent or discourage buying.  One national study I saw recently suggested that banks have begun loosening lending standards somewhat to encourage borrowing but there are a lot of “soiled dove” buyers out there bearing the credit scars of a recent foreclosure or short sale that still won’t qualify for a home loan anytime soon. So while we still have many challenges ahead, it has certainly been refreshing to have some good news to talk about. I believe strongly in the power of positive thinking and building momentum and the latest stats provide some of both.  I will also repeat what I suggested in a previous report in the last month or so:  If you were waiting for the bottom of the market to buy residential property you better get out your check book because you may have missed it.

I apologize for this report being longer than usual, and my sincere thanks if you stuck with it this far.

As always I welcome your questions and comments and of course, most of all, your referrals.  I am also more than happy to customize the graphs below to your particular interests.  Just let me know.

Here’s to a strong March!

January’s numbers show a continuation of the trends that have taken shape over the last several months in Ada County: stabilizing prices and sharply reduced inventory. 413 single family residential sales closed in January, a 4.8% increase from last year.  Sales dropped 22.7% from December, but that is fairly typical as January is generally the slowest month of the year for closings.  Pending sales, a good indicator of future market activity, were up 19.7% from 2011 while inventory continued it’s free fall to the lowest levels in years and was off over 30% with only 2201 homes available versus 3150 last year.  There is speculation that the $25 billion settlement with the Big 5 banks this past week may unlock the shadow inventory that many feel the banks have been holding back until they knew where they stood.  There may indeed be a resurgence in foreclosures although some provisions of the settlement were clearly intended to keep that from happening including the possibility that some “underwater” homeowners will actually be allowed to refinance rather than default.  Personally I think the shadow inventory fears are overblown, at least here in Ada County.  I think it may be a bigger issue in neighboring Canyon County though.

Prices continue to stabilize but show no real signs of a significant increase despite the tight inventory and continued near record low interest rates.  Distressed properties continue to steer prices while persistent high unemployment and difficult access to credit keeps the size of the buyer pool in check.  Many potential buyers still lack confidence in the market and their personal financial situation and are content to rent for now.  Also recently it has been trendy in the media to disparage the dream of homeownership and sing the praises of renting vs owning.  The rental market continues to be brisk in all segments to say the least. So while the average sold price per square foot at $84 was the lowest since March, it was actually unchanged from a year ago.  Just as the number of homes sold varies seasonally there is also a seasonal component to prices.  Prices the last several months have held true to those “normal” fluctuations.  We should start to see prices tick up again in April.  The average sales price at $167,000 has generally followed the same path, but was down 2.3% from a year ago.  In general I continue to believe we are bouncing around the bottom and both a long way away from any serious recovery and still vulnerable to external market forces.

I’m trying to keep it brief this month so won’t dig into the details about distressed sales and days on market/months of inventory other than to say that there were no significant developments in either of those areas but I will continue to look at them and provide updates as needed.

Please feel free to share this report and keep those referrals coming.  As always, your questions and comments are appreciated.

December was another somewhat encouraging month for Real Estate in Boise.  Inventory continues to evaporate and at 2262 properties was 31.5% below a year ago.  Based on the current rate of sales there is 4.4 months of inventory compared to 8 months in January 2011.  Inventory has been 5 or below since March and is well below the 6 month figure that most experts consider a “normal” market.  Days on Market at 101 has fallen 24.6% from a year ago while sellers are getting an average of 94% of their listed price, up from 90% last year.  All signs of a robust market!

There are fewer choices for buyers and that is finally starting to be reflected in prices of certain types of property.  The average price per square foot was $86 in December a 2.5% increase from 2010.  While the number dropped slightly from November, the price per sq foot has been hovering between $85 and $90 since April.  Similarly, the average sold price has been virtually unchanged for 4 months and in December was $174,000 up 1.8% from 2010.  Still too early to declare a recovery is under way, but for you fence-sitters waiting for the market to bottom out, you better keep your checkbooks handy.  The bounce along the bottom may have some bumps in it but it looks like we may finally be there. The single biggest factor working against a stabilization/recovery in prices has always been high unemployment and even those numbers are starting to improve.  Granted there are still other factors suppressing growth in our housing market.  “Distressed” sales still represent almost 50% of all closed sales in Ada County (46% in December).  New lending guidelines and the large number of people who have already lost homes in the current crisis further limits the size of the buyer pool.

A closer look at distressed vs traditional sales reveal some interesting (and very surprising) trends:

The biggest surprise is that based on the figures above, the REO/Bank Owned properties are leading the charge to stabilize prices.  The common perception is that banks are unloading their properties and driving the market down, and yes, the average sold price of those properties would support that.  But buyers are flocking to them and actually driving prices up, in many cases above asking price.  In fact without REO’s prices would still be trending down significantly. As a result there is only a one month inventory for REO’s versus over 5 months for both traditional and short sale properties.  The other thing that jumps out at me is that there aren’t many REO properties available—a drop of 50.1 percent from a year ago as far as closings go, while short sales seem to be picking up the slack and are consequently dropping in price.  This could be banks willing to take less in a short sale than before rather than foreclose and have to sell the properties themselves, although they got 91% of their asking price in 2011 up from 86% in 2010.  Another trend is that short sales are getting easier and somewhat quicker although they are still much slower and more uncertain than any other type of transaction.  Average days on market for short sales dropped to 151, the lowest in years, but REO’s were only 51.

I remain cautiously optimistic of what 2012 will bring to the Boise market, although a recovery based on REO’s is not what I had in mind.  If inventory stays low and unemployment drops in a significant way we should see a more broad based improvement in the market.

As always I welcome your comments and questions and above all, your referrals!

My enthusiasm in the October report, while somewhat tempered, remains alive with the November numbers I have just received.  For the second straight month I believe the stats suggest we may finally be bouncing on the bottom of the downturn that has been going on for all of 5 years now.  Barring some unpredicted national/international event I am hopeful that the current trends will continue and possibly even improve a bit.  Recent unemployment figures have been slightly better both on a national and local scale.  Consumer spending and confidence have also ticked up.  All of these things do affect our real estate market just as events in Europe and the 2012 elections also may.

519 Homes sold in Ada County in November, a 4% increase from 2010.  Pended sales were also up a healthy 9.7% while inventory continues its trend of most of the year and plunged 33.1%.  There are literally one third fewer homes on the market than at this time last year and I have seen the effects of that first hand with the buyers I am currently working with.  There seem to be few quality choices and in the sweet spot of the market ($100-150K) there is pretty intense competition between buyers. Distressed sales continue to be a dominant force but the trend seems to be swinging away from Bank Owned properties and back towards Short Sales.  So while the Days on Market for non-distressed sales in that price range is 81 (24.3% below last year), for distressed sales, particularly short sales, it is 162 days.  This indicates that banks still haven’t mastered dealing with short sales in a timely manner and that there is strong demand for non-distressed sales in that price range.  Days on market for all price ranges has dropped 15.7% to 97 days since 2010 reflecting that more buyers are out there but don’t have as many choices as they used to.  Months of inventory is currently at 4.6 versus 7.2 last year.  You may recall that most analysts feel 6 or below represents a stable to robust market and we have been 5 or below since March.

The big news in October was that for the first time in over 4 years prices actually inched up a tiny bit (.6%!).  I was holding my breath for the November numbers to see if that was a fluke or perhaps the beginning of a trend.  The answer so far lies somewhere in between as the average price per square foot dropped by $1 from October 2011 to $88 but was unchanged from November 2010.  The average sales price was $175,000 which was a 3.3% drop from November 2010 but was unchanged from this October.  The 3.3% drop may be slightly misleading as there was an inexplicable one month spike in the average sales price last November.  I think the most encouraging thing I gather from  both the average $/SF and the average sales price numbers is that they have been remarkably steady since June.  After 4+ years of drops that is pretty good news.  So while I certainly don’t foresee any dramatic price increases it is beginning to look more and more like things have steadied.  High unemployment, tougher lending standards, consumer caution, and the growing number of people with good income who are unable to buy homes because they have already lost or short sold one will continue to keep a lid on prices.  But the blood-letting may be mostly over, although people who bought at the peak and have to sell are going to continue to feel pain for years to come.

As always your questions, comments, and especially your referrals are always welcome.

Best wishes to all of you this Holiday Season!

Friends,

October’s numbers are some of the most encouraging that I have seen in years.  Yes, years!  One month does not a recovery make, or even a trend for that matter, but in these days of precious little good news, the most recent numbers got my attention.  Have we bottomed out or are we bouncing around on the bottom?  Too early to say.  Of course we will be months past the bottom when we can say with any conviction that we are at the bottom.  And as recently as a few weeks ago both the Wall St Journal and the Idaho Business Review were pointing out the seeming market paradox that has vexed me here in this monthly report for the better part of this year, namely very low inventory coupled with falling prices.  The IBR dubbed it a “Nobody’s Market”.  Buyers are frustrated by the lack of quality choices, and Sellers continue to take a beating on price.

So what’s different in October?  Inventory continues to drop like a rock (-34.6% vs 2010).  Months of Inventory, at a very svelte 4.4 months has been 5 or below since March.  Closed sales and pending sales continue to show healthy year over year trends (+12.3% and +10.6% respectively).  Average Days on Market continued their trend and dropped 27% to 89 days from 122 last year and the average sales price as a percentage of asking price rose to 95% from 90.

But in October, prices, for the first time in a very long time, actually were higher than they were a year ago, not by much, but they were higher. The average sales price per square foot at $89, was +1.7% over 2010 and has been basically steady at that number since June.  But October was the first month that the number was higher than last year.  Average Sales Price at $175,000 while down from a June peak of $184,000 was actually up .6% from 2010.  I know it’s not much to hang a hat on but I’ll take it.

The market still has some fundamental maladies that will likely continue to keep it in check such as high unemployment, low consumer confidence, tighter lending standards, the large number of short sales/REO’s, and the fact that as many as 1 in 4 mortgage holders in our area may be underwater.  External factors such as a return to recession, economic troubles in Europe, and uncertainty about the upcoming 2012 elections may also pinch our little bud of growth off before it can bloom.  And while I would be remiss if I didn’t point out those things, I’m am pretty pleased nonetheless.  For those of you interested in seeing the graphs of the data for this month please scroll down.  As always, I appreciate your feedback, questions, and most of all your business and referrals.  I know it is a little early, but since this a monthly report, I think I am safe in wishing you all a Very Happy Thanksgiving!

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

September’s real estate statistics for Ada County continue the trend we have seen most of this year—supply is falling steeply and the number of homes sold is growing but prices have not rebounded accordingly.  606 homes were sold in Ada County in September, an 11.2% increase from 2010.  Pending sales, an indicator of future sales activity, rose 23.8%.  Looking at the 3^rd Qtr vs 2010 the numbers look even stronger, sales were up 32% and pending sales were up 26%. Similarly the average days on market dropped to 78, the lowest in over a year.  Based on the current rate of sales there are 4.3 months of inventory.  Anything under 6 months is generally considered healthy and we have been under 5 since March after peaking at 8 months in January.  By comparison, a year ago there were 7.6 months of inventory. Please scroll down if you are interested in seeing the detailed graphs.

Sales activity and inventories look healthy, so what about prices?  As has been the case for quite some time, they apparently didn’t get the memo…although there was some slightly encouraging news.  The average price per square foot actually increased 1.6% year over year and at $91 was the highest since August of last year.  If you look at the 3^rd quarter though, it was still down 3.1% versus 3Q 2010.  And if you look at the average sales price things look bleak.  At 175,000 the average sales price was -6.9% from September 2010 and has declined pretty steadily after “peaking” at $184K in June.  In previous months I have discussed the hangover from the end of the Homebuyer Tax Credit program, and while sales activity seems relatively unaffected, prices have declined every month since the program ended after rising for 4 straight months leading up to the end of the program.  So did the program work?  Hard to say how bad things might have gotten without it, but the aftermath has certainly not been what the industry had hoped for at least here in Boise.  Don’t tell that to sellers though, because ironically, while prices have dropped almost 7% in the last year ASKING prices have actually jumped over 10%.  They must be reading all those articles about the housing market recovering…somewhere…but as we all know, Real Estate is local.

Oh and let’s not forget about distressed sales. 39% of the closed sales this month were either Bank Owned or Short Sales.  That is still a huge number but is actually improved from 2010 and early this year when the number was hovering around 50%.  Expect to see distressed sales continue to be a major factor although those in the know see a shift away from REOs (bank owned) back to short sales.  The good news there is that in many cases the banks are starting to figure out short sales and the process has gotten somewhat shorter and smoother.  Still not a good option if you need to be moved in 60 days or less, but worth looking at if time is not critical.  And there are some deals too!  The average sold price for distressed properties was $132,000 (25% below that for non distressed).  Of course, a lot of that has to do with the types of properties that end up as distressed so you can’t assume that any given house will sell for 25% less if it becomes distressed.  Distressed properties tend to be in the lower price points anyway.  72% of all closed sales last month were under $200K and 47% of those were distressed (versus 39% overall).  If you look at sales under $125K (36% of all sales) the rate of distressed sales rises to 58%.  Distressed sales also take longer to sell largely due to the delays inherent to short sales.  Average days on market is over 100 for distressed properties and 66 for conventional—about 1/3 less.  Bank owned properties in the sweet spot  of around $125K are still getting snatched up almost immediately however.

Not to sound like a broken record, but I don’t foresee any real recovery pricewise in our market until unemployment drops below 6% and consumer confidence rises.  Even with interest rates that dipped below 4% last month and prices that are roughly half what they were 5 years ago we are just putt putting along.

As always I welcome your comments and questions and greatly appreciate your referrals.  Please feel free to share this market report with anyone you like and I look forward to hearing from you soon.