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.

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!

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!

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

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.