Boise Real Estate Market Report for January 2019

Double Digit Price Increases Despite Falling Sales and Rising Inventory  

In what is threatening to become a trend, in January the Boise real estate market witnessed the counterintuitive combination of sharply dropping sales, rising inventory and strong price increases.  Closed sales for the month (604) were off 8.8% versus 2018 and the number of homes for sale shot up 17.5% to 1494. At the current rate of sales this represents 2.5 months of inventory, still very low, but the highest in two years.  The average days on market at 51 was up 8.5%, also indicating the market is slowing somewhat. Given modestly rising interest rates, uncertainty over the effects of the tax “reform” passed in 2017 and relative lack of affordability caused by higher prices the slowdown is not a surprise.

Neither is the fact that prices are often slow to react to market shifts, but in this case the percentage increase in prices has remained in double digits despite several months of declining market volume.  In fact the average price per square foot in the Boise real estate market hit a new record high in January of $173, 13.1% above a year ago. Meanwhile the average sales price was up 11.7% to $363,000, the second highest ever. Most experts feel that gradually prices will fall more into step with market activity but it could take several more months.

In the meantime people are wondering if we are experiencing a price bubble.  Certainly double digit price increases in the face of dropping market volume and rising inventory are unsustainable but that doesn’t necessarily mean the bottom will drop out as it did in the last recession.  The foundation of the market is much more solid than it was then with stricter lending practices, a generally healthy economy and job market and continued in-migration to the Boise area. For another look at the outlook for Idaho, please review the latest report prepared by Windermere’s chief economist Matthew Gardner. As we all know real estate is local and while the general outlook for Boise is relatively strong despite the recent slowdown in sales, the national picture may be less rosy.  A recent article in Business Insider paints a much bleaker picture of doom and gloom for the housing and mortgage industries.  It is worth a read even if it doesn’t directly apply to our market.

 

SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR JANUARY 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
All 604 -8.8 100 1494 +17.5 100 $173 +13.1 $363K +11.7 51 +8.5 2.5
New Construction 211 +20.6 34.9 955 +18.3 63.9 $178 +11.3 $414K +8.4 69 +9.5 4.5

 

Canyon County 273 -1.8 100 622 -0.3 100 $137 +20.2 $256K +15.3 50 +4.2 2.3

 

As mentioned last month, new construction continues to buck the trend and is in some ways the “saving grace” for the market right now. Despite the slowdown in the overall market sales of newly built homes (not including custom build jobs) surged 20.6% in January and represented almost 35% of all homes sold. The number of new homes for sale was also up sharply (+18.3%) and made up 63.9% of the total available inventory. Prices for new homes were increasing at a similar pace to existing homes.  The average price per square foot ($178) was up 11.3% while the average sales price was $414,000 up 8.4%.

While the current stats offer a glimmer of hope for buyer we remain in a strong seller’s market.  Even though the multiple offers and bidding wars are not as common as they were last summer buyers are still generally dealing with lower than average inventory and decreasing affordability in the face of ever increasing prices.  Please feel free to contact me with your questions and comments. 

Cam Johnson

Realtor®

Windermere Real Estate/Boise Valley

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

Posted on February 14, 2019 at 3:46 pm
Cam Johnson | Category: Monthly Real Estate Market Reports | Tagged , , , , , , , , ,

Boise Real Estate Market Report for December 2018

Sales Continue to Slide but Prices at Record Level 

The Boise Real Estate Market in December was marked by sharply falling sales and sharply rising prices.  An odd couple to say the least. December’s 14.8% decline was the fourth in the last five months and sales for the most recent quarter combined are off 10.5% versus last year. Also for the 2nd straight month, after literally years of declines, the number of homes for sale was up 5.7% and pending sales, an indicator of future market activity were off 5.1%. Normally this would be bad news for sellers and at some point this will likely be the case, but for now prices seem unaffected by the drop in sales and are at record or near record levels. The average price per square foot was up 17% to $172/sf., a new record.  Meanwhile the average sales price was $363,000 (+16% )second only to the $368,000 recorded in August.  Even as the trend of declining sales has deepened the rate at which prices are rising has accelerated.  In November the average price per square foot and average sales price were up 12.3% and 13.6% respectively.

Conventional wisdom would say that a drop in sales is somehow a result of a drop in demand and that at some point prices should reflect that.  Until recently though it seemed a lack of supply was the primary market force keeping sales in check.  The demand was there but there was nothing to buy.  Now although inventory is still very low by historical standards we are seeing the number of homes for sale rise compared to a year ago with no apparent effects on the upward march of prices…so far.  Current inventory based on the rates of homes selling stands at 2.2 months the highest in almost a year, while the average days on market is 41 a 4.7% decline from last year. As a reminder, 6 months of inventory and 60 days on market are widely seen as indicative of a stable or “neutral” market as far as how much leverage buyers and sellers have.  So we are still in a strong seller’s market despite the sharp drop in sales. Continued in migration, stabilizing interest rates, and a generally strong local economy and job market seem to be enough to keep the party going.

SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR DECEMBER  2018

*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
All 750 -14.8 100 1640 +5.7 100 $172 +17.0 $363K +16.0 41 -4.7 2.2
New Construction 256 +11.3 34.1 1019 +14.0 62.1 $175 +10.1 $413K +9.0 57 +1.8 4.0

 

Canyon County 312 -9.0 100 641 -14.5 100 $136 +13.3 $250K +16.3 38 -9.5 2.1

One other area in the latest Boise real estate market numbers worth pointing out is the role of new construction in the current mix of homes for sale and being sold.  While overall sales were down 14.8%, sales of new homes ( not including custom build jobs) were up 11.3% and the number of new homes for sale jumped 14% versus last year. The 256 new homes sold in December was 34.1% of all homes sold while the 1019 new homes for sale represented 62.1% of all homes listed. Without new construction the market would be in serious trouble on the supply side.  For example, sales of pre-owned homes were off 24% in December and 10.5% for the most recent quarter.  This may be helping boost prices as newly constructed homes tend to be priced above the overall market average.  Currently the average price per square foot for new construction is $175 (vs $170 for re-sale homes), while the average sales price for a newly built home is $413,000 (vs. $337,000 for re-sale).

Based on what is happening in other markets around the country and predictions for a nationwide economic slowdown and possible recession in the coming months, I still believe that the current double digit price increases are unsustainable and we will see a gradual flattening of the price curve in the coming months.  Supply for the time being will likely stay pretty tight even with all the new construction occurring because there hasn’t been a strong enough trigger to get existing homeowners to sell.  Many who would like to sell and take a profit are worried that they won’t be able to find a replacement home that meets their needs and their budget.  Until sellers feel like they may be missing out on peak pricing if they don’t sell we will continue to see very few existing homes on the market compared to historical averages.

Please feel free to contact me with you comments and questions. 

Cam Johnson

Realtor®

Windermere Real Estate/Boise Valley

1412 W Idaho St.

Suite 120

Boise, ID 83702

208-258-2222 Office

208-283-3664 Cell

208-258-2230 Fax

camjohnson@windermere.com

Posted on January 15, 2019 at 3:03 pm
Cam Johnson | Category: Monthly Real Estate Market Reports | Tagged , , , , , , , , , ,

Boise Real Estate Market Report for November 2018

Volume Continues to Drop, Prices Slow to React

First, my apologies. Due to technical issues I was not able to distribute a report last month but should be back on track moving forward. Fortunately, you didn’t miss much and the overall Boise real estate market trend remains the same. Sales volume is slowing and is now below where we were a year ago while prices continue to rise, albeit a tad slower than they were during the frenzy of this past spring and summer. There were 887 closed sales in Ada County in November, 6% below November 2017 and approximately 15% below October. The drop from October is largely seasonal but the year over year drop has occurred in 2 of the last 3 months and appears to be the trend as pending sales were also down 3.7% in November. Meanwhile for the first time in literally years, the number of homes for sale was actually up 5.4% compared to last year. There were 1859 homes listed and at the current rate of sales this is 2.1 months of inventory. While still historically very low it is only the second time in over a year we have had 2 or more months of inventory. Average days on market also ticked up to 35, again still historically low and indicative of a strong seller’s market but slightly above levels we saw this summer.

In talking to other agents and brokers there has been a palpable change in the feel of the market. This is also reflected nationally. For months we have been hearing that some of the nation’s previously hot markets such as New York, Seattle, San Francisco, and Portland were experiencing a slowdown. This past week the Wall Street Journal reported that a similar shift is occurring in some smaller markets such as Las Vegas, Phoenix, and Tampa. Bidding wars have been replaced by price reductions and inventory which was non-existent a few months ago has in some cases doubled. There are also more and more predictions of a recession in 2019. Fox News (sorry) reported last week that half of US CFOs say a recession, largely trade and tariff driven, will occur in 2019. While this will likely have some effect on housing, in markets like Boise the impact may be somewhat muted by continued in-migration due to quality of life and relative affordability. For more information on the national picture please check out Windermere Chief Economist Matthew Gardner’s 2019 Economic Forecast.

Meanwhile prices in the Boise real estate market continue to go up in double digits. The average price per square foot was $167 in November, up 12.1% versus 2017, but down 2.3% from October. The average sales price was $350K (+13.6%) but this was down about 2% from October. There is some normal seasonal fluctuation in prices so the numbers I would key in on are the year vs year ones. It is also typical for prices to lag behind a shift in volume. In the case of the last big recession, the market shift occurred in 2006 but prices didn’t peak until summer 2007. While in the current scenario prices may not fall much, if at all, the rate of increase has already dropped from the 15-18% per year that we saw this summer to the 12-13% we are seeing now. I still feel anything over 10% is not really sustainable given current wage growth and inflation so if we continue to slow down it may be a good thing for the overall health of the market.

SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR NOVEMBER 2018
*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
All 887 -6.0 100 1859 +5.4 100 $167 +12.1 $350K +13.6 35 -14.6 2.1

New Construction 241 +15.9 27.2 1010 +14.8 54.3 $172 +5.5 $401K +7.2 50 -24.2 4.2

Canyon County 382 +0.5 100 718 -9.9 100 $139 +20.9 $248K +18.7 29 -32.6 1.9

There are likely many reasons for the market shift that has begun in Boise. The usual culprits are definitely in play here: rising interest rates, prices forcing some buyers out of the market, declining consumer confidence in the national economy. But in our market unemployment is low, wage growth is strong and in-migration continues so the overall effects may be fairly mild compared to some more volatile markets. Still, we are near what I would consider the peak of the current pricing cycle so Buyers may decide to wait for prices to possibly drop while Sellers who have been sitting out may jump in to cash out at the peak. Both those will serve to accelerate the trend—fewer buyers and more inventory. Quite the opposite of what the market has brought the last few years.

Happy Holidays to you all. Please feel free to contact me with your comments and questions.

 

Cam Johnson
Realtor®
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Suite 120
Boise, ID 83702
208-258-2222 Office
208-283-3664 Cell
208-258-2230 Fax

camjohnson@windermere.com

Posted on December 20, 2018 at 1:51 pm
Cam Johnson | Category: Monthly Real Estate Market Reports | Tagged , , , , , , , , , , , ,