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:
|Transaction Type||# Closed 12-2011||% +/- vs 2010||Avg $/SF||% +/- vs 2010||Avg Sold Price||% +/- vs 2010||Days on Market||% +/- vs 2010||% of list price||% of list price 2010||Months Inventory|
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!