Inventory Squeeze Continues and Prices Surge
The Boise real estate market remained a strong Seller’s market in September even as the normal seasonal trend towards the slower winter months continued. While closed sales in September (1099) were 10% below August, they were up 2.3% vs. September 2016. Furthermore the number of homes for sale (2098) was down 10.9% from a year ago and inventory remained below 2 months for the 7th straight month. Home continue to sell quickly—the average days on market was 35. This figure has been at 36 days or lower for the last four months after being as high as 65 days as recently as February. You will recall that 60 days is considered a stable neutral market.
Prices through most of the recent strong seller’s market have remained mostly in check, meaning increases were generally sustainable given current inflation and wage growth. In the last few months things seem to be heating up with regards to prices. We are far from the dreaded bubble and the underlying foundation of the market is much different than in the past but it does bear watching. My general rule is that annual price gains of 10% or more over a period of several months or longer are not sustainable. The average price per square foot at $149 was up 11.2% from 2016 while the average sales price ($304K) was up 8.6%. These numbers have been hovering on either side of the 10% mark for the last few months but as prices continue to rise affordability will drop meaning buyers get less house for their money and some leave the ranks of buyers all together by being priced out. Income growth at 3-4% annually isn’t keeping up, and unlike in the previous strong market when buyers simply borrowed more to cover the gap, lending and underwriting is much stricter now so the chances of a full on bubble are much lower. Eventually though dwindling affordability will be a catalyst for a market slow down which may come as soon as next year or hold off until what some predict will be a widespread recession in 2019. A Wall Street Journal Article on October 2nd with the headline “Cracks in the Housing Rally” starts out saying, “The post crisis home price recovery is beginning to look vulnerable”. The article cites slowing housing sales and starts on a national scale and goes on to say that household formation is slumping and affordability is being pressured by low wage growth and rising (still very low) interest rates. Some of these national trends certainly hold true for our market although real estate is primarily influenced by local factors. One positive factor in our market that is not true nationally is continued strong in-migration from the west coast of people seeking quality of life and affordable (for them) housing. That may serve to keep the market going longer than would otherwise be true.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR SEPTEMBER 2017
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
Please feel free to contact me with any questions and comments. Have a great fall!
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702