Where Have All The Houses Gone?
In speaking of the Boise real estate market it may be an exaggeration to say, “There’s nothing for sale!”, but it sure feels like it. And while there were 1280 homes for sale in Ada County as we head into the prime selling season in April that is 24.6% below a year ago, when inventory was already considered very tight. And when you consider how strong demand is especially in the lower price points it is no wonder that buyers are becoming frustrated and a sense of urgency rules the market. Even with the sharp drop in inventory there was still a modest increase in the number of homes sold in April versus a year ago. 932 sales closed, a 1.7% increase and for the quarter sales are up 9.2% from 2017. Needless to say things are moving quickly—the average days on market stands at 34 down from 45 just last month while the months of inventory remained at 1.4 (remember 6 is “normal”). This is without a doubt the strongest Seller’s market in recent history.
And what happens to prices in such a strong Seller’s market? They go up of course. And boy are they going up! Continuing a trend that really only took off about 6 months ago, prices in April were up in the double digits no matter how you slice it. The two metrics I use, average price per square foot, and average sales price are no exception. The average $/sf ($161) rose 15% from a year ago and 3.2% from March. If you annualized that one month increase we would be looking at a 38% year over year increase. Meanwhile the average sales price rose to $341,000, an 18.4% annual increase. These percentage increases are both well out of the “sustainable” zone I have discussed in previous reports. In general if you factor in both inflation and wage growth in our market, then real estate prices can increase 5-8% per year without forcing large numbers of buyers out of the market and creating a bubble. Anything over 10% for a sustained period like we are experiencing now is likely to have some effect on future market performance. Put quite simply, if prices keep going up and wage growth isn’t keeping pace then at some point so many buyers are forced out of the market that demand begins to drop and the price increases become unsustainable. Money pouring in from out of state may delay this process but as we all know real estate is cyclical and our current 7 year run in positive territory won’t last forever. Knowing exactly when things might turn is very hard to predict but many economists are predicting a slowdown in 2019 and possibly as soon as the 4th quarter of this year. Not a collapse but a slow down and somewhat of a correction. But for now Sellers remain firmly in the driver’s seat.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR APRIL 2018
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/SF||% +/-||Average Sold Price||% +/-||Days on Market||% +/-||Months Inventory|
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Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702