Sales Stutter While Prices Keep Rolling
In August the Boise real estate market revealed some subtle signs that the wheels of a predicted market shift may in fact be starting to turn. One month does not define a trend but there are indicators worth watching as we head into fall. First, the number of closed sales in Ada County fell 4.2% to 1179 versus last August, not a huge decline, but the largest we have seen in quite some time. Secondly, pending sales, an indicator of future market activity dropped 7.9% in August. This will likely be reflected in September and October’s closings. Lastly, while still down 13.7% from a year ago the number of homes for sale increased 13.4% from July meaning there were over 200 more homes available than in the previous month. Albeit inventories are still near historic lows but are inching up lowly. We had 1.5 months of inventory in August up from a low of just 1.0 in May and only slightly below last August’s 1.7 months. Average days on market were a remarkable 26 days, still indicative of a very strong seller’s market.
Booming new construction in the Boise real estate market had a significant effect on the numbers and helped soften the blow of dropping sales. Sales of newly built homes increased 17.8% and were 25.8% of all sales in August. While sales of all homes dropped 4.2%, if you remove sales of new homes, sales of pre-existing homes dropped 10.1% while the number of pre-existing homes for sale was off 25.1%. Homeowners just aren’t putting their houses on the market and as long as prices continue to explode we can probably expect more of the same. Once the market senses it has peaked expect a wave of inventory.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR AUGUST 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|
Speaking of prices, the stumble in closings has yet to impact upward price trends as demand remains very high. The average price per square foot rose to $169, a record high, and 15% higher than last year. That means buyers paid on average $22/sf more than they did a year ago. Meanwhile the average sale price was $369,000 up $10K (2.7%) just from July and $60K (19.4%) over the last year. As prices continue to soar affording a house becomes more and more difficult for some buyers particularly first timers. Many are forced to rent in an already tight rental market here in Boise. Oddly enough this isn’t true everywhere even in other hot markets. Bloomberg recently published an article with the headline, “Rental Glut Sends Chills Through the Hottest US Housing Markets” describing Seattle as having the biggest drop in rental prices of the 50 biggest cities. It says there is now a glut of newer amenity rich centrally located apartments that are fighting for tenants. So far this has not really affected Boise despite the large number of apartments going up including many downtown.
It will remain to be seen whether the drop in sales was a hiccup or a trend in the Boise real estate market, but with the national media suggesting that at least in some markets a change is already underway I’m betting we are not far behind. Please feel free to contact me with you questions and comments.
Windermere Real Estate/Boise Valley
1412 W Idaho St.
Boise, ID 83702