How Low Can We Go?
The Boise real estate market saw another month of record low inventory and record high prices in August. The lack of inventory is unprecedented and given the seemingly insatiable demand it is no surprise that prices continue to set new records every month. While we have been living in a similar scenario for the last few years, with the advent of COVID-19 and the resulting changes in how and where people can live and work, places like Boise, that were already desirable for their relatively low prices and good quality of life, have exploded in popularity. The in-migration from places like California, Washington, and Oregon continues to surge as more people pull the trigger on making a move away from high priced, disaster prone areas aided by COVID fears and the increasing acceptance of remote working. A recent article from NPR uses the term “Zoom Towns” to describe areas, typically resort towns and other areas seen as “safe havens”, where the combination of low interest rates, a large number of millennials reaching homebuying age, and employers allowing or even encouraging remote working arrangements is leading to a sharp increase in demand while current homeowners are reluctant to sell and a relative lack of new construction is pinching supply in a “perfect storm” scenario. Boise, while not typically seen as a resort town, seems to fit into the Zoom Town mold because of its proximity to outdoor activities, high quality of life, and relative affordability.
The numbers are pretty clear cut. While the number of closed sales (1361) was up 18.7% in August versus a year ago, the number of homes for sale was down 61.1% to 717. That means inventory currently stands at 0.5 months, the lowest I have ever seen it…by far. Remember, 6 months of inventory is considered a stable market, and anything under 3 months is considered a strong seller’s market. And at least for the short term we can expect more of the same. Pending sales are up 41.3%, a good indicator of future closings. Not surprisingly the situation is even more extreme in the lower price points. There was only one home available under $200K in Ada County last month, but looking at all homes up to $299,999, there was only 0.2 months of inventory. Even the top end of the market, which typically has much higher levels of inventory and a slower rate of sales, is feeling the crunch. For homes over $700,000 there was 1.4 months of inventory and for homes from $500,000-699,999 there was only 0.4 months.
Since there is “nothing” to buy, prices for what little inventory there is have continued to surge into record territory. The average price per square foot in the Boise real estate market in August was $202 (+12.2%). Meanwhile the average sales price jumped 14% vs 2019 to $448,000. It seems paradoxical with layoffs and unemployment running rampant and many businesses, small and large, closing that we are in the midst of an historic housing boom in Boise. But many of those suffering job losses were not likely homebuyers and many of the out of state buyers that are relocating here are either able to work remotely or are moving using the proceeds from a home sale elsewhere even if they don’t currently have a job lined up here. I am also hearing of people pulling the trigger on retiring early so the job market is not a real factor in their decision on where to relocate. Boise has become a popular retirement destination in the last 20 years and will likely remain a desirable location for active retirees. For the most part this is uncharted territory, so it will be interesting to see how it all settles out after COVID. Many feel the true economic impacts of the pandemic are yet to come but it is hard to say how much impact that will have on the Boise housing market.
SUMMARY BOISE (ADA COUNTY) MARKET STATS FOR AUGUST 2020
*Does not include manufactured homes **see detailed graphs below for more information.
|Type||# Sold||% +/-||% of Total Sold||# For Sale||% +/-||% of Total For Sale||$/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