April Was Hot!

The weather was warm and the market was warmer.

In order to assist you in understanding the monthly statistics, it is important to describe how we capture and analyze our market data. Different sources may deliver slightly different statistics regarding price changes, unit sales, etc. Our data comes entirely from the Intermountain Multiple Listing Service and is captured into a database that includes single family detached homes on less than 2 acres, condominiums, and townhouses. Once the data is captured and stored, we can perform some analyses that wouldn’t otherwise be available to us.  For instance, we can track the changes in pending contracts over time because we measure them on the same day of each month and store that information in our database.  It’s also worth mentioning that when we speak about months of supply, we use the average number of sales over the trailing twelve months as the denominator in order to eliminate the skewing effect of seasonality.

The number of April closings in Ada County was 19% higher than last April and new contracts (pendings) were more than double those of last April. The large number of pending contracts means there should be a healthy market in the next several months. The average price of a home sold in the last twelve months rose 5% compared to the previous twelve months. Despite the increased pace of sales, inventory at the end of April rose 6% from the end of March, and a sign that homeowners recognize that the market is good for sellers: sales and prices are up and interest rates remain very favorable.

New homes comprised only 14% of all sales in April but pending sales of new homes at the end of this April are 35% higher than they were last April. New homes sold for almost 40% more than resale homes. There are 2.5 months of resale inventory and 5.7 months of new home inventory.

The chart that follows shows sales and inventory activity for the past thirteen months.

Ada_Co_All April 2015

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Get on the Bargain Bus!

 

The new year got off to a fast start in Ada County this January. Sales were up 15% over last January and new (pending) contracts increased 9%. Resale closings and pendings were both up 18%, reflecting rising buyer confidence, fantastic interest rates and the recognition that buying real estate in Boise right now is a bargain. New home sales also increased about 10% over last January although pendings were down 7%.

Inventory of resale homes is very low with only 2 months of supply. New home inventory of 6.1 months is down slightly, as we are getting rid of some standing finished inventory.

2015 looks like a great year in residential real estate: buyers are taking advantage of the great bargains presented by reasonable prices and low interest rates. Low inventory levels mean that sellers are able to put their homes on the market without worrying about too much competition.

Take advantage of 2015!

The charts below show current inventory and sales trends.

Inventory Analysis Jan MS 2015

 Inventory Trends Jan MS 2015

Market – These include homes of all ages and new construction.
Existing - This includes all homes older than 1 year and excludes new construction data.
New Construction - This includes new, to be built, and under construction homes.

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A LITTLE SLOWER NOW

The market slowed in November. Closings for the month were 7% lower than they were last November and new (pending) contracts were 8% lower. Inventory is at almost the same level as it was at the end of last November, leaving us with 3 1/2 months of homes on the market, 2 1/2 months of resale homes and almost 7 months of newly constructed homes.

At 7 months of inventory, new home sales have slowed significantly. Closings were 24% lower than last November and new home pending contracts were 17% lower. Resale homes, with only 2 1/2 months of supply, fared better: 3% lower in closings and 5% lower in pendings.

The average price of new homes closed in the last twelve months was 40% higher than the average price of resale homes. It’s interesting to note that the new home price per square foot was 18% higher than the price per square foot for resales and the size of new homes was 19% higher than resales. As we mentioned before, it looks like there is an opportunity for builders and developers to plan for smaller new homes.

Overall, our market this year is down 3% in units, up 5 1/2% in average price resulting in an increase of 3% in total volume.

The first chart below shows trends over the last year in sales, pendings and inventory. The second chart shows inventory levels at different price levels.

If you own a home and have been thinking of selling, with only 2 1/2 months of inventory on the market, this may be the best time to sell.  If you’re a buyer, the $87,000 difference in price between new and resale homes gives you plenty of room to invest in a resale home and make its effective age newer.

InventoryTrends 2014NovstatsInventoryAnalysis 2014novstats

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A Tale of Two Markets

September residential sales in Ada County continued a tale of two markets: inventory reductions in the resale market and inventory increases in the new home market. The charts below show the changes in inventory over the past 13 months in both resale and new homes, resulting at the end of September in 3.6 months of inventory in resale homes (often referred to as a “Sellers’ Market”) and 6.8 months of inventory in the new home market (tipped slightly toward a “Buyers’ Market”).

The main reason for the difference appears to be price. The average price of new homes (including detached single family up to 2 acres, condominiums and townhomes) for the past 12 months is $302,806, 38% (and $82,000) higher than the average price of a resale home.

It’s interesting to note that the price per square foot of new construction is only 17% higher than the price per square foot of existing homes but the average size of new homes is 18% larger than the average size of resale homes: 2,301 square feet for new homes and 1,952 square feet for resale homes.

The total residential market through three quarters of this year is down 4.6% in units compared to the same period last year: 2.1% lower for existing homes and 15.3% lower for new homes. Total dollar volume, however, increased 3.1% as a result of higher average sales prices.

adacounty inventory copy

The opportunity for sellers of resale homes is great: the price difference between existing and new homes makes resale look like a bargain. The opportunity for buyers may be to purchase an existing home and renovate it to lessen the home’s effective age.

The opportunity for builders might be to build smaller homes, thereby reducing the price difference between resale and new homes. Once that price difference approaches 20% rather than the current 38%, new home sales should flourish.

 adacounty inventory

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Is this the “new” stable market?

Unit sales for the past rolling 12 months held steady although the summer months and new construction fell short of 2013; prices are still climbing, although more slowly; inventories remain steady, although significantly higher in new construction.

Ada County Existing Homes:  Sales held steady over the last 12 months with a small increase of 1.4% over the previous 12 months, despite August closings down 10% over last August.  July’s year-over-year average price increase of 10% continues to drop slowly, with trailing 12 months average sold prices up 8.7% over the previous 12 months.  It certainly appears that prices are stabilizing thanks to higher inventories than last year and distressed sales continuing to drop, now making up only 11% of sales compared to 20% last August.

Inventory has remained steadier over the summer with 3.9 months of current supply, down a bit from 4.2 last month (the total number of properties on the market are up 20% over last July/August).  For the resale market, this remains below the 6 months of supply that many experts believe is a “balanced” market between buyers and sellers.

Ada County New Construction:  The most dramatic numbers are in the new construction market with unit sales down 22% this August over last. Average sold prices are up 11.5% (rolling 12 months) and August pending contracts are down 19% over last August.  A 28% increase in inventory explains the 6.2 months of supply on hand.  If we drill down a little it seems builders were looking for a “sweet spot” in the market. Inventory of new homes priced from $300,000 to $600,000 increased 77% August over August – which may be good news for buyers in that price range.

Buyers in the resale market are still finding good values, despite the dramatic decrease in distressed property, with average resale prices 27% lower than new construction ($219,757 vs. $301,695).  Cash buyers are still active in our valley, first time home buyers are anxious to purchase while historically low interest rates give them greater purchasing power, and move-up buyers are finding greater value at that next higher price point.  It remains a great market for sellers who pay close attention to pricing, staging and marketing.

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What Do I Need to Watch Out For When Selecting a Listing Agent?

Not all listing agents are the same. It is important to select and hire an agent that is an expert in the area in which your home is located. In Idaho, licenses allow agents to sell anywhere in the state, but an agent from Mountain Home or Nampa might not be the best choice if the home you want to sell is in Boise’s North End.

Make sure the agent you choose is someone you feel you can talk with. Selling your home is a big undertaking. Lots of things can and will come up. You need to feel comfortable that you and your agent can communicate easily.

Many people make the mistake of choosing an agent who seems willing to listen to their input and agree to their terms, who apparently wants to get the most for their property and, therefore, is willing to start out at their price and then drop the price later. This agent is engaging in a questionable sales practice called “buying a listing.” He “bought” the listing by offering to list the property at a higher sales price than other agents recommend. Most likely, he/she is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price. You pay the high price of too much time on the market, which ultimately results in a lower sales price than if you listed at the right price to start.

There is no “perfect” agent, but arming yourself with some knowledge will help you find a great match.

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A Bump in the Road?

The market took a step back in February with sales decreasing 9% compared to last February and Pendings decreasing 12%. Inventory has increased 18% over the last twelve months but, because of the pace of sales over that period of time, we have only 3 months of inventory.

Distressed property sales amounted to only 13% of total sales this February compared to 24% last February. It is interesting to note that the decrease in total sales from last February to this February is exactly the same amount as the decrease in sales of distressed properties.

New construction sales decreased 12% from February 2013 to February 2014 and the average price of a new home increased 18% to $306,780. New home prices over the last twelve months were 32% higher than resale homes.

Normally a drop in same month unit sales could signal a turn in the market, but the decreased availability of the lower-priced distressed properties may simply signal a continued return to a more normal market.

One thing is clear: the market needs more resale listings and the listing season is upon us.

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Off to a Good Start

January 2013 Statistics

January started the year off on a positive note in Ada County, with a 9% increase in sales over last January at a 12% higher average price of $233,306. Distressed property sales decreased to 12% of the total compared to 25% last January, so the market is continuing to get healthier.

Inventory dropped very slightly during the month but is 21% higher at the end of this January than it was a year ago. Despite that increase, the increased pace of sales over the last twelve months has caused us to have only 2.9 months of inventory available for sale.

New construction accounted for 25% of all sales in January, but with new home prices 33% higher than resale homes, new homes are beginning to sit on the market. There is a 2.2 month supply of resale homes compared to a 5.5 month supply of newly built homes. Moreover, while the inventory of resale homes has increased 14% over the last year – not keeping pace with the average increase in inventory – the number of new homes on the market has increased 35%.

It is encouraging to note that sales of upper end properties in Ada County (over $500K) increased 58% in the last twelve months compared to the previous twelve months.

Sellers: This is a great time to put your home on the market. Competitive resale inventory is low and there are not enough existing homes for buyers to choose from. If the number of resale properties on the market doubled, we would still have only 4.7 months of total residential inventory – still a significant shortage. Why not benefit from current market conditions?

Buyers: Interest rates have dipped in the last few weeks, making homeownership more affordable. If you can act now and find a home that is “almost” good enough, it may turn out to be a great buy in the long term.

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Why Sell Now?

Prices for everything are affected by supply and demand. This is true whether you are talking about gasoline, art or residential real estate. If lots of people want something that is in limited supply, the price goes up.

The National Association of Realtors tells us that the supply of homes for sale increases dramatically every spring. If you put your house on the market now instead of waiting for spring (and increased competition), you could be well ahead of the game.

Buyers that are canvasing homes for sale in the winter are highly motivated buyers. They want to buy now and, because of the limited inventory, a seller has a stronger position from which to negotiate. Think about it. It makes a lot of sense.

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A Successful Year and a Bright Outlook

2013 Year-End Market Statistics

2013 was a very successful year in residential real estate for Ada County. The number of transactions increased 13% over 2012, and the average price of properties sold increased 16%, from $193,655 to $225,226. The median price also rose 15%, from $164,945 to $190,000. A major reason for the price increase was that there were fewer sales of (less expensive) distressed properties, decreasing from 30% of transactions in 2012 to 14% this year and to only 10% in the last quarter.

Inventory actually increased 17% this year but, because the pace of sales also increased, we were left with only 2.9 months of supply at the end of the year.

Canyon County showed interesting results: with only a 5% increase in units sold, the average price increased 26%, from $104,897 to $132,087 and the median price increased 33%, from $90,000 to $120,000. Yet distressed property sales only decreased from 50% in 2012 to 42% in 2013. In the last quarter, however, distressed sales were only 18% of total closings.

Inventory in Canyon County increased 36% from the end of 2012, leaving us with 4.1 months of residential supply.

New construction statistics are noteworthy: while new homes accounted for 20% of sales in Ada County, they accounted for 38% of inventory at year end. It may be significant that, at an average price of over $277,000, new homes sold for 31% more than resale homes in 2013. The new home inventory, at 5.4 months, is more than twice the supply of resale homes at 2.3 months.

In Canyon County, new homes accounted for only 15% of total sales in 2013. At an average price of $180,443, new homes sold for 49% more than existing homes, a significant differential in price. Inventory of new homes increased by 32% with 10 months of supply at year end compared to 3.1 months of supply for resale homes. While new homes accounted for 15% of sales in 2013, they made up 35% of inventory at the end of the year.

Because we are starting the 2014 year with higher prices and higher interest rates than we had at the start of 2013, we encourage both buyers and sellers to act early. The cost of purchasing real estate should continue to rise in the coming year and the buyers and sellers who act soon should benefit.

The graphs below show the movement in average price and number of units sold in Ada and Canyon Counties from 2002 through 2013.

Ada 2013 Year End

Canyon 2013 Year End

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