Boise Area Home Prices - Don't Let Them Fool You

“Average and Median prices continue to go lower”  For those who report on Boise area real estate sales by skimming across the top of the data, that’s probably the headline to their story.  And, in absolute terms, that information would be correct . . .correct, but worthless. 

January is typically the month with the lowest number of sales.  It was last year, and, from the way other data look, it’s easy to say it will be this year too.  The price measurements jogged down because of the low number of sales, which made the two most-active price strata have a greater weighting on the distribution.

Looking deeper into other elements of the real estate market, shows a completely different story.  Those elements appear to be moving in a direction that begins to support a returning real estate market.  Month-over-month, and year-over-year measurements show improvements in total sold, New Listings, and the average and median asking prices of those new listings.

Year-over-year sales for January were up by 13%, and new listings in January were 200% greater than those for December.  For reference, that comparison for the previous year’s December-to-January change was 44.5%.

For more depth on the Boise area real estate trends, see the Market Statistics page on our website.  Click here:  BuySellBoise.com

Home Sales in the Boise Area Grow Year-Over-Year

So, what did the past year look like for the Boise area real estate market?  Well, believe it or not, 214 more homes were sold year-over-year.  But, new listings were fewer. Those two facts made the available inventory tighten, and may be responsible for why average and median prices were stronger in the second half of the year.  What's going to happen going forward is a toss-up.  The direction of the macro economic situation has everything to do with potential buyers and sellers confidence.  Currently, the trend looks like the market will continue to firm up, but growth over time will occur slowly.  With rates historically low, it may be the time to pull the trigger on a purchase, or sale.


You can go to our website for an update on what the past six months of sales activity in Ada County looks like.  Click here - BuySellBoise  and go to the "Boise Area Market Statistics" page.


Here's a look at a breakdown among equity, short, and bank-owned sales over the past two years.  Not a whole lot of changes from year to year.  

Call us if you would like us to help you buy, or sell a house  

Alan Smith - CSP  (208) 473-0343

Shirley Amick Robertson   - ABR  (208) 866-6300

Boise Area Real Estate Trends

I've just updated the Market Statistics page on my website.  You can go there to see what the local Boise area real estate market is doing. 

Here's the link to the page:  http://alansmith-re.info/custompage.cfm?cpid=1800

One of the graphs there is this one showing where we are, and where we might have been, by extrapolating the pre-bubble annual growth rate out to this year.

If you want to know what the Boise area's real estate market is doing, this is the place to go.

The State of the Boise Real Estate Market – Thru June 2011

I decided that instead of posting the usual graphs following the month’s end, I would just pull a bunch of various evaluating-the-market metrics.   So . . .

The total of homes sold in Ada County Jan-Jun  2010 vs Jan-Jun 2011 =  3297 / 3008 That’s . . .

                8.8% fewer total sales, and
                466 fewer normal sales, 10 more shorts, and 166 more bank-
                        owned properties

For June, year-over-year, the distribution of those sales among the three types is almost unchanged: 

                Normal  - 53.6% to 55.5%
                Shorts - 17.0% to 16.3
                Bank-owned - 29.3% to 28.2%

The average price of a single family home in Ada County last June was $180,807, this June it was $177,253.  We are back to where home prices were in the Fall of 2003 – the point at which home prices left their long-term appreciation rate of 3% to 5% per year, to begin their inflating-the-bubble ascention.

The sold price per square foot, by type, for last year vs this year (to-date) was:

                Normal  - 100.10 / $93.62
                Short - $75.01 / 75.41
                Bank-owned -  $79.18 / $72.72

Inventory has steadily declined.   Comparing the average monthly active listings for Ada County, for the first halves of 2010 and 2011 shows how much:  ‘10 = 3088, ‘11= 2277.  For contrast, the average monthly active listings for 2007 were 4667!

So, the supply/demand equation is favoring is tighter now than it was in 2007.  Then, the average monthly ratio of homes sold to homes listed was 12%.  So far this year, that same metric is 21%  That’s why the six month average for the ratio of the sold price to the asking price looks like this: 

                Normal = 98%
                 Shorts =98%
                 Bank-owned = 99%

The raging deals are priced as raging deals, they’re not negotiated to raging deals.  Home prices are low, rates are low, and breadth of choice is restricted.  Two out of three still make buying NOW a winner.

In a quick view, here's what happened in Ada County real estate in May:

Wow! Look at what the Average and Median price did.  Why?  I don't know.  See if you can figure it out for yourself at the Market Statistics page on my website.  I have some graphs there showing additional data that may, or may not explain what's going on.  If you think you can discern the trend, tell me what it is.

Click here to go there.

Thanks for visiting, come back at least once a month.

Alan

We Just Need Some Gas In Our Economic Tank

I’m a frustrated pragmatist.  My tendency is for free markets.  Imagining through the dynamics, I see supply-side economics as the effective market approach.  

With demand-side economics, the government has the resources, and the peoples’ imprimatur, to exercise both for everyone’s benefit. But, a front-loaded stimulus cannot succeed alone. It's necessary though, because it can be implemented relatively quickly to start the economic growth process. In addition, the initiation of the effort helps to begin to rebuild the public's confidence - an important ingredient for rebuilding the economy. However, concurrent with an initial government stimulus must be incentives for the private sector to also make an investment in the recovery. For the government to make the full effort alone is catastrophic. We just may be beginning to see why.

An analogy would be the car that has run out of gas.  After putting fuel in the tank, a shot of gasoline is poured directly into the carburetor of the cranking engine to fire it enough for the fuel pump to draw fuel from the re-filled tank.  Only in this case, the government has not put fuel in the empty tank (incented the private sector for involvement).  The engine fires, runs for a few seconds as the priming charge is consumed, and then stalls.  The process is repeated . . . with the same result.

An idled private sector remits its taxes from a static reserve – so the reserve is diminished as taxes are paid.  An incented private sector invests capital, and produces a return.  A portion of that return is committed to the government in taxes.  A portion of the remainder is reinvested, resulting in additional growth, from which an incrementally greater amount of taxes are paid to the government.  The process is repeated . . . with the same result.

The current economic condition is such that, not until the private sector determines that the risk/reward ratio has become favorable, will capital will be committed for business expansion.  Hiring and expenditures for capital equipment will occur, but current risks lie with what the ultimate costs of yet-to-be-written regulations, as directed by the new health care and finance reform laws, will be.  So, even when there is clarity after all the regulations have been written, the costs of compliance may restrict the ability to commit capital for growth.  The amount of operational cost-overhead added by these regulations – back to a car analogy – will amount to how much pressure has been applied to the (economic growth) brake pedal.

Boise Home Sales Ho Hum

If there's a trend in the Treasure Valley real estate market, it's a subtle one.  Houses are being listed and sold - but without any discernable thrust.  Maybe we are truly bouncing along the bottom.  Maybe macro economic factors are finally settling out and some unknowns are beginning to be known providing us with a better sense of our financial security . . .but, maybe not necessarily one of bounding opportunity.

So, the best I can do for you right now is present a couple statistical snapshots of elements of the market.  In a week, or so, I'll have confirmation of sales activity for May.  From preliminary numbers, it looks like another month's worth of proof that we're probably bottoming out price (decline) wise.  So, check back here again, and on the "Market Statistics" page on my website.  But for now, check out where the activity is - pricewise - and, the changing dynamic in the distrubution of total sales among normal, distressed, and bank-owned houses.