Fast-Moving Housing Market Continues to be Driven by Demand

Despite rising home prices, today’s housing market doesn’t have much else in common with the market we saw prior to the recession.

The Boise Region’s housing market is being driven by real home buyer demand, not speculation, which was common a decade ago. And as we’ve mentioned before, the increase in demand and lack of inventory has pushed up home prices.

The Boise Region’s housing market is being driven by home buyer demand, not speculation. Click To Tweet

That demand for housing can be seen in the data (real or speculative) by looking at the Days on Market.

Days on Market metric (or DOM) counts the average number of days between when a property was listed and when an offer was accepted.

For example, in Ada County, home sales that closed in September spent an average of 32 days on the market before going under contract, 23.8% faster than in September 2016.

DOM doesn’t factor in the time between accepting an offer and closing (which can vary based on the time it takes to complete home inspections, repairs, financing, etc.), so it is a good indicator of the demand for housing, and how quickly sellers find buyers.

DOM is seasonal, meaning homes generally go under contract faster in the spring and summer and slower in the fall and winter. To see the overall trend, we used a 12-month rolling average to remove seasonality. Based on those figures, DOM for Ada County has been trending down since 2009, and since 2014, DOM has been tracking closely with falling inventory.

September 2017 DOM Trends Ada County - web

DOM Chart

The very low DOM of 32 days on average, between February 2006 and January 2007, shows just how quickly buyers were snatching up homes, despite having plenty of inventory to choose from. In the past year or so we’ve experienced quite the opposite — low DOM and very low inventory.

September 2017 DOM Trends Canyon County - webPrior to the recession, Canyon County saw a similar trend with shorter average DOM despite plenty of inventory to meet demand. Since late 2013, DOM has been tracking closely with inventory, indicating increasing demand as inventory drops.

While that historical comparison is another helpful distinction between today’s market and the pre-recession market, it’s not much consolation for today’s buyers who are often required to make quick decisions because of limited inventory. Unless there is a sudden influx of inventory or a quick drop in demand, we expect the market to continue to move quickly, even if we see some slight increases in Days on Market through the winter.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the September 2017 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.

Download the latest market snapshot graphics for Ada County and Canyon County:

ADA Snapshot - September 17CANYON Snapshot - September 17

 

 

 

 

 

 

 

 

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This report is provided Boise Regional REALTORS® (BRR). BRR is the largest local REALTOR® association in Idaho, with over 4,300 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

Ada County Home Prices Reach New Record in August While the Pace of Growth Steadies

Three main factors continue to drive housing demand in Ada County — increased economic development, limited housing supply, and a growing population — resulting in a record high median sales price in August 2017 of $278,000, up 9.6% from a year ago.

Yet while the actual median sales price continues trending upwards, the rate at which it does so… Click To Tweet Think of it like driving your car up a hill: as the road gets steeper, the speed at which you drive decreases. You’re still gaining ground, just not as quickly.

MSP vs YOY Percent Change in Median Sales Price for Ada County

In January 2015, the Ada County real estate market began to see steadier, year-over-year price growth each month, at 7.9% on average through August 2017. Looking back to January 2012 (when the market recovery began) through December 2014, year-over-year price growth fluctuated each month at a much higher average of 13.2%.

These early fluctuations were closely tied to changes in mortgage interest rates.

Rising home prices are great for sellers and our economy overall, but eventually, can cause affordability concerns for buyers, even with low mortgage interest rates. Slowing price increases could be an early indicator of the market coming back into balance, but as long as consumer demand outpaces the number of homes for sale, that low supply vs. high demand relationship should keep actual prices moving up.

Canyon County is experiencing the same slowing price growth. From January 2012 to December 2014, the average monthly, year-over-year median sales price increase was 18.9%, compared to the average for January 2015 to August 2017 of 10.5%. The actual median sales price in Canyon County for August 2017 was not a new record, but it was up 11.0% from August 2016 to $183,000.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the August 2017 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.

Market Report - August 2017_Page_03

Download the latest market snapshot graphics for Ada County and Canyon County:

ADA Snapshot - August 17

CANYON Snapshot - August 17

 

 

 

 

 

 

 

 

# # #

This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,300 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

Ada and Canyon County Housing Inventory Down for 34 Consecutive Months

At Boise Regional REALTORS® (BRR), we feel like we’ve been talking about low inventory for months… and for good reason.

A few weeks ago, Zillow’s Chief Economist Svenja Gudell posted on Twitter: “Inventory down YoY for 25 consecutive months now. We’re just past 2-years into the #inventorycrisis.” While we never like when the term “crisis” is used to describe the housing market, the sentiment reflects the pressure that many home buyers are feeling caused by the low inventory levels, especially for existing homes.

Ada and Canyon County Housing Inventory Down for 34 Consecutive Months Click To Tweet

Gudell’s comments were based on nationwide trends, so what does this look like in the Boise Region?

Based on monthly data, inventory of existing homes in both Ada and Canyon counties has been down year-over-year for 34 consecutive months, starting October 2014. Let’s break this down by inventory (supply) and pending sales (demand)…

Metrics Ada Existing Canyon Existing
Oct-14 Jul-17 % Chg Oct-14 Jul-17 % Chg
Inventory (Supply) 1,702 1,238 -27.3% 886 600 -32.3%
Pending (Demand) 628 1,078 +71.7% 307 537 +76.6%
Months Supply of Inventory 3.2 1.4 -56.3% 3.3 1.5 -54.5%

 

Inventory of existing homes in Ada County was at 1,702 in October 2014 and 1,238 in July 2017, a decrease of 27.3%. In comparison, there were 628 pending sales in October 2014 versus 1,078 in July 2017, an increase of 71.7%. Pending sales are homes under contract that should close within 30-90 days.

Looking at months supply of existing inventory — which takes the number of homes for sale divided by the average number of sales by month — there were 3.2 months in October 2014 in Ada County to 1.4 months in July 2017, a drop of 56.3%. (A balanced market—not favoring buyers or sellers—is typically between 4-6 months supply of inventory.)

In Canyon County, inventory of existing homes was at 886 in October 2014 and 600 in July 2017, a decrease of 32.3%. In comparison, there were 307 pending sales in October 2014 versus 537 in July 2017, an increase of 76.6%. That put months supply of inventory at 3.3 months in October 2014 compared to 1.5 months in June 2017, a drop of 54.5%.

How has the decrease in supply and increase in demand influenced home prices in the Boise Region? The median sales price of existing homes in Ada County increased 34.2% between October 2014 and July 2017, and increased 42.2% in Canyon County during that same period, illustrating BRR’s familiar refrain of how home prices are being driven by demand compared to supply.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the July 2017 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.

Download the latest market snapshot graphics for Ada County and Canyon County:

ADA Snapshot - July 17

CANYON Snapshot - July 17

 

 

 

 

 

 

 

# # #

This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,000 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

Pending Sales of Existing Homes Outpace Inventory in the Boise Region

Homes under contract, also called “pending sales,” are properties with an accepted offer that should close within 30-90 days. Because homes don’t typically go pending and close during the same month they’re listed, when inventory is very low, there can be more pending sales than homes available to purchase.

For the past three months in both Ada and Canyon County, pending sales of existing homes have outpaced inventory, as buyer demand continued to be strong throughout the spring market.

Ada County Inventory vs Pending Chart 052017 smaller Canyon County Inventory vs Pending Chart 052017 smaller

Taking a closer look at April 2017 in Ada County, 1,107 existing homes went under contract compared to the 891 existing homes that were available for sale. In Canyon County, 556 existing homes went under contract compared to just 401 existing homes available for sale.

Canyon County experienced this same three-month trend in February, March, and April 2016, but it reversed by May 2016. Ada County pending sales were only higher than inventory in April last year.

Low inventory has also affected closed sales figures for existing homes, with year-over-year declines in both counties. This is not a reflection of buyer demand, as seen by the pending sales figures mentioned, but more simply: buyers can’t buy homes that aren’t for sale.

While the National Association of REALTORS® (NAR) is looking to builders to help solve the inventory shortage nationwide, locally, we need additional existing inventory to come online.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the April 2017 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.

Download the latest market snapshot graphics for Ada County and Canyon County:

ADA Snapshot - April 17

CANYON Snapshot - April 17

 

 

 

 

 

 

NOTE: Monthly pending sales data is not available prior to 2011, so the instances referenced are the only times we’ve seen this occur in our data set.

# # #

This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,000 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

Low Inventory of Existing Homes Continues to Drive Prices

The continued shortage of inventory compared to buyer demand has pushed the median sales price of existing/resale homes up near the record high in Ada County and set a new record in Canyon County.

As of March 2017, the median sales price for existing homes in Ada County was up 8.4% year-over-year, reaching $233,000. While this was an increase of 5.5% over February 2017, the previous high point was in June 2016 at $239,900.

In Canyon County, the median sales price for existing homes reached $164,700, up 10.2% compared to March 2016, and up 4.8% over February 2017. The previous high point was in July 2016 when the median sales price of existing homes reached $160,450.

While more existing homes are being listed each month as we move further into the spring market, it’s not enough to keep up with buyer demand. This is especially apparent when comparing current inventory to last year’s levels.

According to Lawrence Yun, Chief Economist for the National Association of REALTORS®, the key to fixing the inventory crunch is with homebuilders. They must increase inventory in all prices points to not only help current buyers but also existing homeowners who don’t know where they will move if they sell. As more new inventory becomes available, existing homeowners could move and free up properties in the low to middle price points.

We did see an uptick in the number of new homes for sale compared to last year, but again, existing inventory continued to lag:

Inventory as of March 31st March 2016 March 2017 YOY % Chg
Ada County

Existing/Resale

New Construction

 

1,062

734

 

744

793

 

-29.9%

+8.0%

Canyon County

Existing/Resale

New Construction

 

480

292

 

383

310

 

-20.2%

+6.2%

Builders know there is demand at all price points and they are eager to meet it. However, in order to be profitable, they often build homes at higher price points due to the constraints of higher material costs, land prices, and the shortage of labor. As existing home sellers are able to net more as prices increase, the hope is that they will choose to sell and move up in price point, especially as there are new homes available in the higher price points.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the March 2017 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.

Download the latest market snapshot graphics for Ada County and Canyon County:

ADA Snapshot - March 17CANYON Snapshot - March 17

 

 

 

 

 

 

 

 

# # #

This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,000 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

 

Spring Hits Ada and Canyon County Housing Markets

As expected, warmer weather brought more buyers out in February, pushing pending sales in Ada County 25.7% higher than the previous month, with 1,303 homes going under contract. Though pending sales were up month-over-month, they were 5.5% lower in February 2017 than in February 2016 because there were fewer homes available to purchase. Speaking of inventory, it was down 16.1% in Ada County from February 2016.

But there was a bright spot on the inventory front — the number of homes for sale was up 4.1% in February 2017 over January 2017. More encouraging, this increase was caused by more existing homes coming online, up 14.0% month-over-month.

The story was similar in Canyon County, where pending sales were 30.8% higher in February 2017 versus January 2017, representing 565 homes under contract. Overall inventory was down 11.5% year-over-year, but the number of existing homes for sale was up 3.0% from January.

This uptick in spring inventory seems to be happening a month sooner than is typical, which should be welcome news to buyers. Through member feedback, we’re hearing that sellers are encouraged by the buyer traffic they’re seeing and the increase in prices.

As shared in previous reports, the area overall median sales price (existing and new construction combined) has been pushed up by the limited supply compared to buyer demand. February 2017 hit a new high median sales price in Ada County of $256,600, led by gains in new construction prices. Canyon County was just $250 shy of reaching its previous median sales price market peak, also due to new construction prices.

A recent report based on data from the Federal Housing Finance Agency (FHFA) actually notes that the Boise metro area has joined cities such as Denver, San Francisco, Nashville, and others, as being “fully recovered” from the recession as prices have surpassed previous market peaks. NAR’s Chief Economist Lawrence Yun also referred to Boise in an interview, reinforcing our market’s likelihood to see continued price appreciation.

While not as strong as new housing, the median sales price for existing homes also rose. In Ada County, the February 2017 median sales price for existing homes was at $220,900, nearly even with January 2017 but up 3.8% from February 2016. Canyon County’s median sales price for existing homes was $157,200 in February 2017, up 6.9% from February 2016 and up 3.4% over January 2017.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the February 2017 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.

Download the latest market snapshot graphics for Ada County and Canyon County:

ADA Snapshot - Feb 17CANYON Snapshot - Feb 17

 

 

 

 

 

 

 

 

# # #

This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,000 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

Boise Regional REALTORS® 2016 Residential Real Estate Market Report

Record High Prices Due to Record Low Inventory — Not Market Speculation

Year-End 2016 Market Report - no forecast_Page_01

Summary

Despite the fact that the local median sales price reached a new record midway through 2016, there is not an immediate concern of a real estate bubble. Home prices rose last year because of consumer demand versus supply — not speculation as we experienced a decade ago. Further, the local economy is much stronger and credit is more regulated than during the previous market peak, making our current conditions very different. BRR’s 2016 Residential Real Estate Market Report dives into the local inventory and consumer trends that drove real estate in the Boise Region last year, as well as what may occur in 2017. Some key insights from this report include:

2016

  • Median sales price in both Ada and Canyon counties rose in 2016 due to consumer demand versus limited supply — not speculation. 
  • Ada County prices and inventory rose and fell together between 2004 and September 2012.  Since then, inventory has not kept up with demand and is down 28.8% from September 2012, which pushed the median sales price up 40.0%.
  • This is also true in Canyon County, where prices and inventory rose and fell together between 2006 and March 2012.  Since then, inventory has not kept up with demand, down 11.5%. Low inventory plus more higher-priced new construction, pushed the median sales price up 103.7% since March 2012.
  • The demand for housing is due to three factors: economic development, inventory pressures, and new residents moving into the Boise Region.
  • The actual median sales price in both counties continues to trend upwards, but the rate at which it does has slowed down, keeping affordability in check for most. Keep in mind, slowing price gains do not mean actual prices will decline.

2017

  • With a strong employment outlook and expected population growth, the Boise Region should continue to enjoy a strong and growing real estate market.
  • Inventory is needed in all price points in all communities, especially among homes priced below $250,000 — don’t wait for spring!
  • While the lack of inventory is the primary factor delaying many first-time homebuyers (FTHBs), for some it may be student loan debt and/or rising rents. Down payment assistance or grant programs may help offset this.
  • Buyers and builders may begin looking for options at the edges of Ada County, throughout Canyon County, and beyond, however, this may begin to affect commute times in and around the Valley.

 

Analysis

In 2015, Ada County surpassed $2 billion in total dollar volume sold. The first year since 2006. In 2016, the total dollar volume sold in Ada County was $2.95 billion. Up 20.2% from 2015 as more homes sold at overall higher prices.

In June 2016, Ada County’s median sale price reached $253,000 — 2% higher than the previous peak in July 2006. Then, as of December 31, 2016, there were only 1,490 homes for sale in Ada County, 10.5% less than the previous record low of 1,664 from January 2013. This was mostly due to a lack of existing inventory, at just 1.1 months of supply in December 2016. (More at boirealtors.com/existing-housing-inventory-hits-record-low-boise-region.)

Looking at 2016 overall, the median sale price for Ada County landed at $244,900 — up 6.9% from 2015.

In Ada County, prices and inventory rose and fell together between 2004 and September 2012. But since then, inventory has not kept up with demand, down 28.8% from September 2012, pushing the median sales price up 40.0%. It’s a classic example of supply and demand… home prices rose because of consumer demand versus limited supply — not speculative investing and building as was often the case a decade ago.

Slide8

In Canyon County, the 2016 median sale price was $160,000 — up 11.2% from 2015. The median sales price and inventory rose and fell together between Jan 2004 and Sept 2012.

Since then, inventory has not kept up with demand and is down 11.5%. Low inventory plus more, higher-priced new construction pushed the median sales price up 103.7% since March 2012. Inventory was 7.6% higher than the previous record low of 751 in February 2016, and the median sales price was 2.9% lower than the record high of $170,000 from January 2007.

Slide 10

Why so much demand for housing in the Boise Region? Economic development, inventory pressures, and demographics.

Wins in local and statewide economic development thanks to groups like the Boise Valley Economic Partnership (BVEP) and Idaho Commerce are bringing more jobs to our market. And through the efforts of Visit Idaho and local convention and visitors bureaus, there’s a growing interest in our city and lifestyle, attracting residents from higher-priced, nearby markets like Denver, Salt Lake City, Los Angeles, Seattle, and Portland.

 Slide23

Looking at inventory, there seems to be three things that have brought us to historically low levels.

One, some homeowners are choosing to stay in their homes longer, or, are hoping to buy before they list.

Two, some homeowners may have regained enough equity since the recession to “break-even” if they sold, but not enough for a down payment to buy their next home.

Slide16

 And three, there is not enough lower-priced new construction to keep up with demand, or, to make up for restricted supply of existing homes.

Slide17

The demographic (or people) trends we’re seeing include millennials “aging-into” homeownership nationwide, and they are the largest generation in terms of total population. In Idaho and the Boise region, we have a strong 10-year employment outlook which should provide income stability, helping consumers feel confident about purchasing a home. And overall, the Boise Metro’s population is expected to grow 30% by 2020, to 850,000 people.

Slide22

As prices have risen, so have questions about affordability, especially as mortgage rates and student loan debt track up.

Year-over-year changes in the median sales price, existing and new construction combined, generally followed changes in monthly 30-year fixed conventional mortgage rate, except between 2012-2013 when rates dropped, helping to drive more home sales at higher price points. While actual mortgage rates continue to hover near historic lows, they have started trending up. While this may not affect affordability for all buyers, it may limit purchasing power for some, especially at lower price points.

Further, NAR research suggests 71% of renters (first-time homebuyers) and 31% of move-up buyers (current homeowners) surveyed nationwide may be delaying a home purchase by 1-3 years due to their student loan debt.  If those moves had not been delayed, using national figures from 2015, annual home sales could have grown by 2%, and in turn, increased total inventory by 6-7%. While this isn’t a large share of the market, it is further impacting first-time homebuyers desperately seeking inventory. Yet, economists at the Cleveland Fed say despite student loan debt rising, “the average student debt burdens are more than offset by students’ average financial gain in the long-term.”

REALTOR.com® anticipates U.S. home prices will grow 3.9% in 2017 compared to 2016, with slowing price appreciation in most markets. We’re already seeing a slow-down in year-over-year median sales prices each month, in both Ada and Canyon Counties. So even though the actual median sales price continues to trend upwards, the rate at which it does so is slowing down. This should hopefully offset any increases in the mortgage rate that occur in 2017, keeping home prices affordable for most buyers.

Based on research from RealtyTrac, the Boise Region remains affordable for most, especially compared to the U.S. overall. RealtyTrac estimated that the percent of wages needed to purchase a home in Ada County was 40.4% in Q4-2016, nearly even with a year ago. For Canyon County, the percent of wages needed to buy a home was estimated at 37.2% in Q4-2016, up 6.5% from last year. Many economists and analysts calculate the amount of home one can afford based on 28-36% of wages, so while affordable compared to the nation, most households will have to allocate more of their income to housing, based on the growth in home prices.

Average monthly rental rates have continued to increase in both Ada and Canyon Counties, and in 2016, at similar rates to residential real estate. Using comparable year-to-date figures, Ada County’s 2016 median sales price was up 6.9% from the same period the year before, while the average rental rate was up 7.0%. Canyon County’s 2016 median sales price was up 11.2% over 2015, while the average rental rate was up 10.3%.

Slide32

Vacancy rates were also down year-over-year. Ada County’s rental vacancy was estimated to be 2.6% in 2016, down 18.5% from 2015, and in Canyon County, the rental vacancy rate was estimated at 2.7%, down 28.9%.

The shortage in rental options is pushing up rental rates, just as with home purchases. The result, though, for those renters planning to purchase, means that as more of their monthly income goes towards rent, it’s potentially less they can save towards a down payment, further delaying a purchase.

Boise is noted in a report called the “Housing Trilemma,” showing it has the quality of life and economic strength residents’ desire, but it may be becoming unaffordable for some.

 

Slide33

The reason offered by the report echoes what we’re seeing in inventory: “As people flock to cities [with] economic opportunities and a high quality of life, the increased demand for housing makes rents and property prices spike.” To meet demand and help with affordability, more housing options and rental/purchase assistance programs are needed, especially for young and first-time renters and buyers, to “offset the premium required to live in a popular place.”

 

What’s on tap for 2017?

REALTOR.com® anticipates U.S. home prices will grow 3.9% with slowing price appreciation in most markets. This means that even though the actual median sales price should continue to trend upwards, the rate at which it does will slow down.

We’ve already seen this happen in Ada and Canyon Counties, and while the rate at which prices appreciate should continue to stabilize, we could see home prices in Ada County increase on average 6.5% through 2017, and by 5.9% in Canyon County, based on trends since 2013 when prices and inventory trends diverged. *

*No promises.  Past performance is not an indicator of future success. 🙂

Slide37

Higher home prices paired with potential mortgage rate increases could affect affordability for some, but shouldn’t make housing unattainable for most — especially if year-over-year price gains continue to even out or slow down. Again — slowing price gains do not mean actual prices will decline.

Our market should be able to support the estimated price gains as the local labor market improves, and as more people move in from nearby, higher-priced markets.

Inventory is needed at all price points in all communities, especially among homes priced below $250,000. While buyer demand does fluctuate some due to seasonality, it’s been quite consistent year-round for some time, so the idea of “waiting for spring” is not necessary in our current conditions.

While the lack of inventory is delaying some FTHBs, others may be on hold because of student loan debt rising rent and mortgage rates. Down payment assistance programs and grants may be key, and potential homebuyers are encouraged to connect with lenders and their REALTORS® early in the process to understand their options.

Speaking of affordability, more buyers and builders will look for options at the edges of Ada County, throughout Canyon County, and beyond, however, we may see commutes tick up as a result. Based on current conditions, the local economy should be able to support additional price increases as the labor market improves, and as more people move in from nearby, higher-priced markets.

Should there be major, national economic changes that impact residential real estate, they will likely affect the large metro areas first, giving us time to prepare for any shifts. But a “shift” may not be a swing back to a recession… but back to a balanced market. The key: more inventory.

Throughout 2017, we should continue to enjoy a strong and growing real estate market across the Boise Region but we’ll continue to watch affordability and inventory.

Download 2016 Year-End Market Report stat sheets for Ada and Canyon County.

2016 Ada County Residential Real Estate Market Report Stats Sheet2016 Canyon County Residential Real Estate Market Report Stats Sheet

Want more stats? Have Questions?

Visit boirealtors.com/category/market-info for our market reports, released monthly on or after the 12th calendar day. Contact Boise Regional REALTORS® Chief Executive Officer, Breanna Vanstrom, at 208-947-7228 or breanna@boirealtors.com for assistance with these stats or any other association program.

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This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,000 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.

Ada County Inventory of Homes for Sale Near Historic Low

The low inventory of homes for sale in Ada County has driven home prices for months now.  In November 2016, there were only 1,730 homes for sale in Ada County, just 66 more than the historic low point of 1,664 in January 2013. Compared to a year ago, inventory in November was down 9.8%, but between October 2016 and November 2016, it dropped 21.3%, with 220 fewer homes for sale.

The lack of existing home inventory pulled  new construction inventory  down  0.2% from last year. There were only 868 existing homes for sale in November 2016, a 17.7% drop from last year at this time, and 22.2% lower than in October 2016.

“This time of year, we hear from homeowners who want to sell but think they should wait until spring,” said Carey Farmer, 2016 President of Boise Regional REALTORS® and Associate Broker with Group One Sotheby’s International Realty. “With a market as active as ours has been year-round, there is no right or wrong time to sell your home.”

One of the metrics used to determine demand vs. supply is Months Supply of Inventory. A balanced market—not favoring buyers or sellers—is typically between 4-6 months of supply. In November 2016, the Months Supply of Inventory for Ada County was only 2 months and less than 1 month for existing homes priced below $250,000. “We need existing inventory in all price points, but especially for homes below the $250,000-price point,” said Farmer.

Canyon County’s inventory was down compared to last year, as well, but not to historic levels. In November 2016, there were 903 homes for sale in Canyon County, down 5.3% from November 2015 and 8.0% less than October 2016. Existing home inventory was down 22.7% from last year, but new construction in Canyon County was actually up 23.9%. Months Supply of Inventory for Canyon County was at 2.6 months in November 2016, when looking at the market as a whole. It was at 1.6 months for existing homes and at 7.6 for new construction.

Additional information about trends within each county, by price point, by existing and new construction, and by neighborhood, are now available in the November 2016 Market Report. This includes an explanation of the metrics and notes on data sources and methodology.

Download the market snapshot graphics for Ada County and Canyon County:

ada-snapshot-november canyon-snapshot-november

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This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 4,000 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the Boise Regional REALTORS® Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance.  || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.