Quarterly Real Estate Update
Boise ID Metro AreaJuly 2017 Edition-
Happy Summer. Wow has it been hot! The Boise Metro housing markets have also been red hot this year.
This spring was the best seller's market I've ever seen. Sales may have peaked for the year, but should still be strong until October. If you are thinking about selling, ask me for a free market analysis and estimate of proceeds.
Looking ahead to fall- The big question for me is: Will home sales peak in July and coast the rest of the year, as they have for the previous 3 years? This year, supply is tighter than it has ever been, interest rates are still low and ... a strong fall could push prices really high for 2017 as a whole.
It's never too late to buy your first home or investment! There are good reasons to buy now: 1)This heat wave has slowed buyers down, more homes are coming on the market and 2)mortgage rates are still low and 3)Boise home prices are still low compared to almost everywhere in the West and heading higher. Contact me for information.
Boise Metro Home Prices- Q2 Numbers- Wow!
Quarterly Median Existing Home Prices are the most reliable indicator of housing market trends. I use only existing homes in my chart, as the ebb & flow of new construction can skew the numbers.
Talk about a strong spring rush! Ada County's median existing home price for Q2 jumped 9.3% from the previous quarter to $247,000. That's a huge increase after a flat first quarter. Year over year, the Ada County median existing home price is up a very strong 7.1% when compared to Q2 of 2016.
Canyon County's median existing home price during Q2 jumped 8.18% from the previous quarter, gaining $13,000 in value to $172,000. Year over year, the median in Canyon County is up 11% when compared to Q2 of 2016. That's almost 1% a month over the last year!
Housing Supply Shortage in Boise Idaho Metro.
Idaho is still one of the fastest growing states in the nation and a large number of people are coming to the Treasure Valley. As a result, there are not enough homes on the market to keep up with demand.
This chart shows all active single-family homes for sale on the first of each month. Keep in mind that this includes both existing and new construction, and a large number (569 in Ada/233 in Canyon) are yet to be built or finished. See my Market Monitor for further breakdowns of inventory by city and county.
Now let's add the pace of sales to the low number of listings...
This chart combines Ada/Canyon counties to show how long inventory would last at the current pace of sales. My chart is showing the lowest reading I've ever seen for this time of year. Sellers are in a very strong bargaining position. Buyers and investors not so much.
Signs of Downturn in Boise ID Housing?
Some are asking if there is a downturn coming. Be assured, I am watching for any sign as I have many past clients that might want to take some gains or delay a purchase.
Obviously, rising supply will be an early indicator of the market softening. As you see in my supply chart above, housing supply is still trending lower. Unfortunately, I don't have stats for the 2004-2006 bubble to see when supply began rising. However, past & present trends in discounts off asking are very interesting...
The first sign of the 2007 downturn I can find in housing stats is in discounts off asking rising throughout 2006 as sellers lost bargaining power.
At the height of the downturn in 2007, when prices were falling, the average discount that home sellers accepted rose to a high of 4.5% off asking. Buyers today can only dream of a seller that flexible. Right now, the average discount is under 1% and much lower than during the previous boom. Super tight and trending lower, making an imminent downturn very unlikely.
Downturns are a natural part of the economic cycle, so when is the question. If the current strong appreciation trend in home prices continues, ultimately affordability will reach critical mass. Most likely, it will be a combination of rising interest rates and higher relative home prices that level this market off or turn it downward.
What Really Scares Me About Multi-Family Rental Properties.
Rents are rising and vacancy rates are extremely low, so there's interest in multi-family real estate: duplex, triplex, fourplex, apartments. Most inquiries I receive are from investors looking for replacement property on 1031 Exchanges.
I will admit, I favor single-family homes for investment over multi-family units for many reasons.
I understand it seems easier to have multiple units in one place. My former mentor used to say "So you can file multiple police reports at one time." Generally, there is a difference in the quality of tenants that will rent a home vs an apartment. Single-family renters generally take better care of it, pay more and stay longer.
Liquidity is an important part of an investment. Single-family homes are the most liquid in real estate. There are always many more home buyers willing to pay market price than investors looking for a bargain on multi-fam. Especially when the market softens.
What really scares me is the effect of rising interest rates on multi-family properties. These are income properties and the value is based on income and what an investor will pay for it. Rates go up, values go down. Homes are valued on comparable sales, so are not affected the same way by rising rates.
I'm not saying don't buy multi-fam. Just buy it right with good positive cash flow after a cushion for vacancy, maintenance and management. Easier said than done in this market. Last week there were only 5 fourplexes available in all of Ada County.
I have more charts! See My Market Monitor for more information on Boise Metro housing markets and trends, updated monthly.
I am always happy to answer real estate questions; recommend a good lender, provide a free CMA or neighborhood history, an investment analysis, should-I-refi-or-remodel questions, first-timer education, etc.