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Dans Market Monitor- Boise Idaho Areas

     
Treasure Valley Housing Market Update January 1st, 2009   
 
In a normal market, supply & demand and levels of foreclosures and new construction play a large role in the rise & fall of home prices. With record short sales and foreclosures in the Boise area, this market is anything but normal. We all know that home prices will rise again, but it will take time. The foreclosure bubble may have peaked already, but it will take years to work through this log-jam. In summary, it is a great time to buy and a terrible time to sell.
 
Cheap Money!  As of the first week in January, rates have risen 4 weeks in a row since hitting all-time lows! During the first week of December, rates hit the lowest point recorded by the Freddie Mac Index since 1971.  As you can see from my chart, today's rates remain lower than the annual average for the last 36 years. 
 
Homebuyers- there's no better hedge against inflation than a 30-year fixed mortgage at once-in a lifetime lows.
 
Investors- despite larger down-payment requirements and having to hold long-term, at least the prospects for achieving positive cash flow are good. Contact me for money-makers. 


Median Home Prices By County

Buying low is the trick in real estate. A great reason to buy or invest now in the Boise Idaho area, median prices of existing homes are the lowest in over 4 years in Ada County and now at 5-year lows in Canyon County. Next update showing 4th-quarter medians expected mid-January. 

 


Single-Family Residential Solds in Ada/Canyon Counties

In both Ada & Canyon Counties, sales were up from the previous year due to the tax credit and low rates, but not by much. Sales are still 25-30% below normal, using 2004 as a base-line, which was before the boom started.




New Construction Levels in Boise Area

After the boom, bubbles of unsold new homes contributed to price weakness in the valley, but have diminished.  Builder confidence has been low, eveidenced by steadily falling production. The lengthy development process plus understandable caution makes builders slow to react to the market.  This can be a positive in an upturn. 


Tables based on MLS active listings on the first day of month and includes only new stick-built single-family homes listed new-never-occupied, under constr or to-be-built. Excluded from this table are new homes with acreage, new condos, new townhouses and all new manufactured homes.      

Foreclosure Saturation in Boise Idaho Metro Area 

With unemployment growing, the number of people defaulting on mortgages has continued to grow this year in the Boise Idaho area. The first place you'll see these defaults in Boise area housing markets is as short sales. This next table groups short sales and foreclosed homes together as a percentage of total active listings. With fewer homes listed for sale, the percentage looks mych scarier than it is- see the next chart below.  

Foreclosed homes, also known as REO's, now represent 9.83% of all homes listed in the Boise-Nampa Metro.  REOs are systematically reduced until sold as-is and have been selling for a large discount.

Short sales now represent 29.76% of all homes listed for sale, up slightly from 29.39% the month before. This sounds much worse than actual, since a third of the short sales showing active do have offers and are looking for more.

Short sale sellers are racing the clock to avoid foreclosure and are often priced well below market for fast liquidation. These fire-sale asking prices affect buyer's perceptions, but may not be real, since the lienholders must approve the sale and will often counter higher.   

 This table was created from MLS data  on the first day of each month and includes all single-family home types, including stick-built homes, homes with acreage, condos, townhouses and manufactured homes on rented lots or with land.  

Another Perspective on Foreclosures

The previous chart does not take into account the lower overall supply of homes for sale.  Looking at them by number, rather than percentage shows a whole different perspective. I should also point out that a large percentage of the short sale homes have offers waiting for bank approval, but show active because they are still taking offers. 
 


The Fundamentals of Real Estate Values- Supply & Demand

Pending homes are a leading indicator on the market. Homes under contract represent next month's sales. Supply is expressed in months to sell inventory at current pace. According to NAR, a 6-month supply is a balanced market.
 Inventory  1-2 months  3-4 months  5-6 months 7-8 months  9-10 months 
 Price Variance  double-digit appreciation  single-digit appreciation stable   singe-digit depreciation double-digit depreciation 

 

There's no mistaking the effects of the tax credit here! Just like the Cash-for-clunkers fiasco, the effects were very temporary and now sales are even slower than before the government got involved. This will not be good for prices over the winter months, which is great for buyers. Following the same trend, look for home sales to strengthen and supply to drop starting in February as the new tax credit deadline (must be under contract by April 30th) approaches.
 
This table covers all single-family homes in the Boise-Nampa Metro, both new & existing, including stick-built homes, homes with acreage, condos, townhomes, manufactured homes on rented lots and maufactured homes with land in the MLS on the first day of the month.
 
You'll notice that the smaller markets zig-zag more because variations make a bigger difference in smaller numbers of homes.
 
 

Ada County, Idaho 

Including the cities of Boise, Meridian, Eagle, Star & Kuna, here's an overview of the supply & demand balance in the county. 



Boise, Idaho

The Boise market should have appreciated with such low overall supply, now near normal, but high percentages of foreclosures and short sales has held prices down. We start the year with a normal supply and slow sales and I expect improvement this year. 
 

These tables cover all single-family homes, new & existing, including stick-built homes, homes with acreage, condos, townhouses, manufactured homes on rented lots and manufactured homes with land in the MLS on the first day of each month.   

Meridian, Idaho 

Perfectly located in the path of growth and aptly named in the center of the valley's population, Meridian has a very bright future. The new construction bubble, which was the worst in the valley here, has diminished.  Supply was very low, now headed up, which is normal for the winter months and good for buyers and investors. 

 


 

Eagle, Idaho 

 Due to record-low mortgage rates, even high-priced Eagle is showing improved supply levels over 2 of the last 3 years.  Half of all buyers right now are first time buyers.  With home prices in Eagle too high for most of them, this is a great place to get a bargain with little competition.  There are many luxury homes in Eagle priced below what it would cost to build and at a fraction of previous values! 

 

Star, Idaho 

Star gets a gold star because there's no better place in the Treasure Valley to find a discount.  It may be time to buy in Star with the lowest supply in 3 years, if you can hold a few years. Prices are way down and the percentage of foreclosures is way up.    



Kuna, Idaho 

Kuna supply levels just exploded in December!  The number of foreclosed homes listed tripled since November, now 26 out of 255 total homes for sale. Short sales actually decreased. What happened?  Sales have fallen by 75% in the last 3 months. The tax credit almost expiring has killed sales here, as the majority of homes are in the lower price ranges and appeal to first time buyers. Plus, I think we are running out of first time buyers.

 
 
 


Canyon County, Idaho 


This table is based on MLS data on the first day of each month and includes all new & existing single-family homes, including stick-built homes, homes with acreage, condos, townhouses, manufactured homes on rented lots and with land.


Nampa, Idaho 

With Nampa's low home prices, the tax credit really heated-up sales here, but its effects have come to a screeching halt. Prices will fall further over the winter as foreclosures/short sales make up nearly half of all homes listed and are still climbing. At least the overall supply is in the normal ranges around 6 months.

 


 

Caldwell, Idaho 

Caldwell sales have also dropped precipitously since the tax credit almost expired. As a result, supply has jumped to normal ranges. On the good side, the number of short sales has fallen 2 months in a row, yet remain at an all-time high at 46% of all listings. The most affordable prices in the metro make Caldwell attractive. You can find positive cash flow here on newer homes as rentals.


 

Middleton, Idaho 

Home prices in Middleton got out of hand during the boom, but being farthest out from Boise, were the last to rise and will be last to feel the recovery in home prices.




Thanks for your interest. Yes, this is all my work.  I serve the following areas for real estate for sale including homes, condos, townhouses, manufactured, acreage, land, lots, horse property, luxury homes, executive homes: Boise, Meridian, Eagle, Star, Kuna, Nampa, Caldwell, Middleton, Mountain Home, Idaho City, Horseshoe Bend, Emmett, New Plymouth, Fruitland, Payette, Weiser, Homedale, Marsing, Melba, Bowmont, Ada County, Canyon County, Gem County, Treasure Valley, Southwest Idaho.

Dan Rowe ABR CRS GRI   (208) 866-3481