Boise-Nampa Idaho Housing Market Update

What a difference a year can make! The number of REO homes for sale in the Boise area has fallen 75% from a year ago. The number of distressed homes- short sales listed for sale monthly dropped by 30% during 2011.  These barriers to rising home prices are receding and the possibility of prices falling further- extremely unlikely, since the overall supply of homes for sale in the Treasure Valley has dropped almost 50% from a year ago, now less than a 3-month supply at the current pace of sales.

Based on these facts alone, buyers and investors should be feeling much more confident in Boise area real estate. It's the perfect time to buy- just past the bottom of the price cycle and before consumer confidence returns to normal. I predict rising home prices this year in the Boise area, based on a combination of short housing supply, stronger demand, and a dramatic reduction in short sale inventory I see coming in the next few months.  

Adding to this equation interest rates near record lows and Boise metro home prices down 40-50% from the peak and below pre-boom levels, the potential for long-term wealth creation through real estate is huge. I am excited at the prospects for my buyer clients in 2012!

Quarterly Median Home Prices By County

A very strong 4th quarter!

In a typical year, prices rise and fall in direct correlation with seasonal changes in sales activity. Prices are strongest in the 2nd and 3rd, weakest in the 1st and 4th quarters.

The median existing home price in Ada County fell only $1000 during the 4th quarter. Canyon County's actually rose a thousand!

Median prices are a reflection of what's selling and right now it's the cheapest property. The majority of sales are first-time buyer or investors buying low.  Of all homes sold in the Treasure valley during 2011, nearly 20% were distressed short sales. In Ada County, over 28% of all homes sold were foreclosed homes priced for liquidation. In Canyon County, 45% of all homes sold were repos. This high number of "abnormal" sales are a major drag on prices, but we still ended the year higher. 

Caution! You should never use median prices to judge the value an individual property. Ask me for a free market analysis and I'll use my 20 years of practice to give you a real number, based on comparable sales and competing homes. 

Monthly Solds By County

The pace of home sales has been improving since 2007 in the Boise area and this is real growth with no help from temporary tax credits. These gains in home sales have been driven by record low interest rates combined with low home prices to make the best affordability conditions in decades.

A little history- Prior to the 2007 real estate market peak, Idaho was one of the top 3 fastest growing states in the nation for 3 years running. Builders could not keep up with demand and housing supply was super tight. This drove home sales to record highs and prices up by double-digits during the height of the boom. Based on population growth alone, I would expect a "normal" level of home sales in the Boise area to be at least 20% higher than now.  All we need is jobs to bolster consumer confidence and burn off these short sales and repos.

Foreclosure Saturation in Boise Idaho Metro Area 

This chart clearly shows the foreclosure bubble in the Boise area. Don't be fooled by the percentages- many fewer homes are for sale overall in or near Boise- see the next charts. Also, fewer homes are entering the foreclosure pipeline in the Boise area. While dropping, there are still many default notices in the Idaho Statesman, representing homes entering the lengthy distress/foreclosure process. We see distressed sellers in the MLS first as short sales, as troubled owners (many in default on mortgage) try to quickly liquidate and get the lender to accept less, rather than lose the home to foreclosure.  

The largest roadblock to rising home prices near Boise are these short sales- a huge drag on overall prices for two reasons. 1. Lenders take too long to approve offers and these homes continue to show active in the MLS at a low price months after an offer has been accepted, skewing lower buyer's perceptions of asking prices. 2. These fire-sale asking prices may be deceptively low as most lienholders counter higher when they finally do respond to a short sale offer.

The good news is: Nearly half of all the short sales showing active today have offer(s) waiting for lender approval and the majority of those are effectively sold.

More good news: Lenders are doing a much better job liquidating foreclosed homes- shorter market times on REO properties have much less effect on prices in the overall market and on surrounding homes.    

 

  Look at how the number of all homes for sale has dropped dramatically since the peak- over 50% in 4 years. Also, notice that in Ada County short sales, representing owners in distress and future potential foreclosures entering the pipeline, peaked nearly 2 years ago. Foreclosed homes being resold at the end of the repossession process peaked last winter.

This is all the proof I need to say that the worst of the foreclosure bubble has passed. For the future, much depends on employment, but with these record low interest rates, low prices and the best home affordability conditions in many years, I don't see foreclosure levels climbing to previous heights.

 

The Fundamentals of Real Estate Values- Supply & Demand Drives Prices

Pending homes, a leading indicator on the market, are homes under contract that 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 where prices would be stable.

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

 

This chart clearly says prices are about to rise! Remember less than 6-month supply of homes in a normal market means rising prices.  The main ingredient for appreciation is in place.  The Treasure Valley as a whole now has only a 2.82-month supply of homes for sale to start 2012. Prices would be rising based on supply (they already are at the low end in Ada County), but we can't call this a "normal" market with historically high levels of unemployment, foreclosures and short sales.

 

 

 

Ada County, Idaho 

Including the cities of Boise, Meridian, Eagle, Star & Kuna, here's an overview of the supply & demand balance in Ada county. The supply of homes for sale in many parts of Ada County is now lower than it ever was during the boom. This will cause home prices to rise. I see no relief in sight for the low supply, since existing home prices are below the cost to build and many potential sellers are upside-down and locked in place, until prices do rise.

Boise, Idaho

The Boise home market, always the strongest in the Treasure Valley, will be the first place we see strong appreciation in home prices. Look how few homes are for sale. Housing supply is lower than the boom years. This will drive appreciation as the economy improves. REO inventory in Boise has fallen from over 320 last winter to just over 70 today, which is 5.73% of all homes for sale. Short sales now represent 28.3% of all homes for sale in Boise, unchanged since November, but remember many fewer homes are for sale. 

 

   

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 supply of homes at 3.13 months is down by almost half from a year ago. As of January 1st, there were 158 short sales and only 30 bank repos for sale in Meridian, out of over 525 total homes for sale. This is a huge improvement in just one year and a great sign of market recovery! 

 

 

Eagle, Idaho 

 Eagle is showing remarkably low and stable supply, after a tumultuous few years.  Eagle is one of the higher-priced areas in the Treasure Valley and low rates and great deals are attracting those lucky buyers who can afford it.  There are many luxury homes in Eagle priced well below what it would cost to build and at a fraction of previous value.

 

On January 1st, out of 210 homes for sale, only 48 are short sales and only 4 are repos.  The worst is definitely over for Eagle's home market- it's time to buy before prices rise! 

 

Star, Idaho 

Star's supply of homes appears to have stabilized also.

On January 1st, out of 107 total homes for sale, only 4 were repos and 24 were short sales.

Kuna, Idaho 

Kuna has the lowest home prices in Ada County and is an affordable option for many just ten minutes south off the freeway at Meridian.

As of January 1st, there were 131 total homes for sale, 53 short sales and only 11 repos.  At the current pace of sales, there's only a 2.43-month supply of homes, making a bargain much harder to achieve. However, based on current price levels, you could say everything is a bargain!           

 

 

 

Canyon County, Idaho

I focus on the metro area-  Nampa, Caldwell & Middleton.  The market in Canyon County is more heavily affected than Ada County by short sales and repos. Just under 50% of all homes listed are short sales or REOs, with REOs making up 7.96% of all homes listed. The good news is supply levels are very low- only 2.33 months- a great sign of a coming recovery. Buy low while you can!   

 

Nampa, Idaho 

Nampa has the 2nd highest percentage of foreclosures in the county, behind only Caldwell. As of January 1st, 50.5% of all listings are short sale or REO in Nampa. If you can't wait months on a short sale, then check out the plentiful REOs, down to 7% of all listings in Nampa. Overall housing supply is low in Nampa- only 2.36 months, but it will take some time to burn off the repos and distressed sales before home prices rise. 

 

 

Caldwell, Idaho 

Caldwell is home to the most affordable prices in the Boise Metro and has the highest percentage of short sales/repos. Now 54.2% of all homes listed in Caldwell are short sales(46.2%) or bank-owned(8%). Despite this, Caldwell has only 2.43-month supply of homes overall based on the current pace of sales.  

 

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. The good news is- supply is low again. Only a 1.63-month supply of homes on January 1st- it doesn't get much tighter!

Out of 75 total homes for sale in Middleton, 26 were short sales and 4 were repos on Jan 1st. 

  All charts are based on MLS data, deemed reliable but not guaranteed, searching all single-family homes in the Boise-Nampa Metro, new & existing, including stick-built, homes with acreage, condos, townhouses, manufactured homes on rented lots and with land.

Thanks for your interest. Why settle for just an agent?  I am a broker, licensed in Idaho, and Realtor specializing in residential real estate for sale including homes, condos, townhouses, manufactured, acreage, land, lots, horse property, luxury & executive homes, serving Boise, Meridian, Eagle, Star, Kuna, Nampa, Caldwell, Middleton, Ada County, Canyon County, Treasure Valley, Southwest Idaho.

Dan Rowe ABR CRS GRI, Broker   (208) 866-3481

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