We’ve all noticed the large number of apartments being built to serve the middle to the lower end of the housing market. Right now there are over 1,200 units under construction in Ada County. That leaves the middle to the upper part of the housing market for purchases.
Are we becoming an upper-end housing market? Last December, we sold 972 homes with an average price of $491,087. This December, we sold 6% more homes at an average price 25% higher at $613,146. The total volume went up 33% from December 2020 to December 2021.
Although we sold 13% fewer residential properties in 2021 than we did in 2020, the average price was 32% higher so total dollar volume for the year was 15% higher than 2020.
The chart below compares 2021 performance with 2020 performance and the 20-Year charts show the trends in inventory units sold and average prices for the past 2 decades.
The correction to our overly hot housing market continued through November with unit sales 9% lower than they were in November 2020. The slide in the number of transactions was caused by the rapid acceleration of prices. The average (at $609,206) and median (at $525,000) prices this November were both 26% higher than they were last November. Median days on market, at only 12, were 3 times higher than they were last November.
Pending contracts (transactions in escrow that have not yet closed) were 11% lower than they were at the end of last November, leading us to expect slightly lower unit sales in the next several months. As a corollary, inventory has doubled in the last 12 months although we still have only one month of available homes.
Existing homes, which make up 76% of November sales and 55% of November ending inventory, are still selling for about 12% more than new homes on a square foot basis, a reversal of the statistics in more normal markets.
Please click on the link below to read Fortune Magazine’s article on how national home prices have started to decelerate, which will have to happen here if local sales units are to increase.
The Ada County housing market continued its slide in October; year-to-year unit sales, the most important statistics to follow, were down by 17%. The next most important statistic is the number of pending sales, a predictor of the near-term future, which was 20% lower than it was at the end of last October.
The slowing market produced a level of inventory 243% greater than at the end of last October. The inventory of new homes increased just 45% but the inventory of existing homes increased 435%, perhaps reflecting the interest of many homeowners in cashing in on the last several years of appreciation. Despite the increase in inventory, there is only a 39-day supply of available properties.
Why is the market slowing? Prices, of course. The average price of properties sold this October, at $603,000, was 14.8% higher than the properties sold last October, and the median price, at $525,000, was 18.5% higher.
The per square foot sold price of existing homes at $272 was, amazingly, 13% higher than the per square foot sold price of new homes. This price difference is the reverse of more normal markets in which newly constructed homes sell for more than existing homes. The graph below shows month-by-month unit sales from January through October for 2020 and 2021 so you can see how the market has moved over the last two years…
We usually report on all the major housing choices buyers face in our market including single-family detached houses as well as condominiums, townhomes, and homes on acreages. For this report, however, we are focusing on just single-family detached housing.
Ada County housing unit sales in September were 20% lower than they were last September, and pending contracts were also down 20% lower compared to the end of last September. This should mean lower same month sales in the next several months. As you can see from the chart below, unit sales began to slow beginning in June, and average and median prices began to fall beginning in July. Unit sales in the last 4 months were 24% lower than they were a year ago for those same months and inventory has doubled, from 21 days to 42 days.
Average and median prices rose 32% from October 2020 to July 2021, a period of 9 months. That kind of month-to-month price escalation is untenable.
August saw the continuation of the Ada County market slide that began in July. Closings in August were 29% lower than closings last August. Pending contracts, which are the best indicators of the near-term future, were also down 19% compared to the level of pendings at the end of last August.
As a result of the decrease in
sales, inventory has increased by a factor of 322% since the end of last
April and by 171% over the last 2 months, increasing from 21 days of
inventory to 39, still quite low compared to a “balanced” level of
approximately 180 days.
In the week preceding this report, almost
90% of the price changes in the market were decreases. The chart below
shows the number of sales and the average prices for each month’s sales
for the last 12 months.
Anecdotal evidence from our agents (commenting on fewer
showings on listed properties, fewer people attending open houses, etc.)
has been backed up by recent results. Unit sales were down this July
compared to last July by 29%, the highest reduction of same month sales
in the last 14 years (see the chart below). Pendings – contracts in
escrow at the end of the month – were also down 18% compared to the
level of pendings at the end of July 2020. Pendings, of course, are the
best predictor of near-term future sales.
Part of the reason for the slowdown
is that the average price of properties sold this July ($624,881) was
43% higher than last July. The median price ($535,000) was 40% higher.
An aftereffect of lower sales is
higher inventory. Ada County housing inventory at the end of this July
grew by 19% compared to the level of inventory at the end of July 2020.
Despite that increase, we still have only 30 days of available
residential properties, far from an over-supplied “buyers’ market”.
What should we do? Sellers, if this trend continues, future prices
may be lower than current prices so, if you’re thinking of selling, now
may be the best time. Buyers, make sure the prices of potential
purchases make sense to you. A professional Group One Sotheby’s agent
can help in that regard.
The chart below shows the record of same month July sales for the last 14 years:
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down, pendings down, prices up. Sound like 2007? The question often
heard is, will we repeat 2007-2009 again? The number of units sold and
the number of pendings during the first 6 months of this year are both
down compared to the same statistics for last year. And yet prices are
up. In 2007, this same pattern led to a major correction in 2008. Will
that happen in 2021?
chart below shows that the first 6 months in 2021 are similar to 2007
when unit sales were down, pendings were down and prices were up. The
same pattern is evidenced in the first 6 months of 2021. Although there
are similarities to 2007, there are some major differences. In 2007,
the inventory of available homes was high, while this year inventory is
very low. In addition, the equity in homes today is much higher than
2007 when there were many “no doc” loans which created a risky profile
of existing inventory.
there are similarities today to what the market was like in 2007, we
can witness several trends, such as solid loans and low inventory, that
protect us from another downfall.
The chart below presents a deeper dive into the current Ada County real estate market.
A state-of-the-art fireworks display is set to make its return to the city of Boise, in Ann Morrison Park!
“We have made huge strides in recent months in the fight against COVID-19 and I can’t imagine a better way to celebrate our citizens’ resiliency than with a state-of-the-art firework display for all to enjoy,” said Mayor McLean.
The fireworks display will begin at 10:15 p.m. (dusk) on July, 4th, Independence Day. Ann Morrison Park will be closed to vehicles, but people who plan to watch the fireworks are welcome to walk or ride a bike into the park throughout the day. Outside food and drinks will be permitted in the park, with the exception of glass bottles or containers. No alcoholic beverages are allowed within 250 feet of the Boise River Greenbelt. It’s also requested to leave your drones, pets, and fireworks/sparklers at home.
Sotheby’s International Realty is pleased to announce that it is the No. 1 real estate brand represented in the 2021 REAL Trends “The Thousand” Individuals by Sales Volume list. Year after year, the brand continues to have more sales associates represented in the rankings than any other real estate company, accounting for 20% of the category in 2021. The annual report ranks America’s top 1,000 residential real estate agents and teams based on 2020 annual sales volume and transaction sides.
Sotheby’s International Realty claimed 50 of the top 250 sales associates in the REAL Trends individual sales volume category.
“Sotheby’s International Realty continues to build off the momentum of a record-breaking year in 2020,” said Philip White, president and chief executive officer. “Sotheby’s International Realty leads the industry in the individual sales volume category and the rankings exemplify the hard work and achievements of our sales associates and teams across the country. Their performance made significant contributions to the brand’s record US$150 billion in global sales volume last year and we are proud to count them as ambassadors of the Sotheby’s International Realty brand.”