The Boise housing market is hot right now, WHY are so few sellers taking advantage of it right now?
On the FS Brokers radio show, [which airs live every from on 89.9FM and 93.5FM] last week, we discussed WHY we think inventory levels are so low. Here is an audio clip from that show.
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If it is such a good seller's market right now, why aren't more sellers listing their home for sale?
Here are four main reasons:
- A lot of people are looking for houses. There are still a lot of people moving to the Treasure Valley. Early summer is peak season for home sales. Demand is high right now in the Boise market -- and that's not true nationwide, so we should consider ourselves lucky. Demand is keeping inventory down.
- Many homeowners are not ready to sell . . . yet. If it's so easy to list and sell a house, why aren't more people doing it? For most people, their homes are simply not worth enough -- yet. Housing prices have largely recovered from the recession, but there are so many homeowners who bought in '05, '06, '07 . . . '08. After the market crash, home prices have slowly risen back to the value of most homes, just not far enough above value to make most homeowners want to sell.
- Builders are more conservative than they were pre-bubble. From 2001-'07, before the housing bubble burst, 30 to 40 percent of all home sales in the Boise area were new construction. New construction bottomed out after the market crashed, around 2011. It's been slowly rising, but even today new construction accounts for about 20 percent of home sales. That means a lot more people are buying resale (existing) inventory. Builders are more conservative now. They're not building as many spec homes as they did pre-bubble, which limits the total number of home sales in new construction, and effectively keeps the overall supply of homes for sale down.
- Home Buyers and Sellers are still licking their wounds. They remember the housing bubble and plummeting property values of only a few years ago. They're being a lot more conservative this time around. It's more difficult now to get financing, but there are plenty of qualified buyers. Buyers are proceeding with caution, being careful not to make the mistakes they made, or saw others make, in the past. There are a lot of homes sitting on the market today that are NOT selling. The reason: buyers are weighing their choices carefully and only acting when they find a good value. They want to buy smart. The frenzy you may see is happening in pockets around these homes that come on the market that priced right compared to other homes that are available. Sellers are being cautious too. They are not listing their home because they are not seeing the right options on the market for them to move into if they sell. Plus most sellers are enjoying a very low-interest rate on their home. They don't have any urgency to move yet. Hence housing inventory remains low.
Having a housing market that has a very low supply of homes for sale is typically considered a positive thing because it means the local housing market is very healthy and poised to see values increase.
The best part about the Boise housing market today is that we are seeing steady growth in our market, but without the crazy increases in home prices we saw pre-bubble. Buyers, Sellers, and Builders are for the most part being more cautious today, then they were 10 years ago. That is allowing a strong robust housing market to flourish without it getting too overheated. At least so far...