Boise Real Estate Market Update – Feb 2021- Don’t be fooled by headlines
I’m expecting some exciting headlines this month based on the latest Boise real estate reports coming in for the Boise real estate market, and it’ll be easy to spin some of this information.
So I’m going to tell you what the numbers are, and then I’m going to tell you what they mean and what they don’t mean.
Boise real estate sales are down this month (considerably), down 33% compared to last month (December). And they are down, almost 20% from January 2020.
What does that mean?
Does that mean that the Boise housing market is finally starting to shift?
You could make that story, and I’m confident I’ll see that headline in the news this week. It would be easy to create a story based on this drop in sales as the beginning of a new shift in the Boise real estate market.
And we should all be concerned about this possibility, but that’s NOT what is happening here in Boise, and I will explain why.
Boise housing that is under contract but not yet closed (Pending Sales) is up close to 30% in the Boise market.
Therefore, even though home sales were DOWN 30% this month in Boise, pending sales are UP almost the same amount.
What does this mean?
It means a lot more home sales are coming, and therefore, no market shift or slow down is currently happening (yet). There is plenty of people wanting to buy houses, and when they can, they are taking action. But the lack of supply is causing some homeowners to have to wait longer than they would prefer, which can be a painful process as home prices continue to be driven up. (See below for more details on housing prices).
Lack of Supply
(Record low inventory of homes for sale on the market)
The low supply of homes available in the Boise real estate market has been a story for over two years. Last year at this time, the supply of homes for sale was historically low, but now, it’s darn near non-existent. Sure there is a few homes on the market. But they are selling extremely fast with multiple offers. Any home priced under 500,000 that is still on the market after a week is likely well overpriced or being marketed horribly.
The number of homes listed for sale today is 75% lower than last year at this time.
That is not a typo. To be down 75% from last year’s historic lows is beyond crazy. I’ve never seen this in real estate before across an entire market.
What does it mean?
It means that even if the local or national economy causes an immediate slow down in home buying, AND people stoped moving to here, it would take a minimum of six months, (but more likely a year or two) to reverse this record-low housing supply in the Boise market.
In other words, don’t bank on home prices dropping anytime soon. I’m not saying it wont happen, (it will eventually), but not in the short term.
When you have more homes on the market than people want to buy, it becomes a buyers market. Sellers start competing with each other to have the most attractive price; that is when you begin to see home prices come down significantly.
In the summer of 2008, there was over 5,000 homes for sale in Boise real estate market. Now, there is less than 500.
Do you see why we can’t expect home prices to drop anytime soon?
The lack of affordable home options in the Boise real estate market is only going to get worse. Boise is not the only market experiencing this issue, but Boise is definitely leading the pack when it comes to recent home price increases in our market.
Shocking Increases in Home Prices
Year or year home price increases across the valley are up $100,000 on average! That is not a typo either. Driven but high demand and radically low supply over 12 months have caused explosive increases on home prices.
What does this mean?
First off, this doesn’t necessarily mean your home is worth $100,000 more in one year. But it does mean that your home is worth a lot more now than it was last year. (Watch the video for more details about this).
Regardless, the average price of what people are buying across the valley has increased 100k (roughly 30%) in 12 months, and it’s causing ripple effects across the valley.
MILLION DOLLAR QUESTION
When will the Boise housing market cool down to drop home prices?
I’ve already explained that it won’t happen anytime soon, but eventually, home prices will go up enough to where a lot more homeowners will choose to list their home for sale to cash out on their equity, which will increase the supply and stabilize the market, but it’s not clear yet when and how long that will take.
CRITICAL NOTE: The supply of homes on the Boise real estate market would likely need to increase more than 500% from where it is right now to see home prices soften and drop to lower levels.
These are crazy times indeed. If you are trying to making important real estate decisions in this climate, don’t hesitate to reach out to me. My advice is free, and comes with 15+ years of study of this local market.