Did The Boise Real Estate Market “Over Correct”?
Have you ever noticed that markets (all types) tend to move to extremes, then revert to a more reasonable mean?
Just as the Ada County median price of $248,900 in July 2006 was overly-optimistic, so was the overly-pessimistic $135,000 median price of May 2011.
That’s a 45.8% decline from the peak and an obvious over-correction.
Our April 2012 median price came in at $158,777 ~ a healthy 17.6% over the $135,000 low of May 2011.
After spending the past five years reversing course to “the bottom”, it’s now apparent that the Boise real estate market overshot both our high and low points.
We are now experiencing a strong rebound from our low point (that elusive “bottom” everyone was looking for and missed), much like a rubber band that has been released after being stretched to its limits.
Our recent strong activity in the lower price ranges is not surprising, given the combination of a strong rental market, affordability, and low interest rates.
At some point, however, our market will stabilize as buyers and sellers achieve a reasonable semblance of balance.
A balanced market (where both buyer and seller have an equal amount of bargaining power) is best in the long run.
As we learned a few years back, Ada County cannot sustain 24% annual appreciation without severe consequences.
Data pertains to Ada County single-family homes on lot/acreage. Data does not include condo/townhome properties.
May 21st, 2012 Posted in Boise Market Stats
Print This Post
2 Responses to “Did The Boise Real Estate Market “Over Correct”?”
By love on May 22, 2012
We have definately hit bottom and bounced in Boise. Only point that should be made is that it is predicated on interest rates staying at this level and no/low money down loans being pushed by .gov. If either of those two changes all bets are off.
We are currently at the bottom for interest rates, and we have basically a sub 3% down market if you look at closing assistance. I don’t believe this is sustainable. Folks buy on payments and these two factors make afforability relative to income not bad in the market…
We can keep this up as long as deficits and debt continue to not matter as we are looking better than the ROW at the moment. We will see how long this lasts. If we ever go back to normal sense in the gov and mortage markets with 10-20% down and 8% rates the market will be crushed again…but our ability in the USA to postpone physical prudence should not be underestimated
By philhoov on May 22, 2012
I would agree that the majority of mortgages in the under-$200,000 price range are FHA or IHFA loans with low down payments.
As you progress higher in price, we are seeing larger down payments.
With multiple offers, often above the asking price, we are seeing seller-paid buyer closing costs diminish because the property will not appraise if you increase the price too high.
60% of our sales are under $200,000 at this time ~ down from nearly 70% a year or so ago.
I also concur that interest rates will rise, but not until we see improved economic conditions.
The federal government has no incentive to increase down payments and make it more difficult for buyers to purchase homes.