Is Negative Equity Boosting Boise Home Prices?
Real estate is all about supply vs. demand.
When there are more buyers than sellers, prices tend to rise.
Likewise, when there are more sellers than buyers, prices tend to decline.
The Boise real estate market is currently in what we call a “seller’s market”; meaning that sellers have greater control than buyers.
Before you get too excited, please note that this scenario exists mostly in the under-$200,000 end of our market that comprises roughly 60% of all sales.
The primary reason for this “seller’s market” is a serious lack of listing inventory in the lower price ranges.
And, one big reason for that lack of listing inventory is the fact that about 1 in 4 potential sellers remain “underwater” and unable to sell without bringing money to the closing table.
Which, in turn, results in the unintended consequence of negative equity actually contributing to higher home prices.
I wonder how long this phenomenon can be sustained?
July 22nd, 2012 Posted in Inside Real Estate
Print This Post
2 Responses to “Is Negative Equity Boosting Boise Home Prices?”
By Damon Dickson on Jul 27, 2012
Are you saying that the market prices are artificially high because there are fewer sellers willing to lose money to match appraisals? I wonder if appraisals are where they should be in Boise?
By philhoov on Jul 27, 2012
Hi Damon ~
Thanks for your comment.
The premise of the post is that negative equity prevents some sellers from selling, thereby depriving the market of listing inventory, which in turn leads to a supply vs. demand imbalance.
When there are more buyers than listings, prices rise.
I am not saying that prices are artificially or low ~ prices are determined by market forces; in this instance supply vs. demand.
Appraisals come after the price is established by buyer and seller.