Boise Real Estate Blog

Looks like Mikey isn’t eating what he’s being served, based upon current Intermountain MLS data.

Check out the eye-popping disparity between what’s for sale and what’s actually selling in the Boise real estate market!

Available Properties

• 4,653 homes (on lots/acreage)
• Average asking price = $371,007
• Median asking price = $299,500

Closed escrows September (month-to-date thru 9/28)

• 600 homes (on lots/acreage)
• Average selling price = $278,256
• Median selling price = $242,200

Comparisons:

• Average selling price is $92,751 less than the average asking price.
• Median selling price is $57,300 less than the median asking price.

Looks like Mikey is a picky eater indeed!

(data pertains to Boise real estate market, Ada County, single-family homes on lots/acreage)

A recent report by Charles Schwab & Co. detailed the tight connection between the Housing Market Index and the S&P 500, as illustrated by the following chart.

Five years ago, the Federal Reserve was determined to keep the popping of the internet bubble, the economic recession, and the aftermath of 9/11 from turning into a self-reinforcing collapse.

Short-term interest rates were lowered to 1%, banks encouraged mortgage holders to refinance and withdraw equity, lending standards were lowered, and a rash of new adjustable mortgage (ARM) products were introduced.
All served to fuel speculation in residential housing, thereby boosting prices to an unprecedented level, which in turn reinforced more specualation.
The increase in real estate prices spurred increases in personal net worth, which in turn fuled a consumption boom and sustained economic growth.
And, with demand came more supply.

The report further noted:

• 32.6% of new mortgages and home equity loans in 2005 were interest-only; up from 0.6% in 2000.
• 43% of first-time borrowers (25% of ALL buyers) in 2005 purchased with no down payment.
• 15.2% of 2005 buyers owe at least 10% more than their home is worth.
• 10% of all homeowners with mortgages have no equity in their homes.
• $2.7 TRILLION in loans will adjust to higher rates in 2006 and 2007.

One of the last remaining vestiges of the real estate boom has been sustained mortgage equity withdrawals (HELOC’s), providing ready cash that has continued to spur consumer spending.

To many economists’ surprise, mortgage equity withdrawals have remained high, thereby sustaining consumer spending.  The ultimate danger, however, is that these equity withdrawals will eventually end and thereby cause a collapse in consumer spending.

The report goes on to say that the housing industry is more important to the overall economy than many are currently assuming.

The harder housing falls, the harder it will be for the economy to land softly.

Sobering stuff indeed.

As of this morning, we have 4,534 single-family homes on the market in Ada County.

The average asking price is $370,910; the median asking price is $299,000.

This represents a 50% increase in listing inventory since June, when 2,978 single-family homes were on the market.

Our listing inventory has tripled since January, when we had approximately 1,550 homes for sale.

We are adding about 300 homes to our listing inventory each month; if this trend continues through the winter, we will have 6,000 homes for sale by next Spring ~ quadruple the listing inventory of a year earlier.

7,811 Ada County homes have closed escrow year-to-date, indicating an average absorption rate of 822 homes closed per month, resulting in a 5.5 month supply of listing inventory.

It is interesting to note the average asking price for a home in Ada County remains at $371,219 while the average closed price is $267,384.  This doesn’t mean that the average seller is conceding $100,000+ to sell their home; it means that the mix of homes actually selling is below the average asking price.

I am seeing a lot of price reductions, seller-paid buyer’s closing costs, and offers of bonus commissions to buyer agents!

This is good news for buyers, but many sellers have yet to realize they are now in a buyer’s market.