The Boise Real Estate Market For June 2011

Although Boise home sales are down 6% vs. June 2010, sales are actually up 6% over last month (May 2011). Remember that last year during March, April, and May first-time Boise home buyers, as well as buyers across the nation, were receiving Federal tax credits. The best year to year comparisons will come near the end of the year when last year's tax credit won't be a factor.

For the past 18 months, distressed home sales have greatly impacted the Boise real estate market. In June, short sales made up 15% of the total sales and REOs (bank owned properties) accounted for 29%. In total, 44% of all Boise home sales were distressed. The impact on the overall real estate market is immense. Because almost half of all home sales are distressed, prices continue to drop. The good news is that the percentage of distressed homes is actually dropping. In December 2010, distressed sales accounted for 61% of total Boise real estate market. Incidentally, only 16% of Boise short sales are successful.

Six years ago, a Boise real estate professional began measuring a home affordability Index. At that time the index was at 19%-- indicating that it took 19% of a median Boise income to buy a median priced home. At the height of the real estate bubble, in June of 2006, that index had risen to 30%. In the past five years, that index has fallen to 13%.

The median cost of a Boise home is $150,000 this month. This is 5% up from last month. Interestingly, the median cost of a new construction home sold is nearly $240,000, indicating that most of the new construction is higher end housing. At this point, comparatively few first time buyers are choosing new construction options.

If one looks only at resale homes in the Boise market, the median priced home sits at $138,500-up 2% from last month's numbers. The record low was in January 2011 when the median resale price dropped to $126,500. Is that the bottom? Probably so, barring a major shock to the Boise real estate market.

Prices will rise only when home inventory levels are depleted enough to upset the supply / demand balance. Real estate inventory is falling-indicating that we are potentially on the way to a market recovery. In June of 2011, housing inventory was 32% lower than June 2010. Resale inventory is down even further. In June 2011, there were 1,970 available homes vs. 3,129 available homes a year ago. That's a whopping 37% drop in only 12 months.

Why are available homes so hard to find? In a market like Boise's, where values have plummeted for over five straight years, most potential sellers won't sell unless they absolutely have to. As a result, as buyers purchase the available short sales and REOs, inventory levels drop. Eventually, buyers will bid Boise home prices up in an effort to obtain the relatively scarce resources. Then sellers will return to the market.

Price discounts in Boise home sales are of interest to both homebuyers and sellers. A discount is simply the difference between the final sales price and the home's asking price. The average discount was about 2.3% in June 2011--about where we were twelve months ago. A low discount rate does indicate higher home prices. It just shows that Boise home buyer and sellers are agreeing more readily on where fair market real estate values lie.

By: Todd McCauley

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