Boise Real Estate Market Update - Aug 2020
The median sales price for all homes sold in Ada County in August reached $400,000, the 12.7% year-over-year increase, surpassing the previous high of $390,000 a year ago.
Boise home prices continue to be driven by a shrinking supply of existing homes available for sale compared to demand, more new homes selling at ever higher prices, increased purchase power due to low mortgage rates, and now, buyer activity being compressed into a shorter time period as a result of COVID-19.
First, the number of existing homes for sale has trended down for years now, and there were only 239 existing homes available for purchase at the end of August. This is a dramatic decrease of 72.1% compared to the same month last year, and a record low since BRR began tracking the metric in May 2006.
To further illustrate this imbalance, the months supply of inventory for existing homes in Ada County was also at a record low of 0.3 months as of August. For reference, a balanced market would be between 4.0-6.0 months. This lack of inventory is putting tremendous pressure on existing home prices, which reached a median sales price of $385,500 in August.
Another factor impacting prices is the mix of sales. With fewer choices among existing inventory, many homebuyers are purchasing new construction, increasing the demand in that segment. In August, new homes made up 32.9% of all closed sales, at a median sales price of $444,900. In addition to greater buyer demand, new construction prices are being driven by rising lumber prices. According to the National Association of Home Builders, “The price of lumber has staged a staggering increase in recent months, rising roughly 80% since mid-April… [which is adding] thousands of dollars to the cost of a typical newly-built home.”
Third, the historically low mortgage interest rates are allowing buyers to purchase at higher prices points. For comparison purposes, the rate in August 2006 (the market’s previous peak) was at 6.5% versus 2.9% in August 2020. This has kept monthly payments at roughly the same as what they were during the previous peak in 2006, despite the increase in home prices.
Finally, after a brief COVID-related slowdown earlier this spring, home sales rebounded in August with 1,251 homes closing during the month, up 18.9% compared to August 2019. Interestingly, closed sales year-to-date versus the same period last year were nearly even, with 7,737 and 7,547 sales, respectively.
Off-market new inventory is allowing us to have consistent sales numbers despite low inventory. With so many buyers looking at Boise new construction, builders can sell homes that are not yet built, and therefore, not yet reflected in the IMLS as inventory.
In August, nearly 25% of newly built homes sold were not previously listed on the MLS showed up as a closed sale. This should give hope to homebuyers that while inventory is low, there are options available. Identifying new construction opportunities, in addition to options in the existing market, is just one more way a REALTOR® can bring value to your home search.
Source: Boise Regional Realtors