Bill Williams

As beautiful as it is, the snow has definitely added to the chill on the Treasure Valley real estate market this January. Only 302 Single Family homes sold in all of Ada county during the month, down from 464 a year ago. The Valley as a whole saw only 434. There is just no way to spin that into good news, especially if you are a seller. Inventory has stopped decreasing as well. There were 3898 active SF listings in Ada this morning, which is nearly identical to the level we had at this time last February. In talking to other agents and to sellers this past two weeks, showing activity seems to be down quite a bit, due to the snow.

There are two encouraging signs right now. The first is that many investors, as well as many homeowners who do not have to sell right away, are taking their properties off the market. Although this is holding rental rates in check as more investor homes get re-rented and come off market, it is a step we need to go through in order to work through the inventory and firm up sales. We'll have to watch how that changes as the weather calms down. Perhaps the homeowners will re-list later in the Spring? The second positive sign is there has been an increase in pending sales over the month. Currently there are 500 pending sales, which is about 25% higher than at the beginning of January, so although activity seems off, the numbers show that there are buyers finding homes to buy.

Price has been the big issue for both buyers and sellers lately, and it is especially important for the sellers. It is true there are buyers out there that are writing what some sellers feel to be insulting offers ($80,000 offered for a $160,000 home? Yes, that IS insulting). Those don't fly in any market, not even this one. But it is also true that many sellers aren't hearing what the market has to say ($360,000 asked for a home assessed at $289,000? Not going to happen). You will not get a 2006 price for your home. And while we haven't seen declines like other parts of the country, in most neighborhoods I've looked at recently, prices no longer command a 1.2 to 1.4 premium over the assessor's tax valuation (some areas are selling below now). If you need to buy or sell right now, it is not the time to be a do it yourselfer, especially when it comes to pricing your home.

I wanted to make a little closer look at the numbers for last year, now that we're into January. In Ada County we finished 2007 -34% in homes sold compared to 2006, and off 33% in total sales dollars. For the year, the median price was off 2%, most of which happened in the last few months as the mortgage problem reared its head and gave us all fits in the Fall.

I've mentioned New Construction inventory being steadily worked through, and that our area hadn't overbuilt to the same degree seen in other markets in the country. The end of the year numbers bear that out. In February of 2007 we had nearly 1800 new construction homes listed in Ada County. At the end of December we had 1168. That is quite an improvement, and it is reflected across all price ranges too, except the over $1M range, where sales are running only 1 or 2 per month for both new and resale (but do you remember when a $1M property was a rare thing here? It wasn't that long ago!) And in the underr $200K range we have been building inventory since last Spring, although, as you mught expect, there is still pretty good demand in that range.

Existing inventory is showing an increase since January/February of last year, although the current total is below the Summer peak in August. Last year at this timethere was about a six month supply in Ada County homes for sale over all prices, and right now it is about 11 months. Watching the inventory numbers overall shrink but the "absorption rate" increase, you can see how the real estate market has slowed.

These numbers only tell the broad outline, they don't tell the details. In the under $200K range there is a 5-7 month supply, while over $700K the supply is nearly 3 years. By comparison, some areas in Florida have a nearly 10 year supply! The big numbers also don't show the details across the county by area. Star has too much inventory in all price ranges, both new construction and existing homes. Eagle inventory over $300K is high, but Kuna is even higher, mostly in existing homes. As you might guess, North Boise under $300K is still moving a little better than the rest of the county, and Northwest Boise is almost as good, followed by the Bench area under $300K.

Meridian is a big area, and it is of course a mixed bag. Most of the inventory, both new and existing, is in the Northwest and Northeast parts of Meridian, where the supply right now is about 9 to 12 months. South of the freeway has fewer homes for sale, but fewer sales as well, so the supply is a bit longer, with the higher end homes in the Southwest side having the greatest supply in terms of time needed to work through it.

Are there any bright spots right now? Anecdotally, there is more traffic in the subdivisions and open houses again. Inquiries from out of state have picked up as well. Interest rates are lower this January than they were in 2007, and my lenders tell me there are still good programs out there. And while it is not a "hot" market, we've seen a jump in pending contracts over the last 10 days, from 366 to 426 this morning, which is the first pop we've seen in awhile, so we'll take it.

As expected, December home sales have come in as the lowest in 2007. Single family homes in Ada County for the month totaled 372, according to MLS data. That compares quite favorably to November's 388, but it is still 38% fewer than December a year ago, and for the year leaves us down about 36% compared to 2006.

The bright spot in the latest numbers is again the decreasing number of active listings. This morning there were 3781 homes listed (not counting condos, townhomes, or properties with acreage). This is the lowest inventory we've seen in a year, and marks 5 months in a row of declining inventory. I haven't finished all of the numbers yet, but the decline in resale homes will likely again be slightly greater than the decline in new construction listings, due to the continued very low rate of new spec building in the valley.

January will be another slow sales month, both traditionally, and by looking at the current number of pending transactions. Pendings are as low as they've been all year, currently 366. We'll have to pick up the pace to catch January '07's 464 Solds, but a 35% decrease would result in fewer than 300 sales for the month. It'll be interesting to see what comes about.

The Treasure Valley has held up much better than the National market. Our foreclosure rate is less than 1%, and many of the short sales I've heard of are people who tried to be investors and bought late in the cycle and now cannot get out on the positive side. Live in homeowners don't seem to be as hard hit here at this time.

It continues to be a buyers' market, although there are still sellers who are not realistically priced, as there are buyers who are truly looking for the "steal of a deal". We seem to have hit a spot where everyone is waiting to see who blinks first. Buyers, don't be afraid to step up, as interest rates are still low, but your choices are more limited now than they were 6 months ago. Sellers, be realistic on your price, and be competitive, because well priced and well presented homes are selling.