Boise Idaho Real Estate Market Update
The Boise real estate market seemed to flatten over the holidays. Not much happened with interest rates, homes were still selling but at a declined pace, and home prices leveled off after the exciting 16% jump witnessed over the previous 12 months.
As we close out 2013 and begin our transition into 2014, however, things are starting to pick up. TripleCord Real Estate has already seen a heavy increase in the number of phone calls from buyers and sellers looking to make a move in 2014. Given that we are such a small brokerage, I can only imagine that other brokerages in the valley are feeling the same spike in consumer interest.
I have already seen a number of homes fly off the market with multiple offers within the first few days of being listed. Additionally, a lot of the housing inventory that has been sitting since early fall is now seeing activity, multiple offers, and a change from “Active” to “Pending” status.
For more on the trends and statistics that defined the Boise real estate market in December 2013 and are moving us into 2014, see below.
December Boise Real Estate Market Trends
The economy is improving. Across the nation, the economy is starting to come back. This is good news for the housing market because financial improvement opens more doors for buyers to move up, move down, move sideways, or jump in as a first time home buyer. As you can see from the map to the right, 46 of the 50 states are some shade of green, depicting an economic improvement for those areas. Idaho is the darkest shade of green, which indicates states with the greatest improvement.
Home sales and housing starts are increasing. According to Frank E. Nothaft, the chief economist for Freddie Mac, single family home sales and housing starts across the nation are expected to rise to the highest level since 2007. This prediction seems to be ringing true for the Boise real estate market too, with year-to-date home sales already up 14% and new home starts up 16%. Additionally, despite the fact that home sales typically decline from November to December by an average of 2%, December 2013 sales were actually up 4% from November numbers.
Inventory declined in December but is up from last year’s numbers and should increase further as we move into 2014. Housing inventory decreased by 10% from November to December. This was not surprising, as inventory typically sees a steady decrease from August to December. Despite the monthly drop, however, our market still saw an overall year-to-date increase in inventory of 15%. The Boise area real estate market currently has 3.6 months of inventory on hand. As we move into the busier spring and summer months and as increased home values allow more and more homeowners to sell their homes for more than what they owe, we definitely plan to see an increase in inventory in 2014. We may even get back to having a balanced market, which occurs when there is 5-6 months of inventory on hand.
Housing demand is poised for a boom. There are three groups of people that are expected to have a large effect on the uptick in housing demand this year.
a. The millennial generation: With rental affordability decreasing, the value of home ownership is looking attractive to young professionals. As the economy improves and more of them get jobs, we anticipate many who have been holding off on home ownership will be able to make the move into buying their first home.
b. Move up, down, sideways buyers: Increased home values have finally freed up many to sell their existing home and make the move they have been wanting to a home more suitable to their changing needs.
c. Immigrants: Immigration reform is in the works and depending on how that reform shakes out there could be as many as three million families that have the door to homeownership flung open for them. This will definitely make a HUGE impact on the real estate market.
Interest rates are going up. As mentioned may happen in last month’s update, the federal government did in fact begin to taper their purchase of bonds in December. The purchasing of bonds is what has kept interest rates at historic lows. Now that they are tapering those purchases, we will see interest rates head back toward normal numbers. Rates already saw a small spike in December and analysts anticipate they will increase as much as 1% in 2014.