The story of the current market remains the same as reported in previous months—the median sales price continues to rise, due largely to two major factors:
(1) Record low levels of inventory for existing homes
(2) And an increased number of newly constructed homes selling at higher prices due to rising costs for building materials and labor.
To dig deeper into the second factor, it may be helpful to look at trends in the market for new construction. Nationwide over the last 5 years, new construction accounted for between 8-10% of sold homes. In Ada County over the last 5 years, new construction has accounted for between 18-24%. To date, new construction has made up 28% of homes sold in Ada County this year! That’s a lot! Boise Regional Realtors reported that when the share of new construction sales goes over 25%, we can expect to see overall home prices increase an average of 12-14% over the year. You can see this play out in the graph below, displaying a side by side view of the share of new home sales and the correlating overall median sales price increase.
As we have said before, in order to move from this seller favored market to a more balanced one, we will either need to see a decrease in housing demand, which is unlikely given the number of people who continue to be attracted to the Boise area, or we will need to see a strong increase in the inventory of existing homes for sale. If you are considering listing your home or would like more information about what it looks like to be a buyer in this market, please don’t hesitate to call us. We would love to listen to your questions and share what we know.