When home prices drastically inflated 10 years ago, a disastrous market crash soon followed.  As we now know, this was largely caused by a combination of hyped-up market speculations and loose lending practices.  With the current escalation in prices, concern over another market crash has grown.  To help ease those fears, it is important to consider the stark difference between today’s market and that of the last bubble.  Today’s price increases are driven by normal economic factors of supply and demand, not speculation.  How can you tell?  Well, a good indicator is the comparison of average “Days On Market” (DOM) statistics (a good measure of demand) next to inventory level statistics (a good measure of supply) .  For a helpful look at the last bubble compared to today’s market conditions, see the chart below created by Boise Regional Realtors using MLS statistics:

In 2006-2007, you will see the average DOM was 32 days (indicating high demand) and the average number of homes to choose from was 3,875  (indicating high supply).  This scenario of increasing prices occurring in a high demand/high supply market is not an economic norm and would be cause for concern.  These statistics show that in the bubble, buyers were grabbing up homes quickly, even though there were plenty of homes to choose from and  no need to rush. Compare that to statistics from earlier this year or from more recently, where the average DOM was 42 days (indicating high demand), and the average inventory was 1,748 homes (indicating low supply).  This scenario is a normal economic driver for price increases.  Buyers are having to act quickly because there are so few homes on the market.  They know they have to make a competitive offer to get the house before someone else does.   Hopefully, this helps explain why current price increases are expected given the high demand/low supply market conditions and why they should not cause fear of another bubble.  We can expect this upward pressure on housing prices to continue until supply increases or demand decreases.

Below are the current Ada County market statistics for September 2017 compared to September 2016:

  • Closed sales – 1,022 (up 3.7%) 
  • Median Sales Price (including new construction) - $274,700 (up 9.9%) 
  • Days on the Market - 32 (down 23.8%) 
  • Pending Transactions - 1,595 (up 11.1%) 
  • Inventory: 1,985 (down 8.6%) 
  • Months of Supply – 1.8 (down 18.2%)

We also wanted to show how the number of months supply of inventory fluctuates based on the price range.  The current month’s supply condition in each price range is as follows: 

  • $159,999 or less: 0.8 months.
  • $160,000 - 199,999: 0.6 months 
  • $200,000 - $249,499: 1.2 months 
  • $250,000 - $299,999: 1.9 months
  • $300,000 - 399,999: 1.9 months
  • $400,000 - 499,999: 2.1 months
  • $500,000 - $699,999: 3 months
  • $700,000 - $999,999: 6.6 months

If you’re interested in knowing more about the current state of the market, check out these informative September 2017 Boise Regional Realtors Market Reportfor both Ada and Canyon Counties.