As we near the end of the busy summer buying season, it is common to see month over month median home sale prices decrease slightly and the number of months supply of inventory increase. The supply of inventory didn’t have as much upward movement as expected, but the 4% decrease in median home price from June to July was in line with normal trends for this time of year. Although this seasonal decrease may concern some sellers, it is important to note that July 2016 prices were up 5.5% from prices in July 2015. That’s a good thing =-) The number of months supply of available inventory was at 2 months in both June and July. I expect we will see this number tick up slightly by our next newsletter, but we are still well below a balanced market which occurs when we hit 5-6 months supply.
Based on the number pending sales, buyer demand remains strong for both existing homes and new construction. Pending sales on existing homes were up 13.4% from this time last year, and pending sales for newly constructed homes were up 51.2%! Local population growth, a tight rental market, and still low interest rates have all contributed to keeping buyer demand high.
Although watching “The Big Short” made me slightly more reserved about the stability of the housing market, I still feel real estate remains one of the most solid long term investments available. Monthly rental rates have been steadily on the rise since February, reaching a current median price of $1,250 per month. It is expected that both home values and rental costs will continue to increase. As a homeowner, this will likely mean greater equity and the ability to move up within the market. For the renter who is not building equity, however, these increased costs will make future entry into the housing market a greater financial burden. Now may not be the perfect time for every renter to purchase a home, but it’s worth looking into and considering future costs. If you are currently renting and would like to discuss this more, we would be happy to meet with you to talk in person about your particular situation, goals, and needs.
Here are current Ada County market statistics for the month of July compared to July 2015:
- Closed sales - 1,053 (up 2.8%)
- Median Sales Price - $243,000 (up 5.5%)
- Days on the Market - 33 (down 21.4%)
- Pending Transactions - 1,639 (up 24.3%)
- Inventory – 2,196 (down 12.4%)
- Months of Supply - 2.0 (down 20%)
We also wanted to show how the number of months supply of inventory fluctuates based on the price range. The current months supply condition in each price range is as follow:
- $159,999 or less: less than 1 month
- $160,000 - 199,999: 1 month
- $200,000 - 299,999: 2 months
- $300,000 - 499,999: 2.5 months
- $500,000 - 699,999: 3 months
- $700,000 - 999,999: 5 months