Idaho Mortgage Borrowers, Take Note: Inventory Will Push Prices Down
The number of Treasure Valley homes for sale is at a record high, and that is sure to keep driving down Idaho home prices, experts said Friday.
The Intermountain Multiple Listing Service said 3,143 homes were put up for sale in Ada and Canyon counties between April 9 and May 9, raising the total available nearly 80 percent to 7,124 in just one month.
When condos, townhomes and manufactured homes are added, the total jumps to 7,827, said Heinrich Wiebe, co-founder of Genius Realty.
To put that in context, Don Hubble, owner of Meridian-based Hubble Homes, said that on Jan. 6, 2006, only 1,780 homes were listed — about one-fourth as many because Idaho mortgage borrowers were snatching up properties.
The local housing market is still more robust than markets in many cities. But while buyers have plenty of houses to pick from, sellers and builders have reason to be nervous.
“I don’t see any recovery,” Wiebe said. “All I see are a lot of homes that are not selling.”
Wiebe said a closer analysis of MLS data shows that 63 percent of homes for sale are owned by investors, many of whom got into the Boise housing market to take advantage of skyrocketing prices in 2005 and early 2006.
Investors may now be acting on the fact that the median price of an Ada County home fell 1.3 percent in March, the first decline since the housing slump in Treasure Valley residential home sales began 10 months ago. The median price in March was $226,800, compared with $230,000 in March 2006.
Canyon County fared a little better with a $158,000 median, a 2 percent increase from a year ago.
Newspaper classified ads and signs in front of homes for sale tell the story: “Price reduced!” they say — a rare come-on before the slump started.
“With that much inventory on the market, it’s going to be tough to keep your price up,” said Boise economist John Church.
Trey Langford, founder of Buildingcredibility.com, a website that tracks subdivisions and sale prices, says the market is doing OK. “If you compare us to markets like Utah, Arizona and California, we look pretty good,” he said.
His site says the Valley has a 15-month supply of homes above $400,000, a six-month supply of homes in the $200,000 to $250,000 range; a 2-1/2-month supply in the $150,000 to $200,000 range; and a one-month supply in the $100,000 to $200,000 range. It’s no surprise more mortgage loans are being used on the more affordable residences.
Will a market flooded with high-end homes collide with an economy creating mostly low-paying service jobs?
“That’s always a concern,” Church said. “I estimate Idaho had an in-migration of 22,000 people last year, so I think that will soak up the housing out there. But it won’t be as fast as if we were generating high-paying jobs.”
As the building season begins, Mike Inselmann president of Metrostudy, which provides data to the housing market, said builders should build only when they have contracts in hand and avoid “spec homes” that wait for buyers to materialize.
“For the rest of the year, home starts will be tied to contracts as builders try to move (existing) inventory,” Inselmann wrote in a news release.
SOURCE: The Idaho Stateman