Friday, January 22, 2016

Ada County Real Estate Report for 2015 Continued

As prices and volume returned to pre-downturn levels, the question of a market peak—or even another housing bubble—came up frequently last year. Based on the trends tracked by the National Association of REALTORS® (NAR), Chief Economist Lawrence Yun explained that the market today is very different than it was at the bottom (around 2009 nationally, and 2011 for Ada County) mostly because of the changes in mortgage lending and the decreasing numbers of homes for sale.

Mortgage lenders now follow stricter rules to qualify potential homebuyers, and many of the creative loan programs that were available before are no longer in use. This has helped diminish the risk of buyers getting into loans beyond their financial means, which caused many to lose their homes to foreclosure. Paired with improving jobs reports, we’re in a much better situation today, both financially and economically.

The supply of homes for sale has been well below consumer demand, nationally and in Ada County. The following charts illustrate the change in local inventory before, during, and after the downturn:

Overall inventory has been dropping due to the lack of existing homes being listed. Carey Farmer, President of the Ada County Association of REALTORS® and Associate Broker at Group One Real Estate, explains:

“We hope more homeowners will be in a position to sell in 2016, having regained equity after the downturn. I’ve talked with some potential sellers who are concerned that they won’t be able to find a home once they sell theirs. While it’s true we need more existinginventory to come online, our market actually has a good supply of newly constructedhomes, which is not common across the country. New construction is a great option for those looking to move up in price point, square footage, or amenities.”

The “months supply of inventory” metric is a great way to gauge supply and demand, by taking the number of homes for sale at the end of a given month, then dividing that by the average number of closed sales by month, over the preceding twelve months. The result could be interpreted as the number of months it would take to sell through the current inventory if no other homes were listed. A balanced market—not favoring buyers or sellers—is typically between 4-6 months of supply. Based on the chart above, the buyer demand for existing homes is outpacing the supply, while new construction supply is on track with demand.


Thanks to the Ada County Association of Realtors

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