Are We There Yet?

Many are wondering if the real estate market has hit bottom (here in Boise anyway…). It seems every time we think that the market was there, it then edged a little lower the next month. But if we look at the statistics from the past few months, the story seems to be changing. So, are we there yet?

The problem with knowing when the market has hit bottom, is when the data shows you that your are already out. And the numbers are indicating that we are not in bottom anymore. Now there will be those that argue that “shadow” inventory has not hit yet so we can expect further decreases in prices and increased inventory. The problem with this theory is that shadow inventory could be considered every house that is not for sale yet! Well if that is the case, then the market is doomed! Kind of silly thinking, so here are some real numbers to consider:

In the ADA County (Boise, ID)  market units sold:

December: 2010- 518  homes sold

                       2009 – 374 homes sold

                       2006 – 614 homes sold

Keep in mind that in 2009 the buyers credit was in place and yet we still sold more in 2010. This means a few things to me: 1. that lenders are doing a better job of closing short sales and bank owned, and 2. that smart buyers are realizing that the prices are definitely in bottom.

Inventory has also had quite a change:

December: 2010 – 2641  active

                       2009 – 3428 active

                       2006 – 3919 active

The difference between Decembers 2010 and 2009 for active listings really highlights how inventory has decreased. With prices staying relatively flat for the past few months and inventory on the decrease, I sense a subtle shift in the market. Now does this mean that we are going back into a seller’s market? Not immediately, because we do have to see how it goes come spring, but it is pretty safe to say that the pendulum is starting to shift out of the buyers side and back in the sellers direction.

One more thing to keep in mind! When we think of getting back to normal, do not think of the market as it was in 2006, when the median sales price was $ 232.9K but closer to the 2004 median sales price of $167K.  2004 was a much “saner” normal!

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