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 Reports for both Ada and Canyon Counties.  

The Bown House, located in front of Riverside Elementary, is an Idaho landmark I pass almost everyday.  This past week, my oldest daughter, Hadley, was able to visit for a field trip and share what she learned about this unique property.

In 1841, at the age of 12, Joseph Bown immigrated with his family to America from England.  He grew up in Illinois, married Temperance Hall, and moved to Iowa to start a farm and a family.  In 1862, Joseph  took a wagon train west and ended up with a gold claim in Idaho City.  When his efforts at gold mining failed, he moved to Boise and spent the next few years establishing one of the first ranches in the Boise Valley.  As soon as he was able, he moved his wife and seven children to Idaho as well.  They lived in a log cabin, farmed their ranch, and saved their money until they were able to build a new house in 1879.  The large and luxurious home, known as the “block house,” was built from local sandstone and was set on the highest site in the area, providing sweeping views of their 240 acre ranch.

In addition to raising their family there, the Bowns also used their home as a school when a nearby school burned down.  Many parties and dances were held there.  In 1893, the Bowns moved to a new farm.  The house transferred ownership a few times until 1987, when the Independent School District of Boise purchased it to use as office space.  In 1991, the school district entered into a stewardship agreement with Preservation Idaho to restore the house and make it the centerpiece of the heritage education program.  The house remains as such today.  It is open for tours the first Saturday of each month from 1pm-4pm and is the namesake of the mixed-use Bown Crossing neighborhood.  

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide:

• Greater exposure to more buyers
• The skills of a professional negotiator
• A layer of protection from possible legal liabilities
• Professional guidance in navigating any pitfalls that may arise
• A level of safety while showing the home

There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny?

A study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money on their own than if they used an agent?

The study makes several suggestions:

• “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
• “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
• “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

Content from Keeping Current Matters

This past Friday, I had the pleasure of gathering around a table with the people of TripleCord Real Estate for our annual company dinner.  What a privilege it was to share our personal joys and struggles from the past year and to be reminded again of the unique and beautiful friendship we share.  By the grace of God, whenever we are together, I believe we all leave encouraged, thankful, and stirred up to better love and serve the clients we are privileged to represent. 

This year, our dinner table was packed a bit tighter with the addition of three new agents and their spouses.  We are excited to have these friends as part of our team and to enhance our service with their unique gifts, backgrounds, and skills.   “As each has received a gift, use it to serve one another, as good stewards of God’s varied grace” (1 Peter 4:10).  It is with sincere gratitude and great joy that I get to introduce these three new incredible members of our company: 

Tony Ball has been a health coach for the past several years.  He and his wife began coaching after they lost 80 lbs together with Take Shape for Life and have greatly enjoyed helping others achieve similar success. Tony is looking forward to applying his coaching skills as a Realtor by assisting buyers and sellers in accomplishing their real estate goals.  He has a huge heart for people.  And, if he had limitless time, I have no doubt it would be spent getting to know new faces, learning about their lives, and hearing their stories.  He values relationships greatly and cares for people well.  The combination of his coaching skills and his love for others will make him an incredible agent for those he is honored to serve. You can read more about Tony HERE!

Joy Logan is a dear friend, a mother of three, and expectant mother of two identical twin girls due in January!  Because of her personal experience in real estate investments, she and her husband are well versed in the buying and selling process as well as in property management.  She is now excited to use her acquired knowledge and skills to help others with their real estate endeavors.   Despite morning sickness and incredibly low energy during this time of growing two humans inside her, she has excelled at meeting the demands of her job with excellence and caring for her clients well.  Watching her work with professionalism, passion, promptness, and joy even in this physically trying time makes me marvel at how well the Lord has gifted her to be a Realtor.  You can read more about Joy HERE!

Having been an agent a few years back, Sara Walker is not new to the world of real estate. Although it has been difficult to say goodbye to the students and staff at the elementary school where she was serving as an educator, she is excited for the opportunity to be a Realtor again and eager to see how the Lord may use her in this new role.  With Sara’s love for the Treasure Valley community (where she was born and raised), her incredible “heart of a teacher,” and her understanding of the special significance of the place a person calls “home,” she will, no doubt, be a wonderful asset to her clientele—proving a valuable resource to anyone who is looking to buy or sell in the Boise area.  You can read more about Sara HERE!

Each of these new team members live out Romans 12:9-10 which reads, “Don’t’ just pretend to love others.  Really love them.  Hate what is wrong.  Hold tightly to what is good. Love each other with genuine affection, and take delight in honoring each other.”  Should you have the pleasure of working with Tony, Joy, or Sara in the future, I am confident you will see for yourself that these are genuine, hard working, trustworthy Realtors who truly care about promoting their clients’ best interests above their own!  How blessed I am to have them as part of the TripleCord family!