For years now, Boise Regional REALTORS® has reported on how the demand for homes has outpaced supply and the impact that has had on home prices. October 2020 was no exception as the median sales price for homes sold in Ada County was $406,684 in October, up 14.7% year-over-year, but down slightly from September 2020.
This was based on 1,112 home sales, an increase of 11.9% compared to October 2019. But looking at the supply of homes for sale, according to data from the Intermountain MLS (IMLS), there were 443 of single-family homes available for purchase at the end of October, down 73.7% compared to the same month last year.
This begs the question, "How can home sales be up while inventory continues to drop?"
It's important to note that the inventory metric fluctuates daily and is based on the number of homes listed as "active" in IMLS on any particular day. For consistency purposes, our reports use the number of single-family homes available for sale on the last day of each month, so it does not represent the total number of homes that may have been available for sale throughout the month; however, the closed sales metric reflects all homes sold during the month.
That one-day "snapshot" of inventory compared to a monthly total of sales is one reason we can see more closings than available inventory in our monthly reports.
Adding to that, once a seller accepts an offer, the home is no longer considered available inventory. With homes spending an average of only 20 days on the market before going under contract, some may not make it into the reported inventory numbers.
Looking specifically at inventory trends for existing/resale properties, there are a variety of reasons the supply has been so constricted: homeowners delaying listing until they find their next home, which takes longer due to already limited inventory; some homeowners may not feel they can "trade up" from their current home due to current prices, despite equity and low mortgage rates; the surge in mortgage refinancing may have reduced some homeowners' monthly payments, making it more affordable compared to what they may spend on another home; and in response to COVID-19, some have delayed listing to limit the number of people in their home, or, they may be unable to manage a sale while working from home or if they have children at home for school.
These kinds of situations are when a REALTOR® can be incredibly valuable to a homeowner in helping them understand their options. Discussing new construction opportunities for those worried they won't be able to find their next home, or explaining how virtual open houses and showings can limit in-person visits while still exposing the home to the widest pool of potential buyers can help homeowners find a path forward.
New construction inventory was also down significantly, year-over-year, while sales were up by 16.7%. With new homes selling almost twice as fast this year than last year, similar to existing homes, it reduces the numbers captured in our monthly inventory snapshot. But as many builders have had to alter their construction timelines, with fewer tradespeople or difficulty obtaining materials (including home appliances) causing delays, some have also delayed when or how they list a home as available in IMLS. Some builders are able to pre-sell units through model homes, which then later show up in our reports as a closed sale but never as active inventory.
The low inventory conditions have put tremendous demand on builders, and they have been responding. Between January and September of this year, 3,374 permits were approved for new single-family homes throughout Ada County, according to Construction Monitor, and another 380 permits were approved in October. While a few of the newly approved permits were for existing owners, most were for homes that will be available for purchase in the coming months.
Again, this is where working with a REALTOR® is so important for home buyers. They can help guide you through the complex process of a new build, and often, can identify new construction options before the ground has even been broken, or, for existing homes, they may have insights on those that may be getting ready to sell. So, while inventory remains low compared to demand, higher year-over-year sales show that there are properties available to be purchased.
NOTE: While this month's report provided an explanation on our inventory metrics, even with the variables that affect the monthly counts, the information from IMLS remains the most complete and reliable database for tracking our local housing market, helping home buyers, home sellers, and their REALTORS® make the best decisions for their unique situations.