2022 Boise Idaho Real Estate Blog

Idaho Real Estate BUBBLE TROUBLE?

Main Idaho Real Estate Insights

As July keeps pace with the hot market this year, more people are asking if we are headed for a bubble.  We certainly don’t expect an always-improving market, and there’s always a possibility of a “Black Swan” event, but we see several reasons that today’s market is on a more stable footing than the market that lead to the crash in 2008-09.

1. First, there are no “no doc” loans that created financial instability. The financing instruments are more traditional, requiring cash down payments.  There’s more “real” now in real estate.
2. Second, our prices and number of transactions are rising more steadily now than the abrupt rise in 2005-2007, when properties were selling within hours of going on the market.  July’s closings were 11% higher than last July and year-to-date closing are also 11% higher than last year’s respective closings.  Average prices for the previous twelve months, despite the brisk market, are only 6.5% higher than the previous twelve months.
3. Third, even though prices are rising, buyers are not over extended. Low interest rates are keeping residential real estate carrying costs affordable.  Mortgages are now averaging 15% of average income, much lower than the historical rate of 20%.
4. Finally, newly constructed homes, where a lot of the speculation occurred prior to 2008, are selling well, but we still have 4.6 months of new home inventory.
The charts below show what has happened this year in closings, pendings and inventory.

Brad Barker
Group One Sotheby's International Realty

Posted by tlangford at 8/11/2016 7:05:00 PM

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