Boise- With so many sources for news, some local some national, how can buyers and sellers know what is actually going on in the Real Estate Market? Rarely, does a national news headline focus on a specific location unless they are seeing astounding growth, or worse, double digit losses. The key to remember is that the Boise Real Estate Market is Local and is mostly influenced by local and sometimes regional factors.
There are 5 basic factors:
1. Job Growth
Jobs require people and people require a roof over their head. If our local economy stays strong and small businesses can start-up and thrive and if large corporations set up shop here, it will produce jobs. Without a healthy job growth, you will see people moving to other areas of the region or country seeking work.
Job growth can be tricky however, so it’s important to distinguish different types of jobs to creat a real picture of the labor force. During the housing boom, there was a ton of new construction which created even more jobs for skilled labor and general labor. Today, many of those jobs are gone because they were so dependent upon sustained housing growth which has slowed significantly in the last couple of years.
2. Inventory
If you can’t remember back to Economics 101, most markets are affected by supply and demand. That is to say, if there is a larger supply of homes on the market than there are buyers for, the price will tend to come down. As we witnessed in the Boise real estate market in 2004-2006, there were fewer homes for sale than there were buyers which drastically increased the price of a home. In many cases, it created an atmosphere similar to an auction where multiple buyers were bidding on the same home.
As real estate agents we measure inventory basted on ‘months of supply’ or ‘absorption’. We call it a buyers market when there are more than 6 months supply of homes available on the market and a buyers market when there are less than 4 months supply of homes available. To determine the supply, you divide the total number of homes available by the number of homes sold in the last month.
3. Interest Rates
Pretty simple really. According to the National Association of Realtors, in 2007, 93% of all buyers financed their purchase. If interest rates are low, purchasing is more affordable. If rates are higher, fewer buyers are qualified to purchase. For the last 8 years (the length I’ve been involved in real estate matters) rates have been very affordable making a home purchase in the Boise area a better decision than renting.
4. Consumer Confidence
One of the most powerful influences over any type of market is the confidence of buyers to spend their money on a purchase. Unfortunately, this can be influenced very easily by misinformation and rhetoric. Often times, buyers can be loured emotionally into a bad purchase or even buy when the timing is bad because certain news sources are late with market news.
During the last boom, many buyers and sellers were certain that their purchase would result in immediate appreciation and growth in values. Lots of people during that time felt entitled to a profit and many consumers cashed in on double digit gains.
When buyers feel that it’s OK to buy, they will. But if the market slips, loses ground or there is bad news about, buyers will keep their money in their pockets. Consumer confidence is a very powerful factor. Currently, many buyers are confused about whether or not investing in real estate is a good financial move and rather than seeking trustworthy information, they will bet conservatively and opt against a large financial obligation like a purchase of a home.
5. Personal Life Changes or Goals
Without a doubt, one of the most influential factors in whether or not you should buy or sell a home has to do with your own specific needs. Daily, someone asks me if Boise is in a good or bad real estate market and every time, my response is, “What are your needs and goals”? Annoying I know, but each transaction is unique and requires specific attention and there are certain situations where a purchase or a sale is a bad idea.
If you have owned your home for 5-10 years and have a reasonable amount of equity and are looking to move up or even down, there is a very good chance that there hasn’t been a better time to sell and follow it up with a purchase. Since you have room to move in your price and don’t have to ask a premium to pay off your mortgage or other obligations, you can undercut your price, get your home sold quickly and take advantage of a solid buyers market and maximize your sale proceeds like never before.
On the flip side, if you have just purchased and would like to sell, chances are you would wind up in a negative position and would be better off keeping your home rather than selling.
Keeping in touch with your trusted Realtor and seeking consultation prior to buying or selling real estate will keep you informed and from making a bad decision. Try to ignore national and even some local news headlines and focus specifically on your personal needs and goals. I’ve only been around for 32 years, but during that time, everyone I know, lives in a house…
No related posts.
{ 1 comment… read it below or add one }
Great post! Thank you very much catt, 5 factors what were mentioned here was really basic and very important to the real estate market