MARKET SPOTLIGHT: WESTERN HOT SPOTS
down payment, on the other hand, was 49.4 percent of wages in Ada County and 47.7 percent in Canyon County. As a result, whatever deals investors find are off-market, ac- cording to Brown. “You have to be connected to find off-market properties,” he said. Deals that are put out to the mass- es, such as on the MLS, are gobbled up quickly. Given current market conditions Brown does not believe there’s enough margin in most deals to warrant flipping properties. “I get two or three calls a week from guys looking to buy B and C-class properties and want to turn them into A-class properties. That’s been done. They’re about five years too late,” Brown said. LAS VEGAS SLOWDOWN IN THE CARDS Las Vegas ranked the sixth fastest-growing city in America last year, according to Forbes. But despite projections of continued population growth and an unem-
ployment rate that was down to 4.4 percent in November 2018, Las Vegas is still in recovery mode. “We took a huge hit after the Great Recession, down over 50 percent in lost values,” said UNLV Economics Professor Stephen M. Miller. “After the recession we were at the bottom of the heap. We’re still trying to catch up.” ATTOM reported that the median sales price bottomed out for the Ve- gas metro area in April 2012 and has not gone negative thereafter. Since March 2017, the metro area has seen double-digit yearly increases in median sales prices. As of November 2018, the median home price was up 12.5 percent from November 2018. Still, Miller believes the market affordability — which has seen large declines since Q3 2016 — is playing a major factor in the mar- ket’s slight slowdown. “It is slowing down a bit here. It’s not a bad thing,” said Miller. “Affordability is on a downward trend and that’s what you expect when prices go up.” Investor Travis Schurr believes a
metro area, Brown knows there is not enough housing to meet demand, and the lack of inventory is causing prices to go up, pushing potential home buyers out of the market and into rental housing. “From an investor’s standpoint it’s wonderful. I don’t see it cooling off,” he said. “The good news is rents continue to increase and prices continue to increase. We’ve seen investors who, in the past have been okay with purchasing at certain cap rates. As things get more expensive, those caps go lower and lower.” Rents in both Ada and Canyon coun- ties — the primary counties compris- ing the Boise metro area — will rise 2 percent in 2019 to $1,317 a month for a three-bedroom, single-family home, according to an ATTOM analysis of rental data from the U.S. Department of Housing and Urban Development. Average wage earners in Ada County in 2019 would need to spend 33.0 per- cent of income to rent, while in Canyon County it is 43.9 percent of the average wage to rent. Affordability to buy a median-priced home with a 3 percent
BOISE CITY, ID HISTORIC HOME SALES
MEDIAN SALES PRICE
YEAR-OVER-YEAR HOME PRICE APPRECIATION
30%
$300,000
25%
$250,000
20%
$200,000
15%
$150,000
10%
$100,000
5%
$50,000
0%
$-
-5%
“It’s a interesting market. De- mand is always there,” said Mike Brown, owner of the Mike Brown Group at Silvercreek Realty Group based in the Boise area. “It seems to be quality of life for the most part. That’s why we’re attracting people who are relocating.” According to ATTOM, since the market in Boise turned around in the beginning of 2012, the year- over-year growth in median sales prices have only gone negative once, in June 2014. Otherwise the metro area has seen long periods of both single and double-digit yearly price appreciation through November 2018, when median home prices were up 11.7 percent. “The housing market isn’t likely to soften in 2019. The prices will still be rising by the end of 2019,” said Donald W. Holley, emeritus faculty in the Department of Eco- nomics at Boise State University .
“It’s got to cool off sometime. As we look ahead, the consensus is someday we’re going to have a recession, but not this year.” Inventory of new housing peaked for the area in 2006, while existing home inventory peaked from 2007 to 2008, explained Holley, who noted that overall inventory declined dra- matically from 2016 through 2018. “By 2016, the inventory of existing homes was less than the inventory of new homes. The reason, apparently,
is that Idaho is the fastest-growing state. It’s much easier to sell a home in today’s market than it was five or six years ago,” he said. The trends are also showing that the median home prices and the days-on-market for new and exist- ing homes have tracked each other fairly closely over time between 2006 and 2018. “Things are moving up. The ques- tion is when will it stop?” Holley said. As a long-time investor in the
LAS VEGAS-HENDERSON-PARADISE, NV HISTORIC HOME SALES
MEDIAN SALES PRICE
YEAR-OVER-YEAR HOME PRICE APPRECIATION
$300,000
50%
40%
$250,000
30%
$200,000
20%
$150,000
10%
$100,000
The housing market isn’t likely to soften in 2019. The prices will still be rising by the end of 2019.”
0%
$50,000
-10%
DONALD HOLLEY
$-
-20%
24 think realty housing news report
march 2019 25
Made with FlippingBook Online newsletter