Market Update January 2009 Part 1

In mid 2008, I told you that I believed our real estate market was very fragile but showing positive indicators. Then for the following 6 to 7 months, we had positive month over month sales. We’ve had inventory reductions for 7 straight months, and in the last 6 months our inventory has stayed below last year’s levels. That is a solid predictor of improving conditions. Our home values even held on to 96% of their value through July and they only slipped 4% in the 4th quarter. And, Idaho had the best 3rd qtr over 2nd qtr sales improvement in the country.
The fact is, if you bought an existing home in Ada County in December 2006 for $185,000 it has appreciated 6% as of December 2008. That is not exactly wildfire returns, but it is better than my 401k has done.

Unfortunately, as predicted, all we needed was one or two negatives to push our recovery off track. The collapse of consumer confidence and near elimination of credit in October and November while unemployment rose derailed our ’08 recovery train and our November sales were under 300.

December, by the way, showed better sales than November and inventory continues to shrink.
So, where are we now and what’s going to happen next?

First…The fundamental things that make this a great place to live haven’t changed. This is still the same place that was recognized again and again in 2008 as one of the best family and business locations in the country.

Second…NAR’s efforts in Washington to help end the credit crisis and jumpstart mortgage lending are going to work.

Lawrence Yun, NAR’s Chief Economist, says that the combined effect of the expanding the $7500 home buyer credit and delivering a 1% mortgage rate buy down would be incrementally increase home sales by 10 or more percent in 2009.

In our market, a 10% increase in 2009 would be 500 more homes sold…$116 million more in total sales.