Market Report - Jan/Feb 2021
Well here we are, the 2020 housing market has turned 21 and boy is it off to a raging start. Not only has 2021 started with political drama, social media censorship, and market volatility from Bitcoin to Game Stop but the local housing market is hopping as well. These are certainly interesting times and we are here to guide you through it.
We are seeing an extraordinary seller’s market here in Latah County. As of writing this there are only 15 active single family homes in the county. If a buyer wants to narrow their search at all by price, location, size condition, etc. (and everyone does) then there are only a home or two that someone might consider. To give that number some context over the past 6 months we have averaged a little over 33 homes sold per month. So there is less than two weeks worth of inventory which is unbelievably low. This extremely tight inventory is being approached by seeming record demand.
What is behind this supply and demand? The limited supply is driven by a couple of factors. Economic growth and stability here locally and a low expansion of new inventory. We have many people staying in their homes either because they are not looking to move out of the area or because of the costs associated with moving out or “up”. Many potential sellers I talk to cite the high costs and tight inventory as a reason why they wouldn’t sell because they would be worried about finding something else to buy. This further compounds the problem. Local contractors are booked out for months or more and construction and material costs are at record highs as well. The bottom line is, we need more building and development to help the supply side of the equation.
The demand is being fueled by a combination of low interest rates and in-migaration to our area. Interest rates remain at historic lows; as of writing rates on 30 yr fixed mortgages have fallen again to an average of 2.93% according to a Bankrate.com survey. This has increased buying power for borrowers and added some urgency as buyers look to take advantage of these low rates. Locally, we are also seeing a tremendous amount of in-migration. One of the results of 2020 has been a shakeup of how and more importantly where people work. Many companies have allowed and even encouraged remote work, so we find folks reevaluating where they live and many are choosing our corner of Idaho. As I have said many times if you find that you can live anywhere, why wouldn’t you live here in beautiful Latah County!
I often get asked what I think the market will do this year. Is the trend of high demand and low inventory going to change and bring prices down? I don’t have a crystal ball and it would be foolish to suggest I know where the future is headed. But, that being said I don’t see this dynamic changing very soon. Barring some sort of national crash I am very optimistic about the local housing market. The supply side will be take a while to increase (again local contractors are already swamped) and experts seem to think the low interest rates will continue for a while, and work from home may be the new norm. All of that combined with the sheer beauty of this area and the desirability of Idaho gives me confidence that demand may even be just picking up. 2021 is going to be a wild one so get on and enjoy the ride!
- MIKE CHURCH