Team Boise
at Better Homes & Gardens 43 N R.E.
Analysis of the Boise Valley Market Summer of 2011

"From the Trenches" " (Today's Observations by Dale Alverson - 36 years experience on the front line of Boise Valley Real Estate)

Today's Boise Real Estate Market could be said to be a Cornucopia of opposing facts, trends and myths.

From the available data one could make assumptions that would seem on first blush to indicate a falling market giving weight to better values ahead if you were to wait for the bottom to materialize.  .... and you would be wrong!

What statistics do not tell you is the growing disparity between Modern Homes and the homes of yesteryear. 

In 2007,  the Market was peaked in full over value acceleration with appreciation on a 3 year roll of 25% + appreciation per year. With the Great Recession starting in late 2007 and early 2008, the New Construction which was the leading cause of inflation in the Market took a leap off the proverbial cliff - but not before it had set an irreversible Trend in the Quality of New Construction.

With the free-fall of 30% of Value over the next 18 months leading to the end of the building market as we knew it, the glory of the New Construction Industry Died the sudden death of a fiery comet!

From 2008 to 2009 we entered the Black Hole of New Construction Real Estate. Developers hoping for a short Recession tried in vain  to hold onto their Developments. It was not to be - by 2009 it became evident that the only hope to sell building lots was to either sell them for 30 - 40 cents on the dollar or give the development back to the banks and let them discount the lots to the few builder who could still build model homes.

The bleeding edge of the recovery has emanated from Developers, Builders Suppliers, and Sub Contractors all willing to discount their Services and Products, resulting in the minimal amount of New Construction being able to compete with the existing glut of distressed property. 

The upside of the Great Recession for today's Buyer's is the ability to purchase State of the Art New Homes with every conceivable upgrade previously found only in upper echelon homes at yesteryear's prices!

And here in lies the dichotomy  -  Between the Upgrades and Discounts that builders have had to offer in order to be competitive, they have out distanced the older properties to the extent that most existing homes have become obsolete by comparison. 

While the more obsolete homes are still falling in price and the not so obsolete homes have bottomed out - their counterpart New Construction Homes are actually appreciating in a down market.

Add to the nuances of this market are the holes created in the market from the 2008 & 2009 Stimulus package in the bread and butter price range of $150k to $200k which may take another year or so to recover.

The anomaly in today's market is the Empty Nesters who have assets and cash coupled with the realization that they will never again in their lifetime be able to purchase a highly amenitized upscale home at  Discounted Yesteryear Pricing. We see many cash buyer in this newly emerging segment of the market as well as High end Buyers who have realized the same paradigm and are sophisticated enough to take advantage of the Silver Lining.

Today's Disaster is tomorrows Glory for those that can cut through the fear and fog of the market and take advantage of the few segments of true value.

My prediction is that the majority of the distressed market sales will be the futures Rental Homes which will appreciate only as rents increase. These can still be good investments if the numbers support the purchase price, however the Real appreciation will be in New Modern energy efficient homes that will take a dramatic appreciation as we run out of discounted building lots which is already happening at an alarming rate.

Expect a 25% jump in prices in the not too distant future as Developers are forced to purchase new land and pay tomorrows inflated costs of future developing. 

My recommendation would be to quit listening to the pundits and the media and put your ear to the ground and see what is happening in the"Trenches" where Reality meets Realty.

by: Dale Alverson -  Exclusive Buyer's Agent for "Team Boise"
Representing Clients "Best interests"- Not Sales -
43 Degrees North Real Estate

Add a Comment

(Enter the numbers shown in the above image)