Treasure Valley Real Estate Summary

Tying it all together: Taken as a whole, our analysis leads us to believe the following scenario is playing out:

After observing the phenomenal 2005 and early 2006 market, sellers, in general, started by putting homes on the market at what even they believe to be extremely high prices (our qualitative research also supports this theory).

After a short time (remember DOM has not increased substantially all year) they drop the price to a more reasonable level. They get an offer, make a relatively moderate concession (less than $2,000) and make the sale for around 98% of asking price. All this is taking place, on average, within two months.

Because sellers aren’t getting “immediate offers on whatever they ask for” the perception becomes that the market is softening. While it is softer than it was in the spring, it is critical to look at all the indicators—DOM, prices per square foot, sales prices, etc. all indicate that the market is still fine. The rate of growth may have decreased, but the market is still very strong.

What Can We Learn About Price Decreases?

Summary: Large discount (greater than 3% of asking price) are rare, but have increased in the past two months. Existing home sellers are more likely to discount than builders are.

The distribution of price discounts to price premiums forms a nearly perfect bell curve. Nearly forty percent sell for asking price. Over 85% of homes sell for within 3% of asking price. Only 10% of homes have sold for more than a 3% discount.

Difference between ask and sale percent categories

	Homes	Percent
Greater than 3% Decrease	329	9.3
Less than 3% Decrease	1008	28.5
Full Price	1279	36.1
Less than 3% Increase	759	21.4
Greater than 3% Increase	166	4.7
Total	3541	100.0

Although this report clearly indicates that the market is quite stable, it is very worthwhile to learn as much as we can about the discounting practices in hopes of finding the best deals. While still a small fraction of total sales, 3+% discounts are increasing—representing 16% of sales so far this month.

	Total Homes Sold	Homes Discounted More than 3%	Percent of Total
January	280	29	10%
February	318	22	7%
March	391	24	6%
April	392	32	8%
May	500	39	8%
June	448	34	8%
July	396	38	10%
August	393	49	12%
September	355	44	12%
Thru Oct 13	113	18	16%
Total	3586	329	9%

	Total New Homes	New Homes Discounted More than 3%	Percent of Total	Total Existing Homes	Existing Homes Discounted More than 3%	Percent of Total
January	83	5	6%	197	24	12%
February	76	1	1%	242	21	9%
March	92	2	2%	299	22	7%
April	94	8	9%	298	24	8%
May	94	7	7%	406	32	8%
June	79	3	4%	369	31	8%
July	82	5	6%	314	33	11%
August	78	7	9%	315	42	13%
September	85	5	6%	270	39	14%
Thru Oct 13	25	5	20%	88	13	15%
Total	788	48	6%	2798	281	10%