The Cassel Report June 2011

Because Knowledge is your first line of defense. 208-440-9548 / derek@lebois.com

As a Realtor, I suppose that I spend more time than most people behind the wheel of a car with this thought running through my mind: I wonder how I get there from here. Most days, I end up driving to some place Ive never been before in order to show houses or meet with potential sellers. Its easy enough to get around on the main roads here in Idaho, but things get a little squirrely once you enter the larger subdivisions. This is probably intentional and discourages people from using subdivision streets as shortcuts, but it definitely makes my job harder. Sometimes I incorrectly guess where a road will come out and have to backtrack. Thats always frustrating, but there is an equally strong sense of satisfaction when I follow my instincts and end up exactly where I think I should be. Call it an I told you so moment if you will, but sometimes it just feels good to be right! Thats exactly how I felt when I saw the Real Estate market data for this past month. Two of the graphs are starting to respond exactly as I expected, and its good news for our market as a whole. The total number of sales last month increased slightly, so we are still mirroring the trend from 2010. As I mentioned last month, we want to see how long this ride of increased sales lasts. Thats what really separates one summer buying season from the next. Many people look at the new construction market as a signal of demand, but it takes too long to react. Existing home sales are immediate and show what people are doing right now. As you can see from the New vs. Existing Sales graph, our increase in sales last month came from existing homes. New construction remained at about where its been since the end of the Federal Tax Credit last year. The average sales price ticked up, but only slightly. This was a result in the volatility of new construction pricing. We are still waiting for the elusive start of appreciation for existing homes. And now we get to the really good part! I know it looks like theres a mistake on the Average Days On Market graph, but its completely accurate. In the biggest one month drop in over two years, and the lowest number weve seen in the last two years, the average time to sell a house fell to only 58 days. This shows an incredible increase in demand and competition for houses on the market. Reflecting the same strength, we also see a huge shift in the balance of power between buyers and seller. Sellers are only giving up about 5% from their original asking price, which is the smallest concession theyve made in over 2 years. And why are these things happening? Because once again, we are not getting enough new listings each month to make up for the number that have sold. Its supply and demand. Stay tuned to the Cassel Report throughout the summer to see our market changing!

Derek Cassel 2011

Total Number of Sales

700

600

500

400 Last Year Current Year

300

200

100

0 Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Jun

Jul

Derek Cassel 2011

Total Number of Sales by County

240,000.00

220,000.00

200,000.00

180,000.00

160,000.00

Average Ada Canyon

140,000.00

120,000.00

100,000.00

80,000.00

60,000.00

9 0 9 09 09 09 0 10 10 10 10 10 10 10 10 0 1 11 11 11 11 9 9 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 01 0 0 0 0 1 0 1 0 1 01 /2 7/2 8/2 9/2 0 /2 1 /2 2 /2 1/2 2/2 3/2 4/2 5/2 6/2 7/2 8/2 9/2 0 /2 1 /2 2 /2 1/2 2/2 3/2 4/2 5/2 6 1 1 1 1 1 1

Derek Cassel 2011

Total Sales Volume

700,000,000.00

600,000,000.00

500,000,000.00

400,000,000.00

300,000,000.00

Current Year Last Year

200,000,000.00

100,000,000.00

0.00

Last Year

2nd Qtr 3rd Qtr 4th Qtr 1st Qtr Current Year

Derek Cassel 2011

New vs. Existing Sales

700

600

500

400

300

200

100

1 0 0 0 0 9 0 0 1 1 0 0 0 0 9 9 1 1 0 0 9 9 9 9 01 01 01 01 01 01 01 01 01 01 01 01 00 00 00 01 01 01 01 01 00 00 00 00 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 5 4 3 2 1 9 8 7 6 5 4 2 3 1 9 8 7 6 12 11 10 12 11 10

Total

New

Existing

Derek Cassel 2011

Average Sales Price: New vs. Existing

240,000.00

220,000.00

200,000.00

180,000.00

160,000.00

140,000.00

120,000.00

100,000.00

0 9 1 0 1 0 0 0 0 1 1 0 0 9 1 9 0 0 0 0 9 9 9 9 01 20 1 20 1 20 1 201 01 201 01 201 201 201 00 200 01 201 01 201 00 200 0 0 20 0 20 0 201 201 / / / / / /2 / / / /2 /2 / /2 / / / /2 /2 / / / /2 / /2 5 3 8 9 4 7 6 1 2 4 5 2 9 3 7 8 1 6 10 12 11 11 12 10

Average

Existing

New

Derek Cassel 2011

Average Sales Price

240,000.00

220,000.00

200,000.00

180,000.00

160,000.00

Average Ada Canyon

140,000.00

120,000.00

100,000.00

80,000.00

60,000.00

09 1 0 10 10 10 09 09 10 10 11 11 10 1 0 10 10 11 10 0 9 09 09 09 11 11 10 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 1 9 7 8 2 3 4 4 5 6 5 1 3 2 6/ 7 8 9 10 11 12 12 10 11

Derek Cassel 2011

Average Days On Market for Existing Homes

90

80

70

60

50

40

30

20

10

1 1 0 0 0 9 1 0 0 0 1 0 1 0 0 0 0 9 9 9 9 0 9 9 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 00 00 00 00 00 01 00 00 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 5 4 3 2 1 9 8 7 6 5 4 3 2 1 9 8 7 6 12 11 10 12 11 10

Average

Poly. (Average)

Derek Cassel 2011

Sales by Category

100%

90%

80% 47% 51% 52%

48%

70%

60% REO Sales Short Sales 16% 17% 17% Traditional

50%

20%

40%

30%

20% 37%

33%

32%

31%

10%

0% 3/2011 4/2011 5/2011

2/2011

Derek Cassel 2011

Buyer vs. Seller: Relative Strength

0%

-2%

-4%

-6%

-8%

-10%

-12%

0 9 00 9 00 9 00 9 0 09 0 09 0 09 01 0 01 0 01 0 01 0 01 0 01 0 01 0 01 0 01 0 0 10 0 10 0 10 01 1 01 1 01 1 01 1 01 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 20 2 2 /2 /2 /2 /2 /2 /2 3/ 8/ 4/ 9/ 2/ 7/ 5/ 6/ 1/ 1/ 3/ 4/ 5/ 2/ 7/ 8/ 9/ 6/ 10 11 12 11 12 10
Existing Home Negotiations Poly. (Existing Home Negotiations)

Derek Cassel 2011

10

Number of New Listings per Sale

2.5

1.5

0.5

09 0 09 01 0 10 0 10 0 10 1 0 01 0 01 0 0 9 0 09 1 0 01 0 0 9 00 9 00 9 1 0 01 0 01 0 1 1 01 1 01 1 1 1 01 1 2 2 2 20 20 2 2 20 20 20 2 2 2 2 20 2 2 2 20 2 20 2 2 20 / / / / / / 8/ 7/ 6/ 9/ 2/ 4/ 3/ 1/ 6/ 5/ 2/ 7/ 1/ 5/ 4/ 3/ 8/ 9/ 11 12 10 12 11 10

Derek Cassel 2011

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New Listings vs. Monthly Closings

1000

900

800

700

600

500

400

300

200

100

0 9 1 1 0 0 0 9 1 1 0 0 0 0 0 9 9 9 1 0 0 9 0 9 01 01 01 01 01 01 01 01 01 01 01 01 00 00 00 00 01 01 01 01 00 00 01 00 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 5 4 3 2 1 9 8 7 6 5 4 3 2 1 9 8 7 6 12 10 11 12 10 11

Closings

Listings

Derek Cassel 2011

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Appendix 1: Graph Explanations The data collected to generate these graphs is based on a general search of the residential listings of the Intermountain MLS. There are some restrictions placed on the search in order to eliminate unique properties which do not represent normal market activity. For example, Cancelled and Expired listings are not currently included in the data set as they are not considered normal or realistic for the purposes of this study. A home which Expires means that it was priced incorrectly and thus does not represent a realistic attempt to sell. Therefore the markets reaction to the listing should not be considered sluggish or unduly harsh. The purpose of these graphs is only to attempt to describe market trends as they occur. Total Number of Sales The number of closings reported each month in Ada and Canyon Counties. Total Sales Volume The sum of the purchases prices of all of the sales that closed during each quarter. This graph is only updated once per quarter. It allows for a comparison between each quarter of this year and last. Keep in mind that there are some restrictions placed on the search. For example, a 10,000 acre ranch outside Emmett would not be included because it would skew the data. These graphs are only intended to show relative trends. New vs. Existing Sales The total number of sales reported in the region along with a breakdown showing how many of the sales were of new construction and how many were existing. Average Sales Price: New vs. Existing The average sales price reported across the region. Also the average sales price of new construction and existing. Average Sales Price The average sales price reported each month in Ada and Canyon Counties. Average Days On Market for Existing Homes The average number of days that it takes to get an acceptable offer for a listing across the region. Please keep in mind that for our purposes, the number of Days On Market is only the number of days from Listing to Pending. It is not the number of days from Listing to Sold. A trend line is added to smooth out inconsequential spikes in the data. Sales by Category Since the decline of our market in recent years, there has been an increase in the number of bank owned (REO) sales and Short Sales. When there is a high enough percentage of these properties, their values can start to drive the rest of the market. This graph does not show the total sales volume from month to month, but only seeks to illustrate the percentage of total sales that are made up by REO, Short Sales, and Traditional sales. Buyer vs. Seller: Relative Strength This graph is based on a comparison of the original asking price of each closed listing to its eventual sales price. The listings included this graph are all existing in order to capture the free floating market and not be influenced by large scale marketing shifts of the major builders. The purpose of the graph is to describe how realistic sellers are when they price their homes and how determined buyers are to get the property on which they are negotiating. When the line reaches 0%, it means that buyers are paying exactly what sellers are asking. Listings per Sale This graph is a simple comparison between the number of sales each month as compared to the number of new listings. Not all listings sell (some expire or are cancelled), but it gives us a feel for the apatite of the market relative to the supply.

Derek Cassel 2011

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New Listings vs. Monthly Closings The number of homes on the market (inventory) changes so rapidly that it is useless to attempt to provide a running count of that inventory. Such a count would only represent a snapshot in time which could be seriously out of line with reality within a few minutes of its being taken. In order to get an accurate picture of the way that the inventory is changing over time the total number of new homes coming on to the market each month is compared to the total number of homes leaving the market (because of a sale). Each month during which there are more new listings than sales represents a theoretical increase in the inventory. Because it is impossible to predict which new listings will leave the market for a reason other than a sale, numbers of new listings for a given month will continue to adjust for a few months until the only remaining new listings for that month are also listings which ended up selling at some point.

Derek Cassel 2011

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Appendix 2: Terms of Use By using or viewing this data, the user agrees to these terms and conditions specified by the provider: 1. The provider of this data makes no claims as to its accuracy or to the quality of the statistical methods that were used in its gathering, processing, and analyzing. 2. All Real Estate transactions should be based on a comprehensive study of the specific property in question and should only be undertaken with the advice of a qualified Real Estate professional. 3. This data is not intended to predict future market conditions or to forecast future data. 4. The provider of this data will not be held liable for any decisions made or actions (taken or not taken) by the user as a result of reliance upon this data. 5. This report may be freely distributed, but it must always be distributed in its entirety. 6. Future statements may be added to this agreement with or without notification to the user. 7. The user may not charge or collect fees or any form of reimbursement for providing this report to others.

Derek Cassel 2011

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