When summing up the December and 2021 Ada County housing market, one could easily argue that this past year brought the most fast-paced market we’ve ever seen, particularly in the first half of the year. The market conditions were incredibly competitive.
The Treasure Valley has faced limited housing inventory for years now, a phenomenon we’ve detailed in many of our reports. This lack of supply has been insufficient compared to the persistent demand for housing, which has driven up prices and caused a home buying frenzy earlier this year. We tracked the pace of the market by a few metrics — how quickly homes went under contract, the share of sales that sold over list price, and for how much they sold over list price.
We’ll first explore the data for each of these metrics in the existing home sale segment to illustrate just how competitive the market was in 2021.
The Days on Market (DOM) metric measures the time between when a property is listed and when it has an accepted offer. Overall, DOM for existing homes trended down, reaching a historic low of just nine days in May 2021. Since then, the DOM metric has increased and normalized, reaching an average of 30 days in December 2021 — 18 days longer than in December 2020, and more in line with pre-pandemic levels from early 2020.
Not only were existing homes selling at a faster rate, but a larger share of total sales sold for more than their asking price, usually the result of multiple offer situations. The share of homes that sold over list price passed 50.0% in September 2020 and reached a peak of 75.9% in March 2021. By December 2021, it dropped to 22.6%, possibly indicating that list prices have become more aligned with what buyers are willing or able to pay.
But how much over asking did buyers pay in 2021, on average? As the share of over list sales went up, so did the amounts paid over asking. In May 2021, 69.7% of existing homes sold were for over list price, with an average premium of $44,075, the highest we’ve seen (going back to 2006 based on our existing dataset). The average amount paid over list has dipped since then, coming in at $16,487 in December 2021.
Unsurprisingly, with tight competition for existing homes and so many buyers willing to pay over list, the impact on prices was significant. The median sales price for existing homes was $510,000 in December 2021, up 21.4% compared to a year ago. The year-to-date median sales price was $505,000, a 34.7% increase compared to 2020, and the largest annual gain since we began tracking this data in 2006.
The new construction segment also saw year-over-year price jumps, largely due to increasing costs of land, labor, and materials — as well as the ongoing impact of pandemic-related shutdowns that continue to create delays in increase costs in the global supply chain. In December, the median sales price for new homes was $579,990, a 30.4% increase compared to December 2020. The year-to-date median sales price in 2021 for new construction was $525,000, a 23.1% increase over the previous year.
While homes have continued to sell at higher prices, interestingly, sales have dipped in recent months, and more notably so when comparing data year-over-year. In 2021, there were 10,855 home sales (new and existing combined) a decline of 11.8% compared to 2020 and the lowest number of total annual home sales for the county since 2017.
How can one of the fastest growing metros in the U.S. with a persistent demand for housing have declining home sales? The data provides a few clues.
First, buyers can’t buy homes that aren’t there, so limited inventory has definitely limited sales. This is especially true at the lower price points where buyer demand is most acute and inventory is hardest to come by. While inventory has ticked up over the last six months, the slim 0.7 Months Supply Inventory in December is still a far cry from the 4-6 months needed for a balanced market.
When year-over-year home sales are broken out by segment, there was a 6.7% decline in existing home sales and a 21.7% decline in new construction sales. One reason there may be fewer new construction sales could be because buyers are having to wait longer to move into their new homes. The average number of days between when a home goes under contract and when it closes was at 106 days in 2021, 30 days longer than in 2020, limiting the number of closings that can take place within the year and possibly leading some new home buyers to opt for an existing home with a quicker move-in date.
Much to the relief of buyers, we saw more normal market times and increases in inventory in the last few months of 2021. However, we’re still a long way from a balanced market and we hope more homeowners are able to realize the great values for their properties by listing in the coming months.
Other notable statistics from December 2021:
- The overall median sales price (existing and new construction combined) in December 2021 was $546,000, a new record high. This is likely due to the large share (35.1%) of the typically higher priced new construction home sales that closed in December.
- There were 582 homes available at the end of the month — 75.8% more than in December 2020.
- As mentioned in the release, the overall (new and existing combined) Months Supply Inventory was 0.7 months. For the existing segment, it was 0.5 months, or approximately two weeks.
This report is provided by Boise Regional Realtors.
