Inventory Squeeze

One of the best indicators of where prices are going in any real estate market is to track available inventory. When the number of active listings balloons, as it did during the Great Recession, the real estate market becomes flooded and prices fall. This phenomenon played out in communities across the United States from 2008 to 2012.

The opposite is also true. When the inventory of available homes shrinks, real estate prices begin to climb. That’s the trend in the Wood River Valley this month, with some areas of Blaine County set to experience significant price gains. Additional factors such as low interest rates and very little new construction will likely increase competition amongst buyers as we prepare to move into our busy summer selling season.

Consider the following: In May 2009, there were 1,949 properties listed for sale in the Sun Valley Board of Realtors database. The listed value of those properties totaled $1.9 billion. Today, there are 1,068 properties listed for sale in the MLS with a total value of $1.2 billion. So roughly half the number of listed properties as we had five years ago and a 37 percent decline in total dollar volume.

In the resort area including Warm Springs, Ketchum, Elkhorn and Sun Valley, 12 homes sold last year for under $500,000. Today, there are only 2 active listings under $500,000. In resort area condos listed at $250,000 or less, there were 72 sales in the past year meaning an average of 6 closing per month. The MLS shows just 30 units now available, indicating a supply of just 5 months.

The inventory squeeze is most pronounced in the south valley community. Last year there were 121 single family homes sold in Hailey and Bellevue with list prices below $250,000. Today there are just 16 homes available in that price point, indicating a supply of less than 2 months.

Unless a substantial number of new entry level homes hit the market in the next few weeks, the south valley will soon become a Seller’s market with first-time home buyers competing for a dwindling number of units. Can local real estate trends swing from a Buyer’s market to a Seller’s market in less than a year? Time will tell, but it’s shaping up that way in 2013 in parts of Blaine County.