Income Property Report for the Treasure Valley

Have prices hit rock bottom?

Have prices in the valley hit rock bottom? The numbers appear to say "Yes!" We've had five straight months of above average activity (20+ sales) translating into a substantial improvement in the absorption level, which is now at about 9 months, compared to 24 months just 18 months ago. Distressed sales are dominating the market with 87% of all sales (almost 90% of those are REO/bank owned). Supply and demand appear to be equalizing. There is evidence that prices have recently increased. We've had more than one REO turn into a bidding war this month. For ecample, an REO 4-plex came on the market at $220,000 which caused an investor feeding frenzy. After 14 offers, the price was pushed up to over $250,000. Could be a sign of the times, not only the price, but also that there were 14 offers.

I think it is safe to assume that distressed sales will continue to dominate the market through the end of the year. It will be interesting to see if prices begin an upward trend.

Chad Vaughn

Good News for Sellers.....

Alarm Sounds for Buyers

Ada County foreplexes most likely have hit bottom and there is no evidence that they will decrease any further. The ingredients: Active listings are down, pending deals have been trending up and up for the past 6 weeks, and deals are closing. The result is the lowest inventory levels, based on buyer absorption since 2007. I believe that once the pending Ada County fourplex deals actually close, the data will likely show that prices are on their way up. Based on the current rate of sales, Canyon County inventories of duplexes and fourplexes are also at record lows, with less than 3 months of inventory for fourplexes and 9 months for duplexes.

Why? I've been involved in most of the recent fourplex deals in one way or another and I think that we have had a lot of investors sitting by waiting and waiting to see if the bottom would ever hit. Regardless of where the bottom is, recent prices made cash performance too good to sit by and watch any further. So maybe we see values go up next month, but the interest rates make up the difference. Remember, 1% of savings on the interest rate is about eqivalent to a $25,000 price reduction. So, the deals are still there to be made.

Tony Drost