Pocatello Realtor Greg Johnston recently met with a couple wanting to move to the area.
They planned to spend two days looking at homes for sale, but Johnston said he only had six houses to show them and they were able to go through all of them in about two hours. Although the couple was able to find a home, they didn’t have the selection they were expecting.
“We have very low housing inventory right now. In fact, I would say it’s at historic lows,” said Johnston, who works for Keller Williams Realty East Idaho and has been collecting data on the market for years.
“It’s good if you’re trying to sell a home,” Johnston said. “It’s bad if you’re buying a home (because you) don’t have a lot of options.”
Ron Arnold, president of the Upper Valley Association of REALTORS, which serves portions of Jefferson, Madison, Fremont and Teton counties, says he has never seen inventory so low. He said they don’t have enough of the homes that appeal to first-time buyers and those looking for a slight upgrade.
Several factors are contributing to the shortage.
Michael Wheelock, president of the Greater Pocatello Association of REALTORS, said the economy is strong. Unemployment is low, so more people are working and can qualify for home loans. In addition, investors are interested in spending more money in the real estate market.
Johnston said there were 107 multifamily units sold last year — the highest number he can recall since 2008. And when duplexes disappear from the market, investors start looking at single family homes they can purchase and rent out.
“I like to see that, but that’s causing a shortage of inventory as well,” Johnston said.
Local Realtors said interest rates are also expected to rise in the future. That may be motivating some people who have been thinking about buying a home to do so now.
On the other hand, those who have already bought or refinanced a home at a lower rate may be more hesitant to sell and risk paying more in the future, which could be contributing to the low housing inventory, Johnston said.
“It’s a self-perpetuating problem,” said Gordon Wilks, broker/owner of Gate City Real Estate, adding that it will take some time to work things out.
Another problem is that development slowed during the recession and it’s taken years to recover.
“In the building industry, we went a very long time building very few houses in Pocatello and that has created (a) lower supply of new housing for the growth that Pocatello is experiencing,” said Ryan Satterfield, president of Satterfield Builders. “Now we are trying to catch up to that demand.”
He says they are currently building 15 homes, and 11 of those have already been sold.
“The pre-sold home market is much stronger now than what we have seen in past years,” Satterfield said. “In the past, we’ve usually had about 50 percent of the homes sold and 50 percent not sold. But every year is a little different.”
The shortage in the housing market is causing other complications as well right now.
Wheelock said people who can’t find a home to buy often decide to rent while waiting for their perfect house to come along, which leads to more shortages.
“This is now affecting the rental market inventory and bringing challenges to that sector of housing as well. As a result, currently, there are limited rental properties to choose from,” he said, adding that that’s another reason why investment properties are selling so quickly. “What also comes along with this ripple effect are the need for storage units and challenges with buyers having to store items to hold over until they find the home they want to pursue.”
Johnston said buyers shouldn’t be discouraged by the current market. Although they may not be able to look at 20 or 30 homes right now, they should still be able to look at a few and find something that meets their needs. In addition, he said the market tends to increase in the spring and summer so more homes will likely become available in the months ahead.
Local real estate agents encourage people who are in the market for a home to be prepared to act quickly when they find something they like.
“If you are a cash buyer, then have your cash ready to go. If you are a buyer utilizing a loan, then speaking to some of the many excellent local lenders and having a pre-approval letter in hand will allow you to pursue a home immediately as it hits the market,” Wheelock said, adding that such preparations might give people an upper hand if they end up competing with another buyer.