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Jennifer Louis
Residential Real Estate Expert
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Real Estate Pricing Psychology

Real Estate Pricing Psychology

THE PSYCHOLOGY BEHIND REAL ESTATE PRICING

Have you ever wondered why some homes’ list price is an unusual number?  Or why the price is listed as $100 less than a whole number, like $549,900 rather than $550,000?  It’s simple, it comes down to the subconscious psychological trends that can impact how a potential buyer views your home.  Your Realtor knows that using real estate pricing psychology in the list price can potentially bring more interest and ultimately buyers.  Here’s why.

A Good Deal

With prices all around us going up, who isn’t looking for a bargain or good deal these days?  The same is true in real estate.  There is a concept called the “Left Digit Effect” that can trick your brain into thinking one price, that is pretty much the same amount as another price is a better “deal”.  For example, let’s take a common item at the grocery store, eggs.  If you think about it have you ever seen a carton of eggs for sale at $5.00?  More likely you will see the price, $4.99 or $4.79.  This is quite common in most grocery store items as well.  The $4.99 convinces your brain that it’s a better deal than if it was priced at $5.00.  The same goes for pricing a home.

After researching recent comparable sales, you and your real estate professional decide on a list price.  You would like to price at $400,000, but your Realtor recommends $399,900.  It’s only $100, but all those nines change how potential buyers view your list price.  It can assist buyers in thinking they are getting a deal and they will be more likely to want to visit your home. As we read from left to right, the brain places more value on the left digit because it was read first.

$400,000
$399,900
It’s only a $100 difference, but all those nines change how buyers view the price.

With that said, people aren’t that naïve and most people know that there is no real significant difference between the two prices mentioned above, yet psychology plays out in your favor and can help you build more interest in your property.

Memorable Pricing

You may have heard your Realtor talk about a buyer’s price range when selling your home.  Buyers typically look for even numbers that fall within their set range.  For example, a buyer wants to purchase a home for around $500,000, but they will look at homes between the range of $475,000 and $525,000.  Why $525,000 and not $519,000?  That’s because naturally, our brains prefer whole, even numbers in consecutive order.  Such as 100s, 200s, 300s, etc.  The same goes for $25, $50, $75, etc. However, your real estate professional may want to get your home noticed and may try to break this pattern.

So instead of listing your home at $500,000, they may suggest a listing for $497,000.  This is a less common number to see on a list price and your brain knows it.  The unusual number may make your home’s price stand out more to a buyer than an even number.

An odd number such as $497,000 in a competitive market may make a home’s price stand out to a buyer.

Another factor that makes your home price memorable is that the brain has to work harder mentally to process that price.  Simple math such as finding the number in the middle of a budget range such as $475,000 to $525,000 is easy when it’s an even number, like $500,000, but $497,000 can be a brain scratcher and our brain has to think harder, or in some cases pull out a calculator.

The goal is to stand out, but not in a negative way.  Too unusual of a price such as $497,235 could raise red flags to potential buyers and they may wonder if something is off with the seller and avoid the property.

Herd Mentality

After your Realtor presents your home’s value range, based on how comparable homes have been selling, market trends, and time of year they may suggest listing on the low end of the value range.  That may seem counterintuitive since as the seller you are hoping to get the higher price in that range.  However, by pricing your home on the lower end of the range, you can potentially attract more interest in your property and possibly more than one buyer.

Buyer psychology or behavior shows that buyers typically don’t want to be the only ones interested in a house.  When a buyer knows other potential buyers are interested in the same house this makes the home more appealing and buyers are often willing to pay higher when this occurs.

More than one buyer interested in the same house eases a buyers mind and can drive them to offer a higher price.

Everyone’s Best Interest

It’s important to keep in mind that your Realtor’s goal is to get you the most money for your home and keep the process as smooth as possible.  Even with all the psychological tricks mentioned your Agent will ultimately price the home in a way that will accomplish their goal of selling your home for the maximum price.  In some cases, a unique number, or a few “9s” may not make a difference.  If your house is the best home compared to others that have recently sold or that are for sale they may opt to list your home on the higher end of the value range.

It all starts with a Realtor evaluating a home and agreeing to a price with the seller. Then, based on market trends, they might set a listing price that engages potential buyers. This number may change as the list date approaches, but generally, it will be within the range you and your Realtor have agreed on.

If the seller is looking to sell the house quickly, they will likely agree to a lower listing price. If a Realtor thinks they can get above-listing bids, they might also push the seller for a unique number. This is all part of real estate pricing psychology.  Each property has its own psychology based on the neighborhood, trends, and time of year.

Hire the Right Realtor

The real estate professional you choose should be an expert in their field, your area, and market, but having a proven record of psychology pricing up their sleeve is also important.  Realtors in general aren’t psychologists, but they are in the business of understanding buying behavior.  Having years of experience working with both buyers and sellers your Realtor can guide you on the best way to price your home based on knowing what affects each party’s behavior in a real estate transaction.

Considering buying or selling a home in the Boise Metro Area?  Set up a free consultation to learn the most effective way to buy or sell real estate in today’s market with real estate expert, Jennifer Louis. (208) 509-9122 or jennlouis@welcometoboiseandbeyond.comJennifer Louis Boise Real Estate

Escape Boise’s Heat at Bogus Basin

Escape Boise’s Heat at Bogus Basin

ESCAPE THE HEAT IN BOISE

Summer in Boise brings lots of sunshine and at times a lot of heat.  One of the local’s favorite ways to escape Boise’s heat to cool off is to head to Bogus Basin, a Mountain Resort and Ski Area just 16 miles NE of the city. During the warmer months, visitors will find the snow-filled mountain landscape converted into a paradise of summer activities for nature lovers.  Here are a few of the activities you can find at Bogus Basin for the very adventurous and those who just want to cool down and relax.

ADVENTURE AT BOGUS BASIN

The Basin Gravity Park includes over 20 miles of cross-country mountain bike terrain.  Here is where you can find flow trails and some fantastic jumps.  The 14 trails all varying in style and difficult are designed for all levels, beginner or expert and you can take it slow or get some serious speed (and air).  Take a tour around the well-known Around the Mountain Loop then jet down through tree-lined paths leading back to the mountain base.

Photo Credit: Bogusbasin.org

If after making it back to the mountain base and you are still in need of some speed a must is the Glade Runner Mountain Coaster.  Over 4,000 feet of a wild outdoor ride through the mountain with enough twists, turns, and thrills to fulfill any adrenaline seeker’s dreams.

Still looking for fun?  There’s more.  Don’t forget the various other thrill-seeking activities located at the Base Area including Summer Tubing down a 300′ slide, Bungee Trampoline, Rock Wall, and more.

CHILL OUT ON THE MOUNTAIN

For those who prefer a more relaxing experience and want to escape Boise’s heat Bogus Basin has you covered.  One of the best ways is to catch a ride up the mountain on one of their scenic chair lifts.  Ride up, enjoy the view and head back down just as you came, or take a hike on one of the many trails, and stroll back to Base.

After a beautiful hike is sure to stay for Music on the Mountain.  A free, full-production concert with some of the best views in the area.  Check out the event calendar to find the next concert.  If you enjoy music from local artists Music on the Patio is also a great way to relax.   Local musicians perform all summer long on Saturday and Sunday from 2-5 PM.  A great way to support local musicians, and relax, and the best part is it’s FREE.

There’s still more.  Yoga at Bogus Basin takes place Thursday Evenings, Saturdays, and Sunday mornings for one-hour sessions. All levels are welcome and you don’t need to be a Yoga Guru to attend.  They just ask that you meet on the lawn in front of the main lodge at the mountain base and bring your own towel or mat.  Oh, and by the way, it’s free as well.

Photo Credit: Bogusbasin.org

You can purchase a season pass or pay for a day’s adventure if you will be using the chair lifts or any of the thrill rides at the mountain base.  So, if you need to cool off and get a different perspective head to Bogus Basin while it’s still hot.

Considering a move to Boise, Idaho?  Discover this great city, the most sought-after neighborhoods, and hidden gems only the locals know about and take a tour with relocation and real estate expert, Jennifer Louis. (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com

August 2022 Boise Market Trends

August 2022 Boise Market Trends

It’s feeling cold out there lately, and it’s not due to the weather.  Boise Metro Real Estate has really cooled and everyone is feeling the chill.  Boise’s real estate market has really shifted from the hyper-inflated, red hot market we’ve all become accustomed to and has quickly moved to a more volatile market where both buyers and sellers seem lost on how to best move forward.

Let’s Look At The Data

Year to Date Ada County has seen over an 11% increase in single-family home values from one year ago. Yet, Days on the Market have increased.  Homes in Ada County are staying on the market roughly 21 days before going pending, compared to just 13 this time last year.  Additionally, in July 2021 there were approximately 2000 single-family homes for sale and if we look at this year in July there were 3,200 homes for sale.  A big jump in inventory.

Canyon County has experienced similar data.  A nearly 7% increase in sold prices since last year. Days on Market increased from 10 in July 2021 to 25 days on average before going pending last month. Canyon County had a 43% increase in the number of homes for sale in July of this year compared to one year ago.

With a significant increase in inventory, buyers are taking their time, and homes are staying on the market much longer than in past months and years. With buyers pulling back, due to higher interest rates as well as apprehension, coupled with an increase in the number of homes for sale the market has started to really shift.

Unfortunately, headlines are feeding into buyer apprehension.  Yes, the market has shifted, but some buyers in need of a home are holding out, expecting the bottom of the market to drop out due to negative articles featuring Boise as one of the most overpriced markets in the US.  It appears that some buyers are expecting home prices to come down dramatically. However, the data is showing a correction, not a crash.

With the buying frenzy we’ve witnessed over the past nearly 10 years sellers are struggling to understand that they need to price their homes in line with the market.  A recent article by Fortune Magazine said that “Historically speaking, home prices remain sticky until economics forces sellers’ hand.”  As the end of the rise in interest rates remains elusive, where prices will ultimately end up over the next months remains “sticky”.  Corelogic predicts that Boise is one of the markets due for a pricing correction, but many Sellers’ are struggling to follow suit. As sellers’ have continued to push the prices higher and interest rates continued to rise, sellers have been forced to drop prices back to fair market value.  In past years each month home prices continued to increase, as that has not been the case the past few months, sellers who aggressively priced high have also had to aggressively price drop to find the market where the buyers are purchasing.  

With that said it’s important to note that there is still a supply issue in the Boise Metro Area.  As of July 2022, we have roughly a three-month supply of homes for sale.  Sounds great, but a balanced market, in favor of neither the buyer nor seller is six months of inventory.  We’re not quite there yet and most likely won’t get there for some time.  Home prices most likely won’t go up like in past years, but they won’t be coming down much on price either.  Simple economics of supply and demand will continue to push Boise’s market upwards.

In Ada County in July, 671 single-family homes were sold, and this includes new construction and existing homes.  More than half sold under the asking price. In Canyon County 389 single-family new construction and existing homes were sold.  More homes sold under and at the asking price than over.  This is a big change from one year ago.  Additionally, the days on the market have increased in both Ada and Canyon County compared to the same time last year.

What to Expect Moving Forward

Boise Metro home prices have really shifted due to an increase in inventory, higher interest rates, and nervous buyers.  So we can expect homes to stay longer on the market through 2022 and home prices to remain flat or continue to decrease.  In 2023 as interest rates go back down more buyers will most likely enter the scene and home prices may start to trickle upwards.

Is it a good time to buy a home in Boise?

This is the first time in years that buyers are having the ability to negotiate with sellers as well as take a little more time in viewing homes, sometimes even two or three times before putting in an offer.  Interest rates are higher if a buyer is financing their purchase, however, many sellers are offering or may be willing to offer cash to buy down mortgage points to allow buyers to lock in a lower interest rate.  The interest rates will most likely go down in 2023 and home prices will start to trickle upwards, making purchasing a home more competitive.  Now, buyers have more purchase power, and is a great time to get into a home and start building equity.

It is also important to remember Idaho is a non-disclosure state, meaning sold prices are not published to the public, so Zillow and other online resources that provide Zestimates or home value estimates are inaccurate and in this volatile market, this is true more than ever.  Hiring a real estate agent that understands the market is imperative to understanding a home’s current value and making the right offer.

When should I sell my home?

It may not seem like it, but we are still technically in a Seller’s Market.  There are just three months of inventory meaning we have more buyers than homes for sale.  If selling during 2022 it is imperative to price the home correctly.  Over asking price offers and multiple offers have become less frequent, so understanding what buyers are willing to pay right now is key.  Also, sellers should expect their homes to stay on the market longer than in past months.

Having a turn-key ready home tends to attract more buyers, so if considering selling, now is the time to get the home market ready.  2023 should start to level out for sellers and things may pick up.  If you are considering selling now or even next year, start working with your real estate professional sooner than later.  They can help you to know what improvements to make to your home and how to get it market-ready.  Hire a real estate agent that knows your market.

 

Here’s the snapshot of Median Home prices as of July 2022

Median Sold Price July (includes new and existing homes)

Boise: 294 home sales – $525,000

Meridian: 189 home sales  $597,000

Kuna: 63 home sales –  $471,000

Eagle: 71 home sales –   $860,000

Star: 41 home sales –       $605,000

 

Median Sold Price July (includes new and existing homes)

Nampa: 193 home sales $438,000

Middleton: 28 home sales $507,000

Caldwell: 96home sales $425,000

If you are considering buying or selling a home in the Boise Metro Area please contact Real Estate Expert, Jennifer Louis at (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com

Boise River Summer Fun

Boise River Summer Fun

BOISE RIVER SUMMER FUN

Hot temperatures are finally here and Summer in Boise is underway.  Whether you are a local or just here checking out this great city, the Boise River has great Summer fun for everyone.   Float, kayak or paddleboard down the Boise River all summer long.  Start in East Boise’s Barber Park and leisurely float an estimated two hours past city parks, downtown Boise and Boise State University and finish at Kathryn Albertson Park.  Rent a raft or tube at Barber Park or bring your own.  Alcohol is not permitted while cruising down the river, so it’s typically a fun, but more subdued experience than other towns that have rivers floating through the city.

Another great activity is to just enjoy the views and find a spot for the perfect picnic, the river is for everyone.  There are 25+miles of tree-lined greenbelt you can walk, run, or bike all along the Boise River. Boise Greenbelt Map

There are so many great spots to check out along the way.  A personal favorite is to head out early and have breakfast with our locals Jabari and Tafari as you pass by their encounter in Julia Davis Park home of the Zoo Boise.

From there head towards Eagle and stop for lunch with a riverside view at the Sandbar Patio Grill.  If you are looking for entertainment don’t miss those California Waves, check out the Boise Surf Wave in the beautiful Whitewater Park.

Whitewater Park in Boise, Idaho

 

 

 

 

Stay and play at Whitewater Park and have a picnic or take a swim at Quinn’s Pond.  Once you are back at the Greenbelt you can head over to some of Boise, Meridian and Eagle’s fantastic parks.  The activities on the Greenbelt along the Boise River are endless and there is something for everyone.

Considering a move to Boise, Idaho?  Discover this great city, the most sought-after neighborhoods, and hidden gems only the locals know about and take a tour with relocation and real estate expert, Jennifer Louis. (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com

June 2022 Boise Market Trends

June 2022 Boise Market Trends

For the first time in years we are seeing a shift in local real estate.  To understand what that means all you have to do is type “Boise” in any search engine and prepare to be flooded with articles and videos talking about the dark cloud hanging over Boise’s real estate market.  Take these recent headlines:

Boise May Be Center of Real Estate Collapse – 247wallst.com – May 2022

The real estate frenzy is over – Axios – May 2022

Wages Can’t Keep Up with Spike in Housing Prices – The New York Times – May 2022

Housing Market Fever Starts to Break in Boise – The Washington Post – April 2022

Boise Housing Market More Likely to Self Correct than Crash – Home Buying Institute – May 2022

It seems all eyes are on Boise and how the real estate market will respond to the continuous increase in home prices coupled with rising interest rates.  From the articles above, it doesn’t seem many are optimistic that the real estate boom we’ve experienced the past several years will continue, but is that the case?

Let’s Look At The Data

Year to Date Ada County has seen over a 16% increase in home values from one year ago.  Canyon County has experienced a nearly 13% increase since last year.  Mortgage rates are increasing, and homes are becoming unaffordable, so what is driving this increase?  It’s the same story we’ve heard over the past years and months, low inventory, and high demand.  The majority of the demand is coming from out-of-state buyers, looking to cash out on their equity and invest in “more affordable” markets.

Boise keeps making headlines as unaffordable, yet for those coming from California, the Seattle area, New York, and other large metropolitan areas across the US, Boise’s median home price of just under $600K is still appealing.  Yet, many local homeowners are holding on to their homes due to fear of what they can afford if they move, and with limited homes on the market, and builders not able to meet demand, the inventory remains low low low, driving up prices.

This trend, however, can’t continue.  As other markets around the US soften, and it becomes harder for homeowners to sell their homes, the demand here will start to die down.  We are starting to see signs of this in some areas of the market already.  Homes priced over the median price of $600,000 in Ada County have  already being impacted. The same for Canyon County.  Homes are sitting longer on the market and multiple offers and bidding wars in this price range are becoming less frequent.

Here are the charts showing how homes are selling in May 2022.

In Ada County in May, 872 single-family homes were sold, and more than half sold under or at the asking price, In Canyon County there 454 single-family homes were sold.  More homes sold under and at the asking price than over.  This is a big change from one year ago.  Additionally, the days on the market have increased in both Ada and Canyon County compared to the same time last year.

What to Expect Moving Forward

Low inventory has kept the market prices moving upwards, but as more and more people are squeezed out of the market, prices will likely begin to flatten.  Don’t expect a housing crash like in 2008/2009, but be aware that the trend of increasing prices is gradually going to slow down.

As many homeowners are worried we’ve reached the peak of the market they may start to put their homes on the market as we move towards Summer and this in turn will increase the inventory and keep prices from shooting up like in the past few years. This will most likely create what  economists refer to as a “self-correction.”

Inflation, higher mortgage rates, along with a sense of economic uncertainty could cool the real estate market as we approach the second half of 2022.

According to a recent interesting article on ZeroHedge.com, “New home sales are often viewed as a leading indicator of the state of the overall housing market.

Nationally, new single-family home sales dipped by more than 16% from March and decreased to nearly 27% from a year ago. New home sales dropped to the lowest level since the lockdown back in the Spring of 2020

The biggest drop in new home sales occurred in the under-$400k price range, indicating that high prices and rising mortgage rates are squeezing middle-class Americans out of the housing market.

WolfStreet broke down the current dynamics in housing.

Homebuyers struggle with spiking mortgage rates which make the high home prices that much more difficult to deal with. And with each increase in mortgage rates, and with each increase in home prices, entire layers of potential buyers abandon the market, and sales volume plunges.”

The Mortgage Bankers Association (MBA) data for April 2022 shows mortgage applications for new home purchases decreased 10.6% compared to a year ago. Compared to March 2022, applications decreased by 14%.

The Federal Reserve blew up this housing bubble when it artificially suppressed interest rates and bought billions of dollars in mortgage-backed securities. Now the central bank has pricked the bubble by allowing rates to rise ever-so-slightly.”

So to sum it up we can expect demand for housing to start cooling in the second half of 2022, however, a crash is unlikely and home prices will most likely flatten and homes will sit longer on the market than in the past.

Is it a good time to buy a home in Boise?

As more homeowners rush to get their homes sold, buyers will start to see more choices when home shopping, however, they shouldn’t expect home prices to come down dramatically, if at all.   Buyers should be aware that searching for homes at the median sales price or lower is where it is the most competitive.  Buyers will need to carefully assess how to make their offers stand out against other offers.  Hiring a real estate agent that understands the market and the areas of interest is imperative to getting their offer accepted.

When should I sell my home?

We are still in a seller’s market making it an excellent time to cash out that equity while the market is still in favor of the sellers and while buyers are still looking for their next home.  Sellers should expect that their home may sit longer on the market than in previous years and that buyers paying top dollar are less likely to buy a home “as is”, meaning they will want the home in top shape before purchasing.  Pricing the home correctly is imperative to attract multiple buyers and get the best offer.  Hire a real estate agent that knows your market.

Here’s the snapshot of Median Home prices as of May 2022

Median Sold Price

Boise: 580 home sales – $580,000

Meridian: 399 home sales  $580,000

Kuna: 109 home sales –  $490,000

Eagle: 122 home sales –   $929,500

Star: 74 home sales –       $645,000

 

Median Sold Price

Nampa: 354 home sales $449,500

Middleton: 71 home sales $545,000

Caldwell: 175 home sales $420,000

If you are considering buying or selling a home in the Boise Metro Area please contact Real Estate Expert, Jennifer Louis at (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com