The news is out that home prices in the Boise Metro Area rose by 18% in 2020, yet some of the trends were quite surprising. Let’s dive in and analyze the sales from last year to give us a realistic idea of what we can expect in 2021.
Low Inventory
Unfortunately, this is one trend that will continue through this year and possibly longer. According to the 2019 Census Bureau, the Boise Metro area is growing in population by roughly 1,700 people per month. That’s about 20,000 moving to the area annually and these stats are still be to updated.
Due to the COVID-19 situation and the mass exodus of individuals and families escaping large cities in search of small to mid-size cities, such as Boise we can expect the number of those moving here is actually substantially more. To put it in perspective in 2021 we can estimate that around 2,000 people are expected to move to the Valley monthly and as it stands today the Boise Metro area only has only about 120 homes active for sale. That’s a dramatic decrease from a year ago when the housing inventory was still extremely low. Obviously, 120 homes are nowhere near enough housing for those moving to the area, not to mention those already living here looking for a home to purchase. On the positive side there are projections that those who held off selling in 2020 may be ready to sell this year should the COVID-19 numbers start to dissipate.
Home Prices
While it’s true that home prices did rise substantially in 2020 it’s interesting to note that not all homes faced a bidding war, and actually the majority of homes sold at full price or under asking price in both Ada and Canyon Counties in 2020. Take a look at this chart to compare sales throughout the area:
These statistics demonstrate that only 20% of existing homes sold CASH and 80% sold with financing from a lender or other type of financing. Of all the homes that sold in Ada County 64% sold under the asking price or at full price (within $100). This is good news for buyers in that it clearly shows there are still opportunities to purchase a home without having to fear losing out on an offer due to a cash offer or a bidding war. This chart also gives sellers a realistic view not to expect all offers will be over the asking price and cash especially with prices projected to continue to rise over the next year.
Canyon County remains the most affordable area to purchase a home in the Valley and most likely will remain this way in 2021. In Ada County, the most popular areas and the highest increase in home prices were found in Meridian where home prices rose by nearly 16% from 2019. The Boise Bench saw a 19% increase from the previous year with the median price in 2020 at $322,000 and we shouldn’t ignore one of the newest sought-after areas, West Boise that held its own compared to the competing areas for rapidly increasing pricing. The median price for a home in West Boise in 2020 topped at $329,000 a 15% increase over 2019.
New vs Existing Homes
With the ever-growing need for housing, buyers are seeking refuge in newly constructed or soon to be under construction homes. Yet the supply of new homes has fallen drastically behind the demand for several years. A shortage of materials, labor, and building lots will mean many months and years of inadequate supply. Here’s a look at the new construction vs resale homes that sold in 2020:
Low Mortgage Rates May Rise
One of the factors fueling the demand for housing this past year was the historically low-interest rates, but experts are all saying we will slowly see those rates rise in 2021. In 2020 rates hit a historic low of 2.71% and some are saying that’s as low as we’ll ever see it go. Will the projected increase in rates impact the market in the Boise Metro area? Well, yes and no. As we read earlier in this article the majority of those purchasing homes in the area need financing to do so. The difference of just 1% could make an affordable home out of reach for many buyers. The good news is that according to Lawrence Yun, Chief Economist of the Association of realtors mortgage rates will remain stable in 2021, with the potential for a slight increase from the all-time low of 2.71% we saw in 2020 for 30-year, fixed-rate mortgages. “In 2021, I think rates will be similar or modestly higher, maybe 3%,” he says. “So mortgage rates will continue to be historically favorable.”
With a slight rise in rates, it may push some buyers out of the market, but with the high demand, it will most likely not make a difference in home pricing. For buyers however these rates will most likely not last longer than 2021 making it a good time to start the loan process and get locked into a low rate while they still can.
As a reminder, now is the time for those considering buying or selling a home to get their affairs in order. For buyers that means having their financing in place, making a backup plan for temporary housing, should it take longer than expected to purchase a home, and have a clear idea of exactly what home they are looking for before starting to shop.
Homeowners looking to sell should prepare that their home could sell quickly once on the market. Packing now before going on the market can save sellers a lot of time and stress once their home goes pending. Don’t wait until the last minute to hire a real estate agent. If you are considering selling in the next six months now is the time to schedule the listing consultation. This free consultation will provide you with the steps needed to prepare your home before it goes on the market.
If you would like to know more about the current real estate market in Ada or Canyon Counties please contact jennlouis@welcometoboiseandbeyond.com for more details. Sign up for this blog to stay up to date on real estate trends for the area, visit local neighborhoods, take a home virtual tour, home buying and selling tips, and more.
Jennifer Louis is the owner and operator of Welcome to Boise and Beyond, a full-service real estate company dedicated to those relocating to the area and locals looking to sell their home, and maximize value. Jennifer writes and produces with her team weekly updates on the real estate industry in Boise and the surrounding Treasure Valley. Her blog contains insights into some of Boise’s best local businesses, places to visit, and neighborhoods to discover. If you’d like to schedule a free consultation please call: (208) 509-9122 or via email.
