Buyer Burnout is Real in Boise’s Hot Market

Buyer Burnout is Real in Boise’s Hot Market

As Boise continues on as one of the hottest real estate markets in the US it’s to be expected that there will be buyers that will start to tire of playing the game.  Bidding wars, homes flying off the market, and dramatic price increases have pushed many potential buyers from finding their home in the Treasure Valley and giving up on real estate here altogether.

The recent NYTimes article:

Burned by Hot Housing Market, Some Buyers Back Off

discusses this issue and what’s behind it.  I was featured in this article along with my new clients and although the subject can be depressing, it’s also eye-opening for those looking to buy a home in the area.

My experience working with Buyers in this market is that if they are realistic, reactive, and properly prepared they can avoid buyer burnout and succeed in finding a home relatively quickly.  This is why hiring the right real estate agent is so important.  In a competitive market like Boise, a good agent will know how to navigate a multiple offer situation and make their client’s offer stand out.

Over the past several years I have helped numerous buyers successfully find their first home or next home on their first and or second attempt.  Thoroughly researching the home and comparables, communicating with the listing agent, and coming up with creative terms to make an offer stand out against the competition are some of the ways my clients have beat out other offers, even those that had higher-priced offers than my clients. Don’t take my word for it, read what some of my clients, many with challenging circumstances said about their experience working with me in this market. 

If you would like to learn how to succeed in buying a home in Boise’s hot market please contact Jennifer Louis, Real Estate Expert for the Boise Metro Area for a free buyer consultation. (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com

Boise Home Prices Hit an Affordability Wall – July 2021 Market Trends

Boise Home Prices Hit an Affordability Wall – July 2021 Market Trends

Home prices have continued to increase breaking records in both Ada and Canyon County all Spring and Summer.  More and more first-time home buyers are finding themselves priced out of the market as home prices hit an affordability wall.  Should we expect the market to continue to soar as we move into the second half of 2021?  Let’s look at the past few month’s statistics and the current trends to get a realistic idea of where the real estate market is heading through the rest of this year.

Low Inventory Continues to Drive Up Prices

The historic low inventory across the Treasure Valley is the driver in the drastic price increases in homes the past few months and we are still nowhere near seeing it level out.  To better understand the situation homes that take 30 days or longer to sell would be considered a Buyers Market, homes under 30 days a Sellers Market.  Here across the Treasure Valley, we have seen for several years homes selling in record time, typically less than seven days.

Ada County YTD – 77% of homes have sold in 7 days or less and only 9% took 30 days or more to sell.

Canyon County YTD –  74% of homes sold in 7 days or less with only 8% selling in 30 days or longer.

We’re not just in a Seller’s Market, we’re in a WHITE HOT SELLERS MARKET.  If we compare the Days on Market with last year we can see just how much things have changed.  2020 was known as a very hot market, but the numbers show that in Ada County 55% of homes sold in 7 days or less, and 26% took over 30 days to go pending.  That means homes are selling even 20% quicker this year than last year.

Will Boise Metro Home Prices Eventually Cool?

If we look at the homes on the MLS or market today (7/15/21), especially in Ada County, we are starting to see homes sit a few days longer than the past several months.  This could be contributed to the builders releasing more spec homes with longer closing times than existing homes, but it also could point to the fact we are nearing an affordability wall.  Meaning the median price of homes is becoming less affordable for the majority of buyers actively looking to purchase a home.

The median price for a single-family home in Ada County in June hit the mouth dropping $525,000 median price and $424,000 in Canyon County.

This pricing, along with a fast-paced market has made buying a home inaccessible to many who may otherwise have been home shopping.  Even with record low interest rates many home buyers are finding homes at these prices to no longer be affordable.

Yet, there is some light at the end of the home buying tunnel according to National Association of Realtors NAR Chief Economist, Lawrence Yun,

“Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.”

As we see an increase in inventory, and less home buyers on the market due to affordability we should start to see the dramatic increase in prices taper off.

What to Expect Today on the Market

It’s important to note, however, that homes priced in the fair market value range or below still have a tendency to sell for over the asking price.   As homes enter the market, multiple buyers are attempting to purchase the home, creating a competition to come up with the best offer.  What the best offer depends on the seller and what they are looking for, but generally price, financing, and days to close along with other terms to make the offer more appealing and are what will make one offer stand out from the others. Here’s a snapshot of home prices so far this year:

 

 

 

Ada County 2021 market stats

The charts demonstrate that the vast majority of homes this year have sold at the asking price and above.  Very few homes are selling under the asking price.  It will be interesting to watch as sellers attempt to increase prices if we will see these same statistics in the coming months.  Most likely we will see the prices start to flatten or level out, but only time will tell. Another interesting fact is that 22% of the homes sold in Ada County YTD sold with cash, a slight increase over last year, but still the majority of homes are selling with financing from a lender.  With interest rates still at historic low rates, and home prices going up many have opted to get a loan rather than use all their cash on a home purchase.   In Canyon County just over 18% of homes were purchased with cash and the remaining 82% with a financing from a lender.

There’s Never Been a Better Time to Sell.

With the median sales price breaking records and buyers from out of state continuing to move to the area during the summer months the market remains hot.  Yet, the statistics and data above show a possible cooling in the market in the coming months, meaning that sellers shouldn’t expect prices to continue to go up and sell as quickly as we’ve seen the past year.  One main clue is looking at new construction.  Builders are starting to release their inventory and we’re starting to see price drops in many of the spec homes coming on to the market.

68% of spec homes actively for sale have dropped their price as of 7/15/21.

New construction is a great indicator of the market and the increase of inventory they are putting out on the market along with the price reductions point towards a cooling of home prices across the board..  Homeowners who have been considering selling would be wise to start getting their homes prepared to sell now to maximize the sales value and have a chance at getting multiple offers.

Here is the median price breakdown for single-family existing & new homes in Ada and Canyon County for June 2021

Median Sold Price

Nampa: $415,000

Middleton: $430,000

Caldwell: $404,000

Median Sold Price

Boise $500,000

Meridian: $455,500

Eagle : $849,000

Star:  $532,000

Kuna: $455,000

For more details on the market and trends in the Boise Metro Area please contact Boise Area Real Estate Expert, Jennifer Louis at (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com
The Truth About Zillow, Realtor.com and Trulia in Idaho

The Truth About Zillow, Realtor.com and Trulia in Idaho

One of the first things homeowners do when they consider selling their home is going to Realtor.com, Trulia, or  Zillow to get their Zestimate or their estimated home value in the current market.  These mega data-based websites access public and user-submitted data and plug this information into an algorithm to compute an estimate.  There’s just one problem, Idaho is a non-disclosure state.

So, what does a non-disclosure state mean?  It means that sale prices in a real estate transaction are not disclosed, recorded, or published as public records.  However, the National Association of Realtors (NAR) website states that non-disclosure states “cannot withhold sold data from Multiple Listing Service (MLS) data feeds.” The restrictions on disclosing this data relate only to the public display of that information.  So, if you want to know the true sales price of a home, you will need to ask the seller directly or work with a real estate professional with access to the MLS.

How does this affect you if you are selling or buying a home?  Well, as long as you are working with a professional with access to the MLS you can find the most accurate pricing to buy or sell a home based on recent home sales in the area.  However, it can become confusing when you rely solely on online websites like Zillow to price a home.  This is why many For Sale By Owners are unsuccessful, even in our hot market, because without accurate sales comparables, their homes are typically grossly under or overpriced.

Since these online platforms count on public county records as their primary data source driving their price algorithms without the correct/up-to-date sales price their price for homes in the state of Idaho are often WAY OFF.  On Zillow.com they disclose the following regarding their price estimates, “Since we rely on public county records as our primary data source driving our Zestimate algorithms (which take comparable sales prices into account), it poses a challenge to calculate accurate Zestimates when sale prices are not available.”

These real estate websites can access a sales price when it is listed on the MLS, but they can’t see how much it sold for.  Take two homes that recently sold in Boise last month, one sold for $70K over the asking price, and the other sold for $30K.  Since Zillow can’t access the final sales price, it uses the listing price which is substantially less than the final price and hence is unable to come with an accurate sales price estimate. Here’s an example: I went to several online sites like Zillow and plugged in the street where I live in the Bench in Boise.  Zillow’s estimated price range for almost every home on the street, including my own was incorrectly priced by $20K-$100K.   When selling a home, incorrectly pricing from the start can make a big difference in the final price.

Even Zillow acknowledges their Zestimates are limited and has a rating system for their accuracy per county.  4 stars is Best Accuracy, 3 stars is Good Accuracy, 2 stars are Fair Accuracy and 1 star is Tax Assessor Value or Unable to Compute Zestimate Accuracy.  All counties in Idaho including, Ada, Gem, and Canyon County only had 1 star.   According to Zillow.com, a Zestimate, “is not an appraisal and it should be used as a starting point. We encourage buyers, sellers, and homeowners to supplement the Zestimate with other research such as visiting the home, getting a professional appraisal of the home, or requesting a comparative market analysis (CMA) from a real estate agent.”

Does the lack of accuracy for Idaho on Realtor.com, Trulia, or  Zillow.com mean it’s no longer a good source when considering selling a property?  No, there is still a lot of good information that can be found on these websites, and their platforms are often easy to use and enjoyable to look at, but even Zillow acknowledges that even with their most accurate Zestimates it does not substitute working with a trained professional to find the true value of your home in the current market.

If you would like to know the true value of your home in the current market please contact Jennifer Louis, Real Estate Expert for the Boise Metro Area for a free home value analysis. (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com

May 2021 – Boise Metro Market Update

May 2021 – Boise Metro Market Update

This Spring homes slowly trickle onto the market as more and more arrive from out of state looking to invest in a home or relocate to the area.  Needless to say, home prices continue to increase throughout the Treasure Valley.  What can we expect for the real estate trends in Boise through Summer in regards to home prices and inventory?  Let’s look at last month’s market statistics and the trends to see what lies ahead.

Recent data is showing that over 20% of homes being purchased in the Treasure Valley are owned by someone other than the primary homeowner.  According to BoiseDev.com, “The combination of record-low interest rates, a nationwide housing shortage and a renewed interest in single-family homes outside of major metro areas due to the COVID-19 pandemic is fueling a new wave of investor capital in American real estate.” This along with those relocating to the area from out of state is what is driving the prices in the local real estate market.  With such high demand and no end in sight, we can expect prices to increase through Summer potentially up to 30% by the end of 2021 compared with last year.

Ada County Median Price $481,208 – April 2021 – 28.5% Increase Year Over Year

Canyon County Median Price $399,856 – April 2021 – 46.5% Increase Year Over Year

With the Boise Metro area continuing as one of the nation’s top competitive markets does that mean all locals are excluded from purchasing a home?  Well, that depends.  For first-time homebuyers, it has never been a better time to secure a mortgage at record low-interest rates. These rates allow buyers to afford more house than they could two years ago, however with out being able to cash out on equity from a home many first-time buyers struggle to put together attractive offers that compete against cash or large down payments, adding a sense of security to the Seller when choosing a buyer.  We are also seeing more local homeowners start to tap into the equity they have built over the past several years and downsize or move to more affordable areas within the Treasure Valley.  Rather than refinancing some homeowners are selling their homes and reinvesting in a different type of property or going out further from Boise to get more house for the same price.

There has also been a myth that the majority of homes being purchased by out-of-state buyers are with cash, and the stats show that is not the case.  In fact in Ada County in April only 22% of the homes sold were from cash offers, which means nearly 80% of the homes sold were secured with either a VA, FHA, or Conventional loan.  In Canyon County, it was the same with 18% of the homes sold all cash and over 80% via financing.

Another misconception is that ALL homes are selling over the asking price and the data is showing that simply is not true.  We are seeing multiple offers and homes selling substantially over the asking price typically when homes are competitively priced.  In Boise and Meridian homes at the median price point of around $450K and under tend to have multiple offers, as do “fixer-uppers” priced at fair market value.  We are seeing multiple offers and over asking offers on homes above $450K in Ada County, but these are typically homes in sought-after neighborhoods or areas or have large lots or newly remodeled homes.  Analyzing the data means we can expect a competitive market in hot neighborhoods and areas at the median price or below.

What About New Housing?

With the increase of demand for housing and more and more turning to new construction, we’ve seen some big changes in not only new construction pricing but also the process to secure a new home.  With the increase in the cost of materials to build new homes, builders are changing the way they market and sell their properties.  Recent data shows the national price of lumber and wood products increased by 28.8% since 2020, and by 30.5% since 2019. These costs are being passed along to homebuyers, and due to the uncertainty in the availability and price of materials, some builders are holding back available inventory until they are closer to delivery so they can price the property based on the actual build cost.

In the past you could secure a new home under construction with a build time of anywhere from 6-12months, now most builders are waiting to release their homes until closer to completion and asking for higher prices.  To secure a home now by a builder a purchaser may need to put down a hefty deposit and get on a waiting list that can take anywhere from 3-6 months. 

Once a property becomes available it’s another 12-18months for construction.  For those moving to the area and needing to get into a home, waiting nearly 2 years for a home is not an option. 

Another thing to look out for when purchase a new home is their price escalation clauses included in the purchase and sales agreement.   A price escalation clause is a provision included in a purchase agreement as a way for builders to recover some of all of the cost increases over the course of the home build and can be adjusted between the builder and purchaser while under contract.

With the changes mentioned above, we are seeing increases in price across new construction, however since some prospective sellers are also holding back existing homes from the market,  either because of  COVID-19, but also so they can find their next home before listing their current one this has made new homes less expensive on average, than existing homes for the past several months.  According to Boise Regional Realtors, “these unprecedented trends of new homes selling for less than existing homes, the willingness of buyers to pay over list price, and the record fast market times illustrate the incredible demand we’ve been experiencing, driven by low rates and insufficient supply.”

How to Successfully Purchase In These Market Conditions

Be Realistic.  In this market, it may be necessary to compromise on some of the ideal features you would like in a home.  Can you overlook the old carpet, outdated features, and budget in slowing remodeling the home yourself to your own taste?  Could you live with a two-car garage, over a three-car?  Compromising can save thousands and more importantly get you in a house in one of the greatest cities in the US now.

Broaden your search area.  Homes near the Greenbelt and downtown Boise go for a premium, as do newly built homes or homes with a large property.  Consider moving to neighborhoods that are less popular (now) with the knowledge that they may soon be a hot neighborhood to live in.  South Boise, West Boise has great neighborhoods and often with more affordable homes than more popular neighborhoods.  Check out homes in Nampa and Caldwell as these are great alternatives to get more house for less money,  just 20-30minutes from Boise.

Financing.  It is imperative that you have your financing in place BEFORE starting the home buying process.  A local lender, that understands this market and your options is the best place to start.  Have earnest money set aside as well as closing costs before you start the process, so you know how much you can afford and put your best offer forward.  If you are planning on using all cash to pay for a home have your proof of funds letter ready so this can be submitted with an offer, making your offer look reliable.

Put your best offer out there.  Remember, turn-key homes, or competitively priced homes in desirable areas attract multiple buyers.  To get your offer noticed, put together the best offer possible and remember most homes are selling at full-price or over asking price.  “Good Deals” aren’t really happening right now.  Put your best number and terms out there that you can comfortably live with.  The right home always comes around so be patient that it may take a few tries before finding the right home, but have faith it’s out there.

Selling a Home in a Sellers Market

Despite how easy it may look to sell a home in this market there are certain factors that homeowners should consider before selling their home.  The first factor is price.  Many homeowners rely on online real estate websites and the home that sold down the street to price their own home.  These are great places to start, but with Idaho being a non-disclosure state, Zillow’s Zestimates and other online websites are typically dramatically off on price.  And unless you know what your neighbor sold his house for and how it actually compares to your home in the eyes of an appraiser you might be using the wrong information to price your home either too high or too low.

Having worked with many homeowners the past couple of years I notice that the common thought among many of them is to price high and see what the market brings.  Unfortunately, that line of reasoning usually leads to homes sitting on the market, drastic price cuts, and disappointed sellers.  Fair Market Value is the ideal place to price a home in this market.  Too low and you will most likely get multiple offers, but they may not go as high as if you started at the right price range.  Start too high and you scare away many buyers that may have potentially paid your desired price but were cautious not to start the process knowing that most homes sell over the asking price.  How do you find what is the Fair Market Value for your home? Find a real estate agent with experience selling homes in your area and home type.

In Treasure Valley’s current housing market, we are seeing more than just price plays a role in the offer a homeowner chooses to accept.  The terms of the offer can often be more appealing than the price itself.   Over the past few months, more and more buyers are waiving their home inspection, or agreeing up front to purchase the home “as is”, meaning not asking for any repairs.  Additionally, some buyers using financing to purchase may agree up front to make up any difference in price should an appraisal come in lower than the agreed-upon price.  This along with other terms can make an offer more solid and secure in the eyes of the homeowner and may be worth more than just the final price.

Here is the median price breakdown for single-family existing & new homes in Ada and Canyon County for April 2021

Median Sold Price

Canyon County: $399,856
Nampa: $385,817
Middleton: $441,000

Caldwell:  $370,000

Median Sold Price

Boise $458,000
Meridian: $455,500
Eagle : $737,000
Star:  $485,000
Kuna: $417,000

For more details on the market and trends in the Boise Metro Area please contact Boise Area Real Estate Expert, Jennifer Louis at (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com

April 2021 – Boise Metro Market Update

April 2021 – Boise Metro Market Update

 Home prices in the Boise area continue to soar even with an increase in homes for sale popping up this Spring.  The past few months have shown that the real estate market in the Boise Metro Area remains red hot, as home prices have gone up over $100K from last year and all signs point towards home prices continuing to increase through summer.  Here’s a brief overview of where real estate stands as of April 1st, 2021.

Ada County saw an increase in price of 28% over last year to  a record median price of $469,000 for all homes.    The city of Boise also saw home prices continue to rise with the median price at $460,000, a 30% increase from the year before.   Canyon County had the largest increase in home prices with a 40% increase from a year ago leaving the current median price at just over $380,000.

Multiple offers continue to be the norm in most areas around town which contribute to bidding wars and ultimately higher prices.  In the City of Boise during the month of March 395 homes were sold of which 48% sold over the asking price, 41% at the asking price, and only 11% under the asking price.  Homes priced correctly (Fair Market Value) tended to stay on the market for 3-4 days depending on the area.

Although March brought us more homes for sale on the market compared to the Winter months, we still have a dire inventory shortage.   Home inventory refers to a hypothetical scenario in which no new homes become available for sale.  If this happened, and buyers could only choose from the houses that are already on the market, “months of inventory” is how many months it would take to buy up every house on the market.  A balanced market is six months of inventory.  Boise Metro Area is down to less than two weeks of inventory, hence the main reason pricing continues to rise, supply and demand.

Will the Local Housing Market Crash?

An interesting article recently on CNBC said that one of the most popular questions on Google lately is, “When will the housing market crash?”  Experts chime in to say that unlike the housing bubble from ten years ago we are seeing a very different market here, one that may cool, but not crash.  There are a few reasons not to expect a housing crash here in the Boise Area:

Supply and Demand. The difference between today and the housing bubble we saw back in the mid-2000s is the drastic lack of inventory.  As mentioned earlier in this article we are down to less than two weeks of inventory in the area.  Neighboring states continue to flock to Idaho for various reasons along with many locals in need of a different home to accommodate changing circumstances driving the demand for housing.  It’s also important to mention one of the largest generations, Millennials are now at the age to buy their first-home adding more buyers to the every-growing pool.

Mortgage Rates.  The mortgage interest rates remain very low historically allowing buyers to be able to afford more homes than ever before.  Over the past couple months, we have seen a slight increase in rates, but still, a 3.5% interest rate allows many to afford to buy a home for the first time or afford more homes than they had in the past.

Reduced Risk of Foreclosure. Back in the mid-2000s many homeowners, unfortunately, were cashing out on their home’s equity or were locked into negative interest mortgage loans creating negative equity.  This means many homeowners back then owed more than their house was worth.  Today’s situation is just the opposite, as underwriting for a lender has become very strict, unlike the situation ten+ years ago.  Now most homeowners can truly afford the homes they are purchasing.

We can expect the housing market to cool as mortgage rates continue to increase and buyers hit an affordability wall, meaning we can expect that home prices will peak and flatten, but not crash.

Buying a Home in a Seller’s Market

Be Realistic.  In this market, it may be necessary to compromise on some of the ideal features you would like in a home.  Can you overlook the old carpet, outdated features, and budget in slowing remodeling the home yourself to your own taste?  Could you live with a two-car garage, over a three-car?  Compromising can save thousands and more importantly get you in a house in one of the greatest cities in the US now.

Broaden your search area.  Homes near the Greenbelt and downtown go for a premium, as do newly built homes or homes with a large property.  Consider moving to neighborhoods that are less popular (now) with the knowledge that they may soon be a hot neighborhood to live in.  Check out homes in Nampa and Caldwell as these are great alternatives to get more house for less money,  just 20-30minutes from Boise.

Financing.  It is imperative that you have your financing in place BEFORE starting the home buying process.  A local lender, that understands this market and your options is the best place to start.  Have earnest money set aside as well as closing costs before you start the process, so you know how much you can afford and put your best offer forward.  If you are planning on using all cash to pay for a home have your proof of funds letter ready so this can be submitted with an offer, making your offer look reliable.

Put your best offer out there.  Remember, turn-key homes, or competitively priced homes in desirable areas attract multiple buyers.  To get your offer noticed, put together the best offer possible and remember most homes are selling at full-price or over asking price.  “Good Deals” aren’t really happening right now.  Put your best number and terms out there that you can comfortably live with.  The right home always comes around so be patient that it may take a few tries before finding the right home, but have faith it’s out there.

Selling a Home in a Sellers Market

Despite how easy it may look to sell a home in this market there are certain factors that homeowners should consider before selling their home.  The first factor is price.  Having worked with many homeowners the past couple of years I notice that the common thought among many of them is to price high and see what the market brings.  Unfortunately, that line of reasoning usually leads to homes sitting on the market, drastic price cuts, and disappointed sellers.  Fair Market Value is the ideal place to price a home in this market.  Too low and you will most likely get multiple offers, but they may not go as high as if you started at the right price range.  Start too high and you scare away many buyers that may have potentially paid your desired price but were cautious not to start the process knowing that most homes sell over the asking price.  How do you find what is the Fair Market Value for your home? Find a real estate agent with experience selling homes in your area and home type.  

In Treasure Valley’s current housing market, we are seeing more than just price plays a role in the offer a homeowner chooses to accept.  The terms of the offer can often be more appealing than the price itself.   Over the past few months, more and more buyers are waiving their home inspection, or agreeing up front to purchase the home “as is”, meaning not asking for any repairs.  Additionally, some buyers using financing to purchase may agree up front to make up any difference in price should an appraisal come in lower than the agreed-upon price.  This along with other terms can make an offer more solid and secure in the eyes of the homeowner and may be worth more than just the final price.

Here is the median price breakdown for single-family existing & new homes in Ada and Canyon County for March 2021

Median Sold Price

Nampa: $372,000
Caldwell: $377,000
Middleton: $425,000

Median Sold Price

Boise $460,000
Meridian: $459,500
Eagle : $715,000
Star:  $490,000
Kuna: $417,000

For more details on the market and trends in the Boise Metro Area please contact Boise Area Real Estate Expert, Jennifer Louis at (208) 509-9122 or jennlouis@welcometoboiseandbeyond.com