As buyers in the Boise Metro area snap up what little housing inventory exists many are hopeful that Spring will bring an increase in homes for sale, but will it?
Traditionally, Spring is when the Boise Metro Area housing market really opens up. As temperatures rise and days are longer many homeowners on the cusp of selling start the preparations of getting their home ready to sell, but this year may not bring as many homes to the market as some may hope. Mainly due to the pandemic situation dragging on and the fear of moving in such uncertain times has made many put an indefinite hold on selling their home.
Yet, as sellers put the brakes on selling their homes, the Boise Metro area is seeing a huge influx of buyers moving to the area looking to escape crowded higher-priced cities for Boise’s more affordable housing and outdoor draw. So what can we expect as we approach Spring? Pretty much the same as we’ve been seeing since Winter, low inventory, high demand and rapidly increasing pricing.
Here’s a snapshot of the Boise Metro Market Trends in January this year compared to one year prior:
Home prices have risen in Ada County by over 20% and in Canyon County by 33% annually. Here are some other interesting trends we saw in January:
In Ada County of the 355 existing, single-family homes that sold in January 56% of them sold over the asking price, and 24% of those homes sold with cash financing. In Canyon County of the 185 existing, single-family homes that sold 56% sold over asking price and 23% sold with cash financing.
Boise’s market and trends could be considered good news or bad news depending on your role in this market.
For sellers, it’s good, if they are ready to sell now while the market sizzles. We’re seeing more homes for sale include terms in their listing such as “selling as-is”, “seller to make no repairs”, etc. Many buyers are agreeing to buy the home while removing their inspection contingency and also removing their appraisal contingency to make their offers more appealing. In the end, it seems price is the ultimate deciding factor. In homes that are priced under Fair Market Value, we can see up to 25 offers on a home and offers up to 30% over asking price. This is why it’s imperative that sellers price their home correctly to draw this kind of interest on a home and ultimately get the best offer.
The above stats can be disheartening for buyers looking to purchase a home in the area, but the reality is that homes are out there, and with a good strategy, the right agent and patience, buyers do eventually get the right home. My blog article lays out proven tips for buyers looking to buy into this market. The trends are showing that while inventory remains low home prices will continue to rise making it a good time to invest in a home and start building equity. Additionally, interest rates remain incredibly low making rising home prices more affordable in the long-term. Since the majority of homes sold are still be financed via a lender it’s a great time for buyers to see if they qualify for the low-interest rate and start their home search.
Here is the median price breakdown for single-family existing & new homes in the Treasure Valley for January 2021:
Even in Boise and the surrounding Treasure Valley’s hot seller’s market, incorrectly pricing a home can cost a home seller thousands of dollars. You’ve heard about those bidding wars and homes being sold substantially over their asking price? Well, those homes all had one thing in common, they were listed at Fair Market Value or slightly below.
Fair Market Value is a home value range based on what other comparable homes in the area recently sold for. This value range takes into consideration market trends, the home’s features and unique attributes, and the target audience. If you’re overpricing your home with the thought that you’re building in a negotiating buffer, this is not how you should be viewing your pricing strategy. It is far better to list at fair market value and not negotiate, than list too high and expect to negotiate, and here’s why:
Deters Potential Buyers
The reality is that a high price tag does not mean you’re going to cash in big on the sale. It’s actually more likely to deter buyers and have them looking at other homes in their price range. Buyers know that in this market most sellers are expecting full price or higher offers, so if your pricing a home at the top of their range they most likely won’t bother.
Here’s an example of a recently overpriced home that lost out on multiple buyers: A home in a desirable neighborhood in the Boise Bench checked all my buyer’s boxes, but it was overpriced by about $40,000. It had been on the market for a week (a lifetime in this market) with zero offers. I tried to convince my client to consider it and perhaps put in a low offer, but she refused in fear of the seller being difficult to work with or wasting a time writing an offer that wouldn’t be considered. In the end my buyer found the right house and the house in question dropped its price considerably and ended up selling for $60,000 less than the asking price with only one offer after 14 days on the market. In this example pricing high lost the seller viable offers and potentially a bidding war that may have brought the price higher.
The longer your home remains on the market, the longer you have to continue to make mortgage payments, as well as utilities, taxes and home maintenance costs. Every month it goes unsold, you pour more money into the home that you will not get back. With a high price, there is no negotiating up. If there are no buyers, you are spending money that you would not have had to if the home had been priced appropriately at the beginning. This can force you to have to lower the price and lose the valuable momentum that comes from a home that is brand new on the market.
In some cases, an overpriced home may get an offer asking price. It may be that your home is in a desirable neighborhood or that the buyer agrees that your house is something special. However, at a higher price, you may have lost potential cash buyers and then will only be able to consider buyers requiring financing from a lender, and hence an appraisal.
The loan amount the bank will lend the buyer is based on the appraised value of the house rather than the agreed-upon purchase price. The appraiser will use the prices of recently sold nearby comparable homes to help determine the value of your house, in other words, the fair market value. If the agreed-upon price is considerably higher than the fair market value the appraisal in many cases will come in low. In this case the seller will either need to reduce the price to meet the appraisal value or the buyer will need to come up with additional funds to make up the difference.
There’s nothing wrong with pricing a home on the high side of fair value. But do not list over that fair market value price range. In Boise’s market, with many buyers, a fair market value-priced home or even a little under could receive multiple offers because people recognize that it is a good deal. It may even spark a bidding war that will then drive the final offer price above your list price to your desired price or more.
How do I find my home’s fair market value?
With so many online resources at our fingertips pricing a home should be relatively easy, right? Wrong! Idaho is a non-disclosure state meaning that home sale prices are not published to the public, and are only available to those with access to the Multiple Listing Service. This means that Zillow’s Zestimates are well, just a guess. Zillow, Realtor.com, and other online home search sites have an agreement with Idaho’s MLS to post homes that are for sale, but sold homes are at the discretion of the homeowner or realtor to post onto their site. Without an accurate, up-to-date database of homes that have sold Zillow cannot create enough data to come up with an accurate fair market value.
There is also a new trend for online real estate companies that will sell homes for a flat fee and include a value range to price the home from an online licensed agent. These online real estate brokerages claim they are full-service and save sellers thousands on real estate fees and commissions, but in reality, their listing agents are virtual and often misprice a home due to a lack of first-hand knowledge of the home’s condition and are in turn costing their clients more than any fees they would have paid with an experienced real estate professional.
To correctly price a home, it’s essential to know what you are pricing. This means a professional real estate agent needs to come to the home and carefully look at the property and home. Not just any real estate agent, however. Your real estate agent should know the neighborhood, have a history of selling homes in the area, and have a track record of selling homes for full or over asking price. If you’d like to know your home’s fair market value start by hiring the right real estate agent for your home.
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.
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.
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 firstname.lastname@example.org 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.
Many in the Boise area have joined the ranks of those working from home. Without a traditional home office, it can be challenging to tune out the distractions of others at home, daily chores, and household needs. Establishing a go-to work zone will help you regain that focus. Here are some fantastic ideas to convert unused space into a perfect workplace:
If you happen to have an extra closet this can be fantastic, tucked away space for an office. Consider clearing out space and installing shelving and a small desk. Remove the doors for more space while you work, or keep them on and close the “office” when you’re finished for the day. These small home office ideas can also work with an armoire or TV Cabinet.
Under the Stairs
Many Boise homes from the turn of the century and mid-century era have stairs leading to a second level or a basement. Unless the space under the stairs is necessary for the structure of the home this space can often be opened up and provide a great cozy spot for an office. Make sure to install an electrical outlet and consider light fixtures. Maximize productivity by installing shelving and storage bins in the vertical space.
If you happen to have a large entryway into your home this can be a great workspace that is rarely used other than for the occasional visitor or Amazon deliveries. Hang a large mirror to make space feel less narrow and find a desk that blends with the rest of the decor or that can be folded up after work.
If you are fortunate to have a large garage or one that you mostly use for storage why not set up space in it for an office? Remove old shelving or rearrange the space to give you a flexible workspace. Make sure to have it insulated and get electricity run to your work area to keep you working all year round. Ask me if converting a garage to sqft adds value to your home.
The Storage Shed
If you don’t have one already consider installing a garden shed in your yard if you have space. Make sure to get a window installed for natural light, electrical and get it insulated to keep you warm or cool depending on the time of year. This out of the house space can give you the privacy and quiet desired and keep the commute to a minimum. This is a great alternative for a small home office space when multiple family members need a home office. Here’s a fantastic, affordable local Idaho custom garden shed company.
The Laundry Room
Both small and large laundry rooms can be a great area to create a workspace. Transform a folding table into a desk during work hours and install shelving and storage bins to maximize the space. Consider changing out older, bulky machines for stackables to create more space. Dedicate a time for laundry to be done that is not during work hours to ensure a quiet, calm work area.
There are many other spaces around a home, large or small that can serve as a functional, comfortable workspace. The key is to find a spot that flows with the layout of the home but provides a dedicated spot to keep your work in one area.
One of my favorite things in taking buyers to visit homes is offering suggestions of ways to use the space to meet their needs. Whether it be an art room, home office, pantry, playroom, etc. there are so many ways to create new space even in an older home.
Jennifer Louis, Boise Area Real Estate Expert is a relocation specialist for Boise and the Treasure Valley. Helping hundreds succeed in finding their perfect home while simultaneously assisting homeowners to prepare and sell their homes.
We’ve all heard about the low inventory of homes for sale and the sad stories of home buyers being outbid on a home by a cash buyer or an over asking price offer. Then there’s the story of finding the perfect house online, but it’s gone before anyone has the chance to see it. While those stories are true it’s not the whole picture. Let’s compare the myths with actual facts of buying a home in Boise in this market.
Myth: Only Cash Offers Are Being Accepted.
We have indeed seen an increase in all-cash offers over the past year mostly due to the influx of out of state buyers cashing out on their homes in higher priced markets, however, it may be surprising to note however that the majority of homes being sold are being sold to those who are financing through a lender.
There were 1094 existing, single-family home sales from October-December 2020 in Boise, and out of those only 238 were cash sales. This means that nearly 80% of homes that were purchased last quarter came from home buyers that needed financing. This is good news for the majority of buyers out there requiring traditional financing to purchase their next home.
However, even with a strong financing offer, it’s important to understand why a cash offer could be appealing to the home seller and how to make your offer stand out if competing against one.
CASH:A cash sale reduces risk. With a cash offer, there is no chance of the loan not going through.
FINANCING:Offer a personal letter with your offer reassuring the seller of your employmentand the certainty of your loan. Also, put down a strong earnest money deposit (over 1% of the price) showing you are willing to put some skin in the game.
CASH:A lender-required appraisal is not needed. In this market, an appraiser may not have enough sold homes to use to compare and may appraise the home value under the agreed upon price. This can risk the loan and possibly force the seller to have to reduce the price to get the home sold.
FINANCING: Waive the difference in price should the appraisal come in lower than the sales price. The lender will only loan up to what the appraisal came in at, so the buyer should have funds set aside for any difference or have other options worked out with the lender to ensure financing if this happens. This will put the seller’s minds at ease that the home will sell at the agreed-upon price and on time even with a low appraisal.
CASH:Quick closing time. The other reason cash is so appealing is that with no loan approval process a home can close very quickly, even under a week.
FINANCING:Choose a local Idaho lender that can close quickly if needed. Make sure to get as much paperwork into your lender as possible to get your loan process started before you put an offer on a home. One of the biggest hangups for lenders is waiting for the buyers to submit needed paperwork required by loan underwriters.
Myth: All Homes Sell Over Price.
Although home prices have continued to rise in Boise over the past several years, you may be surprised that the majority of homes for sale are not selling for over the asking price. If we look at the 1,094 existing, single-family home sales in Q4 of 2020 we see that over 600 of those homes sold at full or under asking price. Although price is important it isn’t the only factor. Here’s how to make your offer stand out if you are only able to offer full-price:
Know what the seller wants. Are there any other terms, other than price, that could make your offer stand out? This is why hiring the right real estate agent is so important when buying a home in this market. A good agent will have done their homework and know what the seller is looking for in an offer. Sellers may appreciate renting back the home, a quick close, or maybe a longer closing period. There are many different terms, besides price that can make one offer more appealing over another.
Myth: Buyers Are Waiving Inspections.
The inspection contingency allows the buyer to conduct a more in-depth inspection of the house, typically by hiring a licensed home inspector to discover if there are any costly repairs or areas for concern on the home. The fact is in the past six months we are seeing an increase in buyers waiving their inspection, but it’s not the majority. Should a buyer waive the inspection to make their offer stand out?
Although this can be a way to get an offer accepted, it can open a buyer up to a lot of risks should there be major repairs or damaged items on the home that were not disclosed or known about by the seller. Most real estate agents will not recommend their clients waive this important protection, but there are some exceptions. For example, if the buyer is or has a friend/family member with the knowledge to inspect the home before putting an offer in. If the buyer feels comfortable with the assessment then waiving the inspection, if there are multiple offers, could be a good bargaining tool. Another option is to hire an inspector to quickly inspect the home for any major items before writing an offer. This can be more of a challenge as inspectors are typically booked out by several days and the cost can range from $150-$300+ for an inspector.
Either way, it’s important to decide how you will handle the inspection contingency before putting an offer on a home. This is something you and your real estate agent should discuss in-depth before starting the home buying process.
Myth: Homes Sell In One Day.
While some homes sell the first day on the market, the majority of homes stick around long enough for most serious buyers to get a look. The median days on market for existing, single-family homes in Boise during Q4 of 2020 was four days. Four days is still not a lot of time, but it gives most home buyers a chance to take a good look at the home.
In this market, it’s essential for buyers to be proactive in their search and have time set aside to look at homes as they come on the market. The majority of homes go for sale Wednesday through Friday in this area. To ensure an in-person visit make sure to talk with your employer about having the flexibility to go see a home last-minute when it hits the market. Try to visit the home during the day, rather than waiting till the end of the day when it’s harder to see the home due to light or risking not having enough time to get an offer in should there be other offers on the table. If you are coming from out of state plan on taking 4-5 days up to two weeks to visit homes as they come available and make sure your agent has alerts set up to be notified as homes hit the market that meets your criteria.
It’s important to remember that every seller and buyer are unique and there are many methods of getting an offer accepted when there are multiple offers. Buying a home in the Boise area can be a challenge, but geared with the facts, preparation and a real estate agent that has proven experience in this market can make all the difference.
Jennifer Louis, Boise Area Real Estate Expert is a relocation specialist for Boise and the Treasure Valley. Helping hundreds succeed in finding their perfect home while simultaneously assisting homeowners to prepare and sell their homes.