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:

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.

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

Median Sold Price

Boise $500,000

Meridian: $455,500

Eagle : $849,000

Star:  $532,000

Kuna: $455,000

 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

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 [email protected]

The past two months plus have been a whirlwind in Boise real estate.  With a growing number of buyers and a dwindling number of homes for sale, we’ve seen home prices shoot up to never-before-seen prices here in the Treasure Valley.

In Ada, the median price for a single-family home was $450,000 for home sales as of March 15th.  That’s up nearly 29% from the same time period a year ago.  The city of Boise is also setting new records with the median price at $448,500 as of March 15th.  The surprising fact is that of the 377 homes that sold in January and February of this year,  52% of those homes sold at over the asking price, several of which sold at over $100,000 over list price.  Nearly 25% of the recent sales sold cash and 80% of these homes sold in six days or less.

Are We In A Housing Bubble?

With pricing going up so quickly one of the most common questions is: “Are we in a housing bubble?” The warning signs are there, but it’s important to look at a few facts before assuming there is a  bubble and that it’s about to burst:

Supply and Demand. The difference between today and the housing bubble we saw back in the mid-2000s is the drastic lack of inventory.  A healthy market, in favor of neither the buyer or seller, should have six months of inventory.  In Ada County, we have about a 1.5 week supply or as of 3/15/21 290 home for sale.  Pretty dire indeed.

According to Mark Fleming, First American’s Chief Economist what we’re seeing in home prices today is nothing like what we saw in the mid-2000s.  He said,   “During the housing bubble, rapid house price appreciation was not entirely supported by economic fundamentals, but in today’s housing market, nominal  house price appreciation has been driven by a historic shortage of supply relative to demand and rate-driven surge in house-buying power.  May find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying and sale prices indicates there’s room for further house price growth in the months to come.” 

Housing Demand. The current demand for housing is spurred on by many reasons such as the low mortgage interest rates, the pandemic forcing many to look for housing that is better suited to a work-from-home and learn-from-home environment, and don’t forget all those millennials who are now reaching the age to invest in their first home.

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, according to  an article on keepingcurrentmatters.com  “Cash-out refinance volume over the last three years is less than a third of what it was compared to the three years before the crash. More than 38% of homeowners have paid off their mortgage “free and clear,” and another 18.7% have paid off over 50% of their mortgage.”  This means the current market is much more stable with little risk of foreclosure as we saw in previous bubbles.

So if we’re not in a bubble is this a good time to buy a home?  Armed with the fact that the housing market in the Boise Metro Area is very strong and continuing to go up, not to mention historically low-interest rates, now is a great time to purchase a home and start building equity, but that leaves the question:

As a buyer, how can you be prepared to buy in this 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 houses 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.

What’s the best way to sell a home in the current market?

If you’ve been reading the news and just finished this article it may seem rather simple to sell a home in today’s market.  Although most homes are selling in a record short period of time, it’s still imperative to price your home correctly and market it appropriately.  Remember, Idaho is a non-disclosure state meaning the sales price of homes sold is not public record, so those Zestimates and other online resources are often off by thousands of dollars.  Have a real estate professional who has experience selling in your neighborhood help you find the right starting price and prepare your home for the market.  Starting out right when selling your home can make the entire process less stressful and in almost all cases more profitable than trying to sell on your own or hiring the wrong person to sell your home.

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

Median Sold Price

Boise $450,000
Meridian: $442,772
Eagle : $7706,000
Star:  $482,450
Kuna: $400,490

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 [email protected]