Spring real estate season is here, but starting off much slower than in years past.  Far fewer homes have shown up for sale on the market compared to previous Spring seasons, however, we have seen an uptick in buyers entering the market since the start of the year, despite higher rates.   This is causing a leveling out of home prices in Boise and beyond and we can expect the downward trend from last year to continue to wind down.  How will this impact the rest of the Spring and Summer seasons this year?  Let’s take a look at the data so far.

The Facts Year-to-Date

In March, the median sales price in Ada County was just over $483,000 which is about 16% lower than a year ago. Canyon County had a median sales price of $395,000 or a nearly 13% decrease from last year at this time.  Both Ada and Canyon Counties did see homes selling in fewer days on market compared with the previous month which could be attributed to fewer homes going on the market over the past couple of months.  You will see in the chart below inventory has increased from a year ago, but it’s important to keep in mind when reviewing the data that many of those homes have been on the market for 90 days or longer.  As for the number of actual homes entering the market for sale, we are seeing much less than in previous years and this will most likely bring a more stable market.

We can attribute the decline in inventory for this time of year to the current homeowner’s situation.  Most homeowners here in the Treasure Valley paid far less for their homes and are locked in at much lower interest rates, such as 4% or lower.  This makes buying something new less enticing when the rates are in the high 6% range.  Many of the existing homes selling are from out-of-state investors or homeowners moving out to state or that MUST sell.  Builders still have homes for sale which have made up a larger percentage of homes for sale on the market and their incentives to purchase have made them quite competitive with the existing resale market.

With fewer investors purchasing homes and fewer existing homeowners wanting to change homes that leaves first-time home buyers as the main category of buyers on the market right now.  The current interest rates are in the high 6% range, but first-time home buyers that qualify for the Idaho Housing Finance Association (IHFA) loan, can lock in a rate in the high 5% range (almost a point lower in most cases).  Less competition and better rates have encouraged first-time home buyers to get back out there and find a home and we are seeing many sellers still willing to offer some concessions, either cash towards closing costs or towards buying down the buyer’s interest rate making it even more advantageous for first-time home buyers right now.

Here is a chart for Ada County’s new construction and existing resale compared with the previous year:

What to Expect for the Remainder of 2023

If you’ve looked over the facts and read up to now you will see that the market is stabilizing.  Home prices have gone down, but with more buyers entering the market we should start to see the pricing level out through the warmer months of the year.  If the rumors are right and the interest rates tick down to closer to 5%,  then we could possibly even see home prices go up slightly.  As soon as the rates go down we will most likely see a large influx of homes hitting the market and buyers filling out loan applications. Supply and demand will come back into play and affect home values.  As of March 2023, we have a nearly 1.6-month supply of homes for sale in Ada County for existing homes.  That’s still quite low for inventory.  A healthy supply or balanced inventory would be closer to six months, so just over a month of inventory is low should more buyers enter the market.

Should I Sell/Buy Now or Wait?

Schedule Your Consultation

Whether you are buying or selling consult first with a professional that understands this market and the best way to succeed.  Schedule a 30-minute no-obligation consultation with Jennifer Louis, Boise Metro Area Real Estate Expert at (208) 509-9122 or [email protected].

Analyzing the data from February we see that Boise home prices continue to decline compared with the same time the previous year, however, February sales showed that the prices were just a tick higher than the month before.  According to the Boise Regional Realtors monthly analysis, prices are still adjusting to mortgage rates and buyer demand, but comparing February to January of this year, the slight change in prices may indicate that we’re reaching a new normal with prices. Mortgage interest rates and supply versus demand will be the ultimate determining factors on where prices go, but it will be interesting to see if prices continue to level out.

The Facts Year-to-Date

More than 40% of all home sales that closed in February were new homes, which typically sell for more than existing/resale homes. However, the chart above shows that in Ada County the median sales price was $492,000, and in January it was $487,000.  In Canyon County, the median price was $390,000 down from $395,000 in January.  Days on market are about 3 days longer on average from the previous month, holding at around 86 days til a home goes pending.

The last two months are showing that home values are staying close to stable and agents are getting more and more calls from buyers.  They are out shopping again, despite the higher interest rates.  I have a listing in Meridian and in the first 30 days we had over 75 showings of the home.  Another listing I had in Boise had 35 showings in the first 5 days on the market.  Buyers are out there, but they are taking longer to put in an offer, as they carefully view all the available homes for sale within their budget.  Buyers are able to shop without the pressure of bidding wars and have much more negotiation power than they have in years here in the Treasure Valley.

The inventory overall is definitely higher than it was a year ago and this supply/demand has also impacted the price.  We can attribute the decrease in inventory to existing homes.  Much of that is due to the fact that homeowners who bought over the past five years, locked in at a much lower rate than what is available today.  If they are to sell, they will give up that rate, and combined with lower sales prices, it often doesn’t make sense to sell and buy something else right now from a financial point of view.

We do see more homes for sale in new construction and the builders are often offering substantial incentives to get their homes sold which has had a great impact on the overall home prices.

Here is a chart for Ada County’s new construction compared with the previous year:

What to Expect The Remainder of 2023

If you’ve looked over the facts and read up to now you will see that the market is stabilizing.  Home prices have gone down, but with more buyers entering the market we should start to see the pricing level out through the warmer months of the year.  If the rumors are right and the interest rates tick down to closer to 5%,  then we could possibly even see home prices go up slightly.  As soon as the rates go down we will most likely see a large influx of homes hitting the market and buyers filling out loan applications. Supply and demand will come back into play and affect home values.  As of the end of February 2023, we have nearly double the homes on the market than the previous February, however, there is still only about a 1.2-month supply of homes for sale in Ada County for existing homes.  That’s still quite low for inventory.  A healthy supply or balanced inventory would be closer to six months, so just over a month of inventory is low should more buyers enter the market.    

Should I Sell/Buy Now or Wait?

Schedule Your Consultation

Whether you are buying or selling consult first with a professional that understands this market and the best way to succeed.  Schedule a 30-minute no-obligation consultation with Jennifer Louis, Boise Metro Area Real Estate Expert at (208) 509-9122 or [email protected].

This is looking to be a very bumpy ride in real estate in the Treasure Valley in 2023.  With buyers out again shopping and sellers who held off selling last year getting their homes on the market we are seeing and can expect more activity in 2023 than 2022.  However, the Fed has made a few announcements that may make the real estate roller coaster a bit bumpier than anticipated.  Here’s a look at the Boise Metro market stats and trends which include what has happened so far this year and what we can expect as the year progresses.

The Facts Year-to-Date

The data put together by the Boise Regional Realtors in January 2023 may paint a grim picture of what is happening in real estate, however, these numbers can be explained.  January traditionally is a slower month in real estate.   The data shows that home sales in Ada County were down 32% from the previous year, however, it’s important to remember homes that close in January, were often viewed in November or December.  As interest rates were still over 6% and the holidays were in full swing many buyers hesitate to home shop during those months.  Not to mention it was an exceptionally cold holiday season with flights getting delayed across the country, many out-of-state buyers put off their holiday travels and which included looking at homes in the Treasure Valley.  The data also shows that inventory is up by 165% in Ada County and 108% in Canyon County compared to a year ago and this is due to the fact that homes are sitting on average more than double what they were from last year.  With more homes sitting on the market, and fewer buyers out shopping, inventory increased dramatically and this flowed over into January of 2023.

The median price of homes in January 2023 was $487,000, down by 9.7% from the previous year.  In Canyon County, the median price was $395,000, a 6.4% decrease from January before.  These declines in home values have alarmed many homeowners, with most having the concept that their homes have gone down by over 20%, but the facts show it’s actually quite a bit less.  One reason many have the conception their home prices have gone down by 20%+ is Zillow’s Zestimates.  Since Idaho is a non-disclosure state and sales prices are not public Zestimates in Idaho are way off.  Zillow then plugs in whatever list price they can find in the area to create an algorithm of a general home value range, however without accurate comps, their numbers are WAY OFF.  Read this article to understand how to use Zillow accurately in Idaho.  Considering how much the market shifted last year home prices didn’t actually come down as far as anticipated.  Especially when you consider that home prices in Ada County went up by 23% in 2021 and 26% in Canyon County.  However, in 2022 the overall value of homes in Ada County increased by just under 11%, so homes in January of this year are just about where they were one year ago.  In Canyon County in 2022 homes increased in value by 6.3%, so once again we see 2023, January market value at almost exactly where it was the previous year.   It’s not as dire as it seems.

Here is a chart for Ada County showing if you bought a home in previous years, the potential amount of equity you have in your home today, even with the current shifted market:

This chart demonstrates that home prices have continually gone up over the past five years.  Also, home prices did go up in 2022 by 10% compared to the previous year, however, the median price for January mentioned above is only taking into account the median price for homes sold in January 2023.  We can expect that we lost a percentage of our value increase, but still substantially higher than when the pandemic started.  There’s also one other key factor that will impact real estate in the Boise Metro Area this year and for the years that follow, people are still moving to Boise.  It may not be the “gold rush” we saw pre-pandemic and during the last couple years, but Boise remains a desirable place to move to.  For one, the median home price is under $500,000.  Compare this to neighboring States and Cities like California, Seattle, Portland, Denver, etc. and you can see Boise is still quite affordable to those who can sell higher and buy lower here.  Not to mention compared to other major cities, Boise still has relatively low crime, less traffic and the great outdoors continues to draw out-of-staters to the land of potatoes.  The out-of-state buyers will keep Boise’s real estate market moving and it’s estimated that about 15,000 people from California alone will be moving to the Boise area this year.   

Should I Sell/Buy Now or Wait?

Schedule Your Consultation

Whether you are buying or selling consult first with a professional that understands this market and the best way to succeed.  Schedule a 30-minute no-obligation consultation with Jennifer Louis, Boise Metro Area Real Estate Expert at (208) 509-9122 or [email protected].