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].

It’s this time of year that most real estate professionals will put together their Boise market predictions for 2023.  Predictions are typically based on the trends from the previous year, current and predicted interest rates, and local and national trends that could potentially affect the housing market.  With that said 2023 is proving to be a difficult year for many to predict and hence the reason there are widely varying predictions out there.  Moody’s Analytics is quoted as stating that the Boise Metro real estate market could be expected to go down in value by 20%.  Other reliable sources say home values could decline by 30%.  Then Zillow and a few other sources predicted home prices in the Boise area will most likely increase by just under 5% this year.  The contrasting opinions are most likely due to the roller coaster year we experienced in real estate in 2022, coupled with the fact no one is sure where interest rates will end up this year which will greatly impact the future of real estate in the Treasure Valley.  So, before I throw my hat in the ring, let’s look back at 2022 and then take a look at the trends I’m seeing as a relocation specialist for the area to come up with reasonable predictions for this year.

Looking Back at 2022

As predicted at the start of 2022, home prices shot up from early on in 2022 through the Spring.  Low inventory and relatively low-interest rates still in place continued to drive the market and home prices upwards.  However, around this time there was a lot of apprehension in the air as the talk of rising interest rates made headlines.  By Spring those rates started to climb, and home values peaked in value in April, a bit earlier than predicted.  With higher rates, many buyers found themselves losing buying power and suddenly they were unable to afford what they were looking for.  Those that could still qualify for a loan seemed to feel apprehensive about buying, concerned that prices would go down and it would be better to wait.  Homes started to sit longer on the market.  No longer gone in a weekend, we saw multiple open houses and only a handful of showings in the first couple of weeks.  As the apprehension continued, motivated sellers started having to do the unheard-of, “price drop”.  Yet, many sellers weren’t prepared to do this and kept hoping the market would stabilize, but the longer the homes sat on the market, the more pressure there was to lower the price to meet market demand.  The median days on market went to over 30 days, and by the end of the year, it was about double that.

The other trend we saw in 2022 was many buyers struggling to afford a home with the interest rates and closing costs associated with a home purchase.  To help buyers and sellers alike many sellers started to offer or agree to offer concessions to the buyers.  Concessions could be cash towards the buyers closing costs, lowering the price of the house, or offering funds towards buying the buyers interest rate down a point or two.  What a change from 2021 when buyers were feeling the pressure to relinquish most of their contingencies just to get an offer accepted over other buyers’ offers, now by Summer 2022 the roles were quite reversed, with sellers willing in many cases to bend over backward to assist buyers to purchase their home.

Seller concessions, price drops, and longer days on the market remained the norm through the end of 2022, the only real change is we did see an increase in available inventory.  The increase in inventory allowed buyers more time to shop for the right home and did help curb pricing from not declining too fast.  Some of the larger builders in town found themselves with more inventory than expected and offered for several months incredible incentives to get buyers into homes.

Trends In 2023

Interest rates are still quite high from a year ago, and although they fluctuate some, they tend to hang out around 7%.  Many sellers from 2022 who weren’t able to sell their homes last year either opted to rent out their home or pull it off the market right before the holiday season to wait and see if prices rebound if/when interest rates go down.  This created another lull in inventory by the very end of the year and we are seeing that in effect as of January 2023.  We’ve also been experiencing a colder-than-normal Winter in the Treasure Valley and many homeowners prefer to get their home on the market when the grass is green, sun is shining and flowers are blooming, so we could see the seasonal uptick of homes arriving on the market in March/April this year.  With more homes on the market, the question will be how will buyers respond during the typically busy home-buying season of Spring through Fall.

Looking at markets that neighbor Idaho such as California, Colorado, Washington, Oregon, Utah, etc. we see a slowdown in home prices as well, meaning it’s taking longer for those looking to relocate to a State such as Idaho, longer than anticipated to sell their current home, however, those markets still have higher price values than the Treasure Valley and once their home sells, Boise is still a relatively affordable area to buy a home.  As a relocation specialist, I have been getting numerous calls from buyers considering a move to this area and eager to sell their homes where they are currently residing.  Boise still remains attractive for many reasons, even with a shifting market.  Homes are still less expensive than in neighboring markets, and although it has grown here in the past few years it is less crowded here than in most other major cities that are nearby.

So, we can expect that home prices will most likely stay where they are, if not slightly decrease through Spring of this year.  As more out-of-state buyers reach the area in late Spring/Summer and if interest rates take a slight dip we could start to see home prices trickle upwards again.  Don’t expect another jump up in prices of 20-30%, but a slight increase in 2023 of 5% is definitely plausible.

Here is a look at the Boise Regional Realtor’s statistics of Single-Family Homes in Ada County and Canyon County in 2022.  

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].

As the chilly weather has settled in here in Boise so has a colder real estate market.  As the hot seller’s market fades away, Boise shifts into a Buyer’s Market, something the Treasure Valley hasn’t seen since 2008.

Yet, many Buyers are still on the fence about snatching up real estate at these new prices, mostly due to the higher interest rates, and uncertainty of where the market is heading.  There is a lot of headlines and news out there creating fear about real estate.  I’m typically skeptical when reading headlines, and I turn to the facts before making up my mind.  So…

Let’s Look At The Data

In Boise over the past three months, 77% of the homes sold UNDER the original asking price.  This could mean the seller dropped the price, or a buyer offered less than the asking price, either way, the homes tended to have large drops, and some homes dropped over $100,000 from where they originally started.

On top of that 18% of those homes also offered the buyer closing cost contributions.  Most of those contributions were quite substantial. Most were around $10-$15K but a few were over $30,000.  Those contributions were used towards buyer closing costs or buying down the buyer’s interest rate, or repairs on the home.

Canyon County saw a similar market in the past few months.  With 74% of the homes selling under the asking price and about 15% offering closing cost contributions on top of that.

Another interesting fact is that there were some homes in Boise and Nampa for example that sold at the original asking price and even over the asking price, but a percentage of those also offered closing cost contributions which brought the home price under the list price.

These percentages show just how much of a buyer’s market we have entered.  Many sellers are nervous and waiting for the market to shift back in their favor, but the data points to pricing staying in the buyers’ corner most likely through Summer 2023 as Boise continues to shift into a Buyer’s Market

These are the facts, yet buyers are still uncertain.  I’ve had multiple buyers tell me they are waiting to buy until rates come down.  Another told me recently they are waiting for better pricing.  Here is the problem with those two options:

1  The Fed has stated they are still combatting inflation and rates will most likely stay close to where they are if not creep higher over the next several months.  Once the rates do start to come down, buyers will be back in droves rushing to buy.  More buyers equal multiple offers and prices going up.

2.  Many sellers are frustrated with the current market after years of watching homes disappear off the market in days or hours in some cases at unbelievable prices.  As the new buyers market trend has sunk in as here to stay for a while many sellers are pulling their homes off the market.  Less inventory equals higher prices.

We see buyers trying to wait out the market, but the truth is right now is a great opportunity to buy.  Buyers can negotiate pricing, terms, closing costs, repairs, etc. without the stress of having to bid over another buyer, or buy anything with a for sale sign out of desperation that there would be nothing else.

Let’s talk About Interest Rates

At present interest rates are down a bit around 6.5%, but DID YOU KNOW that if the Seller is willing to offer a credit towards an interest rate buy down you can in many cases get that down to 5.5% possibly lower?  I just had two clients who received nearly 20K in closing cost contributions and used part of it towards the actual cost of closing, as well as buying down their interest rate.  Not to mention they bought the house at $20K under the asking price.

Here’s the breakdown:

A $500,000 purchase price with a 20% down payment at today’s interest rate of 6.5% would be roughly $2500/month with Principal & Interest, but if the Seller offered $17,500 towards a rate buy down this same loan would cost $2270/month for P&I.  Nearly a $300/month savings.

The other option is to use the $17,500 from the Seller towards closing costs which could be $7-10K and the remainder towards the price of the home.  Accept the higher interest rate and refinance once rates come down in the future.  Many lenders are offering to pay for some of the fees associated with refinancing if your original loan was through them during this time period.

These two graphics differ dramatically from last year, the past ten years actually.  This is the first time we have seen substantially more homes selling under the asking price since the economic crisis of 2007-2009.  Yes, some homes are getting full price or over asking price, but roughly 20-30% of those sales also had contributed cash towards the buyer’s interest rate buy down or closing costs.  The homes that did sell at full/over asking price were priced competitively from the start with the majority of them being turnkey or in highly desirable areas or subdivisions.  The Days on the Market have also increased.  In Boise from Sept-November, the average days on market were 36.  It has doubled if you compare it to the DOM at the same time in 2021.  Nampa was similar with 20 DOM in 2021 and 44 is the average from Sept-November this year.

What to Expect Moving Forward

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].