Ada County Rebounds: First Year-Over-Year Home Price Gain Since October 2022
Posted by Lisa Kohl on Saturday, December 9th, 2023 at 2:43pm
In November, Ada County witnessed its first year-over-year price increase since October 2022. After hitting a two-year low this spring, local home prices have steadily risen amid a persistently tight supply.
Rising interest rates have done little to dampen home prices. Conversely, they've kept prices higher by discouraging current homeowners from selling. Typically, existing homes constitute most available listings. However, with fewer people moving, this important source of supply has dwindled.
In Ada County, the median home price in November rose by 1% from the previous year, reaching $529,995. In Boise, prices increased by 4.65% to $495,000. Canyon County prices dipped 3.9% from a year ago to $398,990.
Buyers without an existing home to sell or a need for financing have been big drivers of the housing market in 2023. Nationally, nearly 4 out of 10 homeowners own their homes outright, reducing their reliance on financing for new purchases.
In Ada County, all-cash transactions accounted for 31% of sales in November, an increase from 25% a year earlier. First-time buyers are making the highest down payments since 1997.
The number of homes for sale in the Treasure Valley plummeted by 28.6% to 2,208 at the start of December. Months of supply, a gauge of market balance between supply and demand, fell to 2.21, indicating a continued shortage of available properties.
The tight inventory has benefited local homebuilders, who have rushed to ramp up new home construction. They have focused on building more affordable homes and offering to buy down interest rates to attract customers.
Mortgage rates have nearly doubled since the Federal Reserve started aggressively raising interest rates early last year to combat inflation and cool the economy. These higher rates have discouraged buyers by making loan payments more costly, which, combined with the limited home supply, has led to the lowest sales since 2014.
Homes typically go under contract one to two months before the sale closes. Therefore, November's sales data reflects purchase decisions made in September and October, when rates were higher than they are currently.
Since summer, some potential buyers have been waiting on the sidelines, hoping for a drop in rates. However, many have lost patience and seized the opportunity to jump back into the market following any rate decrease.
After peaking at a two-decade high in late October, mortgage rates have plunged from nearly 8% to just over 7%. With rates back at summer levels, there has been a notable uptick in buyer interest in recent weeks.
While buyer demand has surpassed last year's levels, we wouldn't describe it as robust. Generally, it’s best to take December market conditions with a grain of salt. The holidays, the weather, and a lack of new listings can all dampen buyer enthusiasm.
Despite the high costs associated with buying a home, several strategies are available to make the process more manageable.
If you plan to purchase a home using a mortgage, look for a lender offering a "float-down" option. As the name suggests, a float-down feature allows you to take advantage of falling interest rates after you have locked your mortgage rate.
A rate buydown is another alternative for those seeking a lower monthly payment. There are temporary rate buydowns and permanent buydowns. A "2-1" buydown, which lowers the rate for the first two years, is a popular option, but it provides a temporary benefit. A permanent buydown, on the other hand, is good for the life of the loan.
Another approach that doesn't directly impact the interest rate but can still be advantageous involves negotiating with the seller to contribute toward closing costs. This can effectively reduce the loan balance, leading to lower monthly payments.
These strategies benefit both homebuyers and sellers. By lowering financial barriers, sellers can make their properties more attractive, sell faster, maintain competitive prices, and reach a broader range of qualified buyers. In the current rate environment, these incentives can save buyers more money and be more cost-effective for sellers than an equivalent price reduction.
Boise Real Estate Market Summary for November 2023
- Median list price: $498,500, up $13,500 (2.78%)
- Median sold price: $495,000, up $22,000 (4.65%)
- Average price per square foot: $291 (1.39%)
- Total home sales: 197 (down 18)
- Median days on market: 23 days (down 5)
- Available homes for sale: 1.71 month supply (down 0.40)
- 30-year mortgage rate: 7.44% (up 0.63)
Treasure Valley Housing Market by Area
- Ada County: $529,995, up $4,995 (1%)
- Eagle: $754,950, down $75,050 (-9%)
- Garden City: $652,450, down $22,550 (-3.3%)
- Kuna: $454,724, down $17,276 (-3.7%)
- Meridian: $519,995, down $4,905 (-0.9%)
- Star: $542,964, up $5,910 (1.1%)
- Canyon County: $398,990, down $16,010 (-3.9%)
- Caldwell: $365,000, down $21,325 (-5.5%)
- Middleton: $433,700, down $101,300 (-18.9%)
- Nampa: $400,000, up $10 (0%)
Lisa Kohl
Lisa carefully studies the local housing market to give her clients the edge when buying or selling a home in Idaho. We Know Boise is a full-service real estate team that combines our LOCAL expertise with traditional know-how to create exceptional results for each of our clients.
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Select information in this We Know Boise market report was obtained from the Intermountain MLS (IMLS) on December 8th, 2023, and is deemed reliable but not guaranteed. City data refers to single-family homes on less than one acre, while county data includes homesites of all sizes. Months of supply is calculated on a 12-month rolling average. Combining existing homes for sale with new construction is the best way to gauge current home prices and Boise housing market trends. New house prices can be more volatile and can make comparisons, particularly on a month-to-month basis, less reliable.
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