Treasure Valley home prices witnessed another surge in May. The ongoing scarcity of available homes intensified competition among buyers, particularly for the lowest-priced properties.
Home prices in Ada County jumped by $36,000 between March and April, followed by an additional increase of $17,000 in May. That's a remarkable $53,000 increase in just two months.
Over the past year, the number of resale listings has fallen. Homeowners are reluctant to let go of low mortgage rates and have hesitated to sell. Additionally, a slowdown in new construction activity last fall means fewer new homes are available.
While demand is notably lower this summer than we have seen in recent years, low supply is more than offsetting the reduced demand.
In terms of annual trends, Ada County house prices fell 11.3% from last May's record high to $534,450. Boise prices dipped 14.6% from their peak last May, down to $499,900.
Canyon County house prices ended the month at $415,000, falling 9.8% from the same period last year. Nampa prices, reflecting the demand for low-priced homes, finished at $425,000, down only 5.6% from last May.
While local home prices remain lower than year-ago levels, steady demand and an extremely limited supply of available properties have triggered a surprisingly robust rebound.
In May, the number of newly listed homes plummeted to the lowest level for that month since 2012. As a result, there are fewer properties for sale now than at this time last year.
Months of supply, a measure of the balance between supply and demand, began June at 1.84 and 1.78 in Ada and Canyon County, respectively. These levels indicate an extremely low inventory.
In Ada County, homes in good shape, well-situated, and priced below $500,000 are often snapped up within days, frequently attracting multiple offers. However, homes over $800,000 tend to stay on the market longer.
Due to their outsized effect on affordability, quickly rising interest rates tend to have a larger impact on near-term demand than home prices.
As of the week ending June 8, the average rate for a 30-year fixed mortgage rose to 6.71%, up from 5.30% a year earlier. Since last October, rates have fluctuated between 6% and 7%.
While mortgage applications have mirrored the fluctuation in rates, the demand for homes has remained steady since the beginning of the year.
Higher rates have encouraged buyers with the means to make larger down payments or avoid financing altogether. In fact, 25% of all the homes sold in the last three months were all cash transactions, up from 23.5% the year before.
Cash buyers aren't too concerned about rising or volatile interest rates—they can create opportunity. Such buyers might be able to negotiate a better deal due to the less competition from those who need financing.
If you're looking for a home this summer, you can expect market conditions to vary depending on the location and how much you're willing to spend. Generally, the lower the price point, the greater the competition, while pricier homes may offer room for negotiation.
New construction accounts for nearly half of the available listings. We continue to see incentives and discounts, particularly for mid-priced homes.
If you plan to purchase a home using a mortgage, look for a lender that offers 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 seller-paid rate buydown is another option for reducing your monthly payment.
Prices for spacious homes with three or more bedrooms tend to peak in May and June, as many families with children aim to settle before the new school year. Also, summer is typically a slow period, as people shift their focus to vacations and other seasonal activities.
If you plan on selling your home this summer, history shows that early June is usually the best time. Demand tends to trickle off while home supply steadily increases until the end of August.
The number of homes for sale will likely rise throughout the summer. However, there is no guarantee interest rates will head materially lower anytime soon. If economic forecasts continue to improve, rates may increase.
Given seasonal factors and the potential for climbing interest rates, if you plan a move this summer, the sooner, the better.
Boise Real Estate Market Summary for May 2023
- Median list price: $499,999, down $75,001 (-13%)
- Median sold price: $499,900, down $85,575 (-14.6%)
- Average price per square foot: $320 (-7.51%)
- Total home sales: 293 (down 75)
- Median days on market: 7 days (up 2)
- Available homes for sale: 1.48 month supply (up 0.16)
- 30-year mortgage rate: 6.43% (up 1.20)
Treasure Valley Housing Market by Area
- Ada County: $534,450, down $67,800 (-11.3%)
- Eagle: $920,000, down $65,000 (-6.6%)
- Garden City: $495,000, up $81,000 (19.6%)
- Kuna: $431,000, down $59,570 (-12.1%)
- Meridian: $530,000, down $54,990 (-9.4%)
- Star: $600,000, down $39,900 (-6.2%)
- Canyon County: $415,000, down $44,990 (-9.8%)
- Caldwell: $366,055, down $59,665 (-14%)
- Middleton: $510,000, down $30,429 (-5.6%)
- Nampa: $425,000, down $25,000 (-5.6%)
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 June 12th, 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.