Bidding Wars Surge As Treasure Valley Buyers Chase Shrinking Supply
Posted by Lisa Kohl on Friday, October 9th, 2020 at 3:02pm
Amid critical housing shortages and record demand, bidding wars continue to drive up Boise area home prices.
Treasure Valley homebuyers in the 1980s had more housing stock to choose from than buyers today, thanks to the unprecedented shortage of listed homes we are currently experiencing. As a result, homebuyers can end up facing a gauntlet: bidding wars, forfeiting basic protections to make their offer more attractive, and paying record-high prices in order to land a home.
How did we get here? A few primary factors spring to mind: the Treasure Valley’s decades-long population boom, coupled with the fact that new construction has lagged behind demand for at least the past seven years in the valley.
Those factors are predictable (and were predicted). The current coronavirus pandemic is neither, yet its influence on the current housing market cannot be overstated. It has affected everything from buyer demand to housing supply to mortgage rates, which together have helped drive up home prices across all price points.
With regard to buyer demand, we’re seeing more Idahoans looking to upgrade and expand their living situations during this time of unpredictable quarantines. Families who once were satisfied with their homes are now on the hunt for larger properties with more room for remote working and learning, as well as privacy (and distance) from their nearest neighbors.
Normally at this time of year, the Treasure Valley experiences a peak in the supply of houses for sale. Instead, thanks in part to the pandemic, we are seeing the inventory of listings hit record lows going back decades.
Active listings in Ada County have declined nearly 73% in the past year, dropping from 1,774 to 486 – less than a two weeks supply. The average amount of time homes spend on the market has also dropped from 18 days to 6 days, a new September record.
Three of the highest demand cities, Boise, Meridian, and Eagle, each saw available single-family homes decline by 70%, 75%, and 78%, respectively.
2020 is defined by seven months of new sales records – and the year isn’t over yet
Despite having fewer houses on the market to buy, sales are also booming. Compared to last year, sales of new and previously owned homes in Ada County rose by 33% in July and August, and nearly 31% in September.
Again, the pandemic comes into play here. Given these factors, it’s no surprise that we once again set new sales records in the Treasure Valley’s key markets. In fact, in 2020 both Ada and Canyon counties have set new sales price records in seven out of the last nine months.
After breaking $400,000 in August for the first time, Ada County single-family home prices set a new median sales price record of $408,700 in September.
In Boise, the median sales price hit $395,000 – a 15% increase over last year’s price of $336,000, while Canyon County prices rose 19% to $310,000. Both areas setting new records.
Even historically low mortgage rates can be traced back to the pandemic. 30-year fixed mortgage rates that had been averaging 3.65% as recently as March declined to a record low 2.86% in early September, where they have held steady since. That nearly 1% decline in mortgage rates boosts affordability considerably, even with record-high prices.
Low rates also indirectly affect the housing supply. More current homeowners are choosing to stay in place and refinance their homes, which gives them the luxury of a lower home payment and frees up funds for larger purchases, like remodeling projects or even a second home.
Additionally, the perceived lack of purchase options can further discourage sellers – leading to even fewer homes for sale.
Over half of all homes in the Treasure Valley now receive multiple offers
Many traditional homeowners put their plans to sell on hold this spring as the pandemic first hit the nation. As a result, we saw a 30% decline in new resale listings in the Treasure Valley in late spring and summer. Yet, sales have increased, spurred by new buyers, Idahoans looking for room to grow, and a third group: out-of-state homebuyers.
In the last year, we’ve also seen a 30% increase in out-of-state residents looking to escape densely-packed urban areas and relocate to the Treasure Valley, where they can find more room in which to live, play, and work (often remotely).
Between the pandemic and low mortgage rates, bidding wars have become steadily more common. Not only are we seeing more than half of all new Treasure Valley listings receiving multiple bids, homes priced below $300,000 often receive 10-plus offers. The most coveted homes often receive more than 30 offers.
As a result of these bidding wars, homes at all price points routinely sell for thousands of dollars over the asking price. To get a competitive edge, more buyers are offering to waive protective contingencies – which means that in addition to paying more than market value for a property, some prospective buyers are agreeing to forfeit earnest money deposits or bring more money to closing.
* Waiving contingencies is risky and, in many cases, unnecessary. An experienced local agent can help you navigate a competitive market by keeping you out of bidding wars, saving your protections, and negotiating a fair price.
Boise Real Estate Market Summary for September 2020
- Median list price - $394,000 (up 15.92%)
- Median sold price - $395,000 (up 17.56%)
- Price per square foot - $226 (up 14.72%)
- Total home sales - 465 (up 64)
- Median days on market - 5 days (down 10 days)
- Available homes for sale - 0.44 month supply (down 0.56)
- 30-year mortgage rates - 2.89% (down 0.72)
Boise Metro Housing Markets by Area
Median sales price:
- Ada County - $408,700
- Eagle - $625,000
- Garden City - $296,000
- Kuna - $326,325
- Meridian - $400,000
- Star - $443,000
- Canyon County - $310,000
- Caldwell - $285,000
- Middleton - $369,900
- Nampa - $305,250
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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Information in this We Know Boise market report was obtained from the Intermountain MLS (IMLS) on October 6th, 2020. 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. Current inventory is calculated on a twelve-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 are much more volatile and can create unreliable comparisons, particularly on a month to month basis.
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