Home prices in the Treasure Valley continue to break new records. No better example of that is Ada County, where home prices have hit a median of $400,000 for the first time in August. This represents a 12.7% increase in price over the previous year. It also means home prices have officially doubled in Ada County since late 2013.
Ada County is not an outlier – Canyon County and the cities of Boise, Meridian and Nampa all set new record sales prices last month. For instance, Boise’s price hit $379,900, beating last year’s median sales price of $337,767. In Canyon County, the median sales price hit $309,900 in August, whereas last year it was $250,000 – that’s a nearly $60,000 increase in one year.
To further put record prices in perspective, homes in Ada County and the City of Boise only hit a median sales price of $300,000 for the first time in March of 2018. Coincidentally, that same month homes in Canyon County first hit $200,000. Canyon County has long been considered one of the most affordable areas in the Treasure Valley. This illustrates how the rapid appreciation of homes is affecting every price point in the market.
Why Home Prices Have Skyrocketed in the Boise Metro
While supply and demand set home prices, right now in the Treasure Valley we’re seeing extreme cases of both: extremely low supply paired with extremely high demand. These factors have spurred a jump in housing prices at an unprecedented rate.
Thanks to the coronavirus, new resale listings have declined by one-third since the beginning of April when compared to the previous year, as traditional homeowners put their plans to sell on hold. At the same time, sales during July and August this year have increased by one-third.
Largely driven by this buyer demand (more details on that below), housing supply has been reduced to levels we haven’t seen since the ‘90s. For instance, in Nampa, currently our hardest-hit market, there were only 119 active listings in August – just two weeks worth of supply – compared to 408 homes last year.
In August, active inventory in Ada County declined to about three weeks of supply, or 691 homes. By contrast, last year there were 1,725 homes on the market.
Given our current demand, to reach a balanced market of four to six months of inventory – which means the market favors neither buyers nor sellers – the supply of available homes in Ada County alone would need to be in the 4,500 to 6,500 range.
Traditionally, the number of Treasure Valley listings peaks in early fall. Instead, we are entering a season with fewer listings than we’ve seen in multiple decades, and with the number of listings down 60% from the year prior.
Home Prices in the Treasure Valley Aren’t Likely to Peak Any Time Soon
All indications show that home prices in the Treasure Valley aren’t likely to level out any time soon. Even our usual seasonal expectations are being upended. For instance, last year, home prices didn’t peak until November (and we were setting new records just two months later).
Low mortgage rates and new coronavirus influenced housing priorities will continue to fuel demand, along with a continuation of record-low inventory.
Record-low 30-year fixed mortgage rates, which have hovered below 3% for the sixth consecutive week, continue to keep demand healthy by putting otherwise unaffordable homes within budget, especially for first-time homebuyers. Consider this: in 2006, the typical 30-year mortgage rate was 6.7%, whereas today, it is 2.9%.
This means that while the average home price has jumped by $160,000 since 2006, mortgage payments have only increased by about $200 per month in that time frame – from $1,200 in 2006 to $1,400 in 2020. *Partially explaining the fierce bidding wars we continue to see despite quickly rising prices.
The coronavirus has helped shape new priorities for individuals and families. It has also sped up many homebuyers' timeline for purchasing a new home. Nationally, because of the coronavirus, there is a mass migration as families leave tightly packed cities to less expensive, more expansive rural areas. Unsurprisingly, this includes the Treasure Valley.
Locally, we’re seeing many buyers on the hunt for more space, both inside and outside. Unsurprisingly, the “must-have” dwelling accessory this season is a dedicated home office, thanks to the growing number of people who are working remotely.
To be clear, the coronavirus created new demand as well as exacerbated trends already in place. The Boise area was already experiencing rapid growth and rising prices. The trend just adds to many homebuyers’ sense of urgency, especially those who were already considering a move. They now feel they must work quickly to ensure they aren’t priced out of the market.
Additionally, an even greater number of people are looking to relocate. For out-of-state buyers who can work remotely, the Treasure Valley is an attractive option.
Heading into 2020 with near record-low inventory, combined with the factors listed above, will continue to keep us in the most robust seller's market the Treasure Valley has ever seen.
Buying Homes Sight Unseen Is Becoming More Common – But It Can Backfire for Sellers
A new trend is emerging, spurred on by the coronavirus and the cut-throat housing landscape that we’re currently experiencing. This new trend is potential buyers putting in offers on homes they have not seen in person. In some cases, buyers are not taking advantage of available videos and virtual tours. More typically, these sight-unseen offers are prompted by the potential buyer’s fear of missing out on a property if they don’t make a quick offer.
Experience has shown us that buyers are more likely to get cold feet in sight-unseen situations, which reduces the odds of closing the deal. For sellers, this is a headache – after having their property off the market for weeks or months, they might be faced with starting the process over. This could mean additional costs on top of delays.
To avoid this increasingly common pitfall, sellers should hire a professional with local experience to represent and skillfully market their property. Additionally, an experienced agent will take advantage of every negotiation tool available to maximize the sales price and ensure you, the seller, experience a smooth transaction followed by a swift closing.
Boise Real Estate Market Summary for August 2020
- Median list price - $374,900 (up 10.59%)
- Median sold price - $379,900 (up 12.21%)
- Price per square foot - $225 (up 16.58%)
- Total home sales - 493 (up 30)
- Median days on market - 6 days (down 6 days)
- Available homes for sale - 0.69 month supply (down 0.75)
- 30-year mortgage rates - 2.94% (down 0.68)
Boise Metro Housing Markets by Area
Median sales price:
- Ada County - $400,000
- Eagle - $599,900
- Garden City - $305,000
- Kuna - $336,500
- Meridian - $403,200
- Star - $395,000
- Canyon County - $309,900
- Caldwell - $276,750
- Middleton - $317,500
- Nampa - $312,409
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 September 4th, 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.