Home Prices Are Rising By $225 Each Day in the Boise Area
Posted by Lisa Kohl on Friday, January 8th, 2021 at 6:44pm
With only weeks of available inventory and homes selling in a median of 6 days, it’s no surprise home prices are continuing to skyrocket across the Treasure Valley.
We said goodbye to 2020 and rang in the new year with another round of record-high prices across the valley. In December, Ada and Canyon county and the cities of Boise, Meridian and Nampa all broke previous price records.
Over the past year, the median home price in Ada County rose by more than $82,000, a 23.6% increase to $432,462. Canyon County home prices increased by a whopping $85,000 since last December, a 33.3% jump to $339,900. Not to be outdone, the cost of the typical home in Boise increased by $86,000, or 25.6% to $420,750.
Fortunately for home sellers (and less so for buyers), this trend will continue in 2021. Our data shows that home prices are rising by $225 every day as buyers compete for every available property. Whether your budget is $400,000 or $1,400,000, if you’re a buyer be prepared for stiff competition.
Bidding wars are still the norm at all price points, with the majority of homes selling for more than their already lofty asking prices.
Idaho home prices keep rising at the fastest pace in the nation
It’s not just the Boise area experiencing this pricing surge. Housing prices in Idaho have appreciated the fastest in the nation over the past year, according to the Federal Housing Finance Agency House Price Index. U.S. home prices rose 7.8% from the third quarter of 2019 to the third quarter of 2020 – which experts have noted is the fastest home price appreciation in the modern era. Yet prices in Idaho during that same period increased nearly double that – by 14.4%.
While this trend has been intensified by the coronavirus pandemic, it extends far beyond the past year. In fact, Boise has been the fifth-highest appreciating metro area in the country over the past 30 years, following closely on the heels of other mid-sized cities that have come into their own, like Portland and Denver.
Since 1991, housing prices in Boise have increased 391%. This appreciation beats even San Francisco, where housing prices have only risen by 389% in that same timeframe.
Much of this recent price appreciation has been driven by out-of-state buyers, who continue to flood our local market in record numbers. Throughout the country, normal geographic housing trends have been turned on their heads, thanks to the pandemic. The result has been that smaller metropolitan areas, including Boise, are seeing big gains in population as families flee dense coastal cities for more affordable, and less crowded, mid-sized cities.
Expect more listings in spring, but not enough to offset demand
The real estate market used to ebb and flow with the seasons. But gone are the days of the real estate “winter lull” that extends from the holidays until the first, tender green shoots of spring emerge in mid-February. Now, we see only the slightest of pauses around Thanksgiving Day and the week of Christmas. By the end of December, buyers were already launching their new home searches for 2021.
We expect an uptick in resale home listings this year, as coronavirus vaccines become more prevalent and sellers, in turn, become more comfortable opening up their homes to strangers. However, this added supply won't be nearly enough to offset demand.
Buyers’ only other option, the new construction market, will also fall short. The Treasure Valley supply of newly-built homes has fallen sharply behind demand for the last ten years. Even now, as construction is booming in the valley and crews race to put up new towers and homes, a shortage of materials, labor and building lots will mean many months (or years) of inadequate supply.
The Boise metro area is struggling with a shortage of finished lots, or land that is primed to build on. In fact, when it comes to places to build, ours was one of the most undersupplied markets in the country in the third quarter of last year.
All of this spells continuing good news for those looking to sell, who have a strong upper hand in this market.
The saving grace for buyers, historically low mortgage rates, may soon rise
Buyers aren’t without their silver lining in the homebuying process, however. For the past year, buyers have enjoyed the lowest interest rates on record since Freddie Mac began tracking mortgage rates in 1971. Thirty-year fixed rates have hit historic lows 17 times over the past year, dropping from 3.64 last year to 2.65 in the first week of January 2021.
Some argue that buyers miss out on the benefit of these lower mortgage rates due to the higher home prices we’re seeing. Others say that the low rates are helping fuel demand, and thus push prices up. Both are true. Higher home prices are more than offsetting low rates, but we wouldn't be seeing the demand that we are witnessing without them.
However, Freddie Mac’s chief economist has said that mortgage rates may begin rising modestly this year. The combination of higher mortgage rates and our current increasing home prices would wreak havoc on affordability, potentially just as our spring homebuying season gets in full swing.
Boise Real Estate Market Summary for December 2020
- Median list price - $415,000 (up 22.82%)
- Median sold price - $420,750 (up 25.60%)
- Price per square foot - $239 (up 17.73%)
- Total home sales - 376 (up 21)
- Median days on market - 5 days (down 13 days)
- Available homes for sale - 0.26 month supply (down 0.58)
- 30-year mortgage rates - 2.68% (down 1.04)
Boise Metro Housing Markets by Area
Median sales price:
- Ada County - $432,462
- Eagle - $564,682
- Garden City - $345,000
- Kuna - $384,745
- Meridian - $428,700
- Star - $413,990
- Canyon County - $339,900
- Caldwell - $316,075
- Middleton - $344,750
- Nampa - $336,712
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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Information in this We Know Boise market report was obtained from the Intermountain MLS (IMLS) on January 5th, 2021. 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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