Boise rang in the first month of the New Year with a median price record as the Treasure Valley's home supply retests all-time lows.
The supply shortage is squeezing home buyers from all sides as a severe lack of inventory pressures choices, pinches budgets, and pumps prices. Mortgage rate jumps are leading to brisk sales as rising interest rates reduce affordability.
Ada County finished January with a median single-family home price of $539,995, up $90,665 in the last twelve months.
To add a bit of perspective, from 2005 to 2021, we saw home prices rise at an annual rate of 6%. Ada County buyers started 2022 contending against a 20.18% year-over-year jump.
- Canyon County finished January with a median sale price of $424,900, a new all-time record. That’s a 25.34% year-over-year surge of $85,900.
- Boise homes hit a new record of $515,100, up $5,100 from December’s high and a year-over-year gain of 18.90%.
- Meridian home prices ended the month at $549,900, a 26.5% year-over-year increase.
- Nampa leveled off at $420,000. That’s a 22.46% bump from January 2021.
- Eagle’s high-priced market ended at $833,201, a $86,759 year-over-year leap.
Supply Turns Critical Ahead of Busy Selling Season
The market may not be as extreme as it was a year ago, but with the number of people competing for an Ada County home in 2022, the buyer experience isn’t far off.
Eager shoppers are lining up for open houses, sellers are juggling multiple offers, and homes are selling fast. Game faces are on, and bids are coming in quick and above asking price.
Fueled by low supply and an ever-growing demand, our estimates show five buyers for each available home. While below the once-in-a-generation activity buyers experienced 12 months ago, 2022 is still highly competitive.
Ada County returned to a critically low home supply as we saw February open with 0.51 months of available inventory. With only two weeks worth of homes for sale, competition is heating up well ahead of the typical spring selling season. For perspective, a healthy market (one that doesn’t favor buyers or sellers) has between 4-6 months of available home supply.
The Treasure Valley remains deep in its several-year-long supply drought. Home inventory is near its lowest level in almost a year, and motivated buyers are driving home prices higher as they do what they can to get ahead of the competition. Demand is flaring as spring approaches. With mortgage rates rising and a severe lack of new home construction, Boise’s housing market is quickly compounding into a perfect storm of price jumps and buyer frustration.
Local Buyers Feel the Pinch of Rising Mortgage Rates
In late December, the Federal Reserve announced it would be pulling its pandemic-era economic stimulus. Their support stabilized a range of financial markets and guided the flow of credit into the economy, limiting the pandemic’s ability to harm the housing market.
The Federal Reserve’s pandemic support dropped interest rates across most sectors. Mortgage rates neared historic lows, and every major city saw home prices jump as buyers took advantage of the reduced rates. With increased demand, rising building costs, and supply chain disruptions, home prices climbed across the country.
However, the Fed’s recent announcement to pull relief is reversing their interest rate impact, and rates are moving back towards pre-pandemic levels.
From January 2021’s record low of 2.65%, 30-year fixed-rate mortgages jumped nearly a point to 3.55% as of last Thursday, and many economists expect mortgage rates to continue to climb throughout 2022.
To frame those numbers a little better, a 1% increase in mortgage rates has the same effect on a borrower's budget as a 10% increase in home prices.
In the Treasure Valley, home prices have not only jumped more than 20% in a year, but the rising interest rates are shrinking the budgets of buyers planning on financing their home purchase. At a 1% interest rate jump, a $500,000 budget drops to $450,000, and buyers still have to contend with rising home prices.
Buyers have been rushing to purchase a home before prices get any higher and mortgage rates sink budgets further. In contrast, the luxury market (a place where interest rates are less of an issue) has buyers moving to the sidelines to wait for the perfect property to hit the market.
Home Prices Rise Ahead of Spring Selling Season
It’s too soon to predict how high or how fast mortgage rates will climb, but the market trends project how the next few months will unfold. As we see it, the discrepancy between home supply and buyer demand has no intention of relenting, resulting in higher home prices.
Moving into the year, we can expect these trends to continue:
- Supply will remain extremely low. There are nowhere near enough resale homes to meet demand. The supply of new construction will remain limited as builders continue to struggle to catch up with an estimated 14 years of underbuilding.
- Demand will stay elevated. As the local economy holds firm and unemployment hugs record lows, the Treasure Valley population will continue to grow.
- Interest rates will continue to rise. Higher rates will make homes less affordable and add to new construction costs.
With several buyers already bidding for each available home, interest rate fears will push more people to try to get ahead of the numbers. Spring will bring more homes to market, but the new listings won’t bring buyers relief. Many sellers will also enter the buying market, and demand will continue to flare as supply stays extremely low.
More competition brings higher home prices, and we can expect these trends to strengthen as our busy start to the New Year leads into an even busier spring.
Boise Real Estate Market Summary for January 2022
- Median list price - $523,900 (up 21.99%)
- Median sold price - $515,100 (up 18.62%)
- Price per square foot - $303 (up 21.2%)
- Total home sales - 275 (up 53)
- Median days on market - 18 days (up 14 day)
- Available homes for sale - 0.37 month supply (up 0.15)
- 30-year mortgage rates - 3.45% (up 0.71)
Boise Metro Housing Markets by Area
- Ada County - $539,995
- Eagle - $833,201
- Garden City - $418,500
- Kuna - $479,990
- Meridian - $549,900
- Star - $517,962
- Canyon County - $424,900
- Caldwell - $389,995
- Middleton - $475,000
- Nampa - $420,000
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 February 7th, 2022. 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.