Falling Rates, Rising Supply: Boise Housing Market Opens Doors for Buyers
Posted by Lisa Kohl on Tuesday, September 10th, 2024 at 2:51pm
Following a brief summer slowdown, homebuyer demand is inching higher as mortgage rates continue to fall. After peaking at 7.22% in May, rates dropped to 6.35% last week—nearly a full percentage point lower than last year and the lowest since April 2023.
Even slight drops in mortgage rates can lead to significant savings, adding up to hundreds of dollars per month. From an affordability perspective, a 1% drop in mortgage rates is equivalent to a 10% decrease in home prices.
In August, the median home price in Ada County rose to $536,665, a 3.2% increase from last year. In Boise, home prices ended the month at $516,000, reflecting a 4.2% rise. Prices in the county saw a notable dip last August, making year-over-year comparisons appear more favorable than they might otherwise. Canyon County experienced a more modest 1.3% increase, bringing the median home price to $410,384.
With inflation easing and economic activity slowing after a post-pandemic surge, interest rates have fallen sharply. Most of this year's decline happened in the last two months, meaning it has yet to be fully reflected in the sales data.
Home sales slowed over the summer due to rising costs. However, as rates have fallen, year-over-year refinance demand has nearly doubled, and buyer interest and pending home sales have risen in recent weeks.
Inventory has also climbed, providing more options for prospective buyers. The number of active listings rose 19% from last year, reaching 2,881 homes, the highest level in nearly two years. This growing supply has contributed to a more balanced market, giving buyers more leverage.
Months of supply—a key indicator of market balance—rose to 2.79 in Ada County and 3.03 in Canyon County. While this means buyers have more choices, the market still leans slightly toward sellers.
Supply typically peaks in early October, but the upcoming presidential election could extend this further into fall. Historically, elections have had minimal impact on home prices, but they can create enough perceived uncertainty to temporarily slow sales. This is usually followed by increased activity the following spring.
While the Federal Reserve doesn't directly set mortgage rates, many mistakenly believe it does, causing some potential buyers to delay their purchases while waiting for a rate cut. In reality, long-term rates adjust in anticipation of the Fed's moves, and a future cut is already factored into current mortgage rates. If the Fed signals at its next meeting that rates will remain higher for longer than expected, mortgage rates could rise.
We've already seen some lenders quote rates in the high 5% range. It's debatable how much further rates will fall this year—without a recession. While today's rates might seem high compared to the record lows during the pandemic, they are actually below their long-term average.
While the next couple of months should remain favorable for buyers, supply will follow seasonal patterns and shrink as the year progresses. And with demand on the rise, any further drop in rates could spark even more competition and push home prices higher.
If you've been waiting on the sidelines to make a purchase, now might be a good time. Buying power has improved significantly, and competition has not yet fully ramped up.
Boise Real Estate Market Summary for August 2024
- Median list price: $523,450, up $24,450 (4.9%)
- Median sold price: $516,000, up $21,000 (4.2%)
- Average price per square foot: $307 (up 2.3%)
- Total home sales: 276 (up 21)
- Median days on market: 19 days (up 7)
- Available homes for sale: 2.41 month supply (up 0.5)
- 30-year mortgage rate: 6.50% (down 0.57)
Treasure Valley Housing Market by Area
- Ada County: $536,655, up $16,655 (3.2%)
- Eagle: $810,750, down $59,250 (-6.8%)
- Garden City: $622,500 (*fewer than ten sales)
- Kuna: $441,990, down $13,010 (-2.9%)
- Meridian: $529,945, up $29,945 (6%)
- Star: $584,285, up $46,785 (8.7%)
- Canyon County: $410,384, up $5,384 (1.3%)
- Caldwell: $385,000, down $3,995 (-1%)
- Middleton: $514,683, up $62,693 (13.9%)
- Nampa: $409,650, up $9,650 (2.4%)
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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Select information in this We Know Boise market report was obtained from the Intermountain MLS (IMLS) on September 9th, 2024. While the data is deemed reliable, it is not guaranteed. City-specific data refers to single-family homes on less than one acre, whereas county-level data includes homesites of all sizes. The "months of supply" metric is based on a 12-month rolling average. Home prices mentioned combine both existing and new construction properties. Comparisons are based on year-over-year changes unless otherwise specified.
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