We Know Boise Real Estate

Boise-Area Home Prices Hover Near-Record Levels; Seasonality Returns

Posted by Lisa Kohl on Friday, October 8th, 2021 at 10:46am

Boise-Area Home Prices Hover at Near-Record Levels

Driven by a short supply of new listings, Treasure Valley home prices continue to hover at near-record levels. The Ada County median single-family home price rose to $534,950 in September, up 31% from last year and $4,450 from just last month. Homebuyers in Canyon County faced a median home price of $422,000 – a 36% annual increase and up $11,500 from August. Both counties finished September with their second-highest price to date.

Let’s take a closer look at data from several of our local markets.

  • Boise’s median single-family home price was $495,000 in September, a $100,000 jump (up 26%) from last year.
  • Meridian set a new median sales record with $546,000. That’s $146,000 over last September’s sales price, or a 37% increase.
  • Hitting its second-highest price last month, Nampa’s $416,495 median sales price also represented a 36% jump from last year’s $305,250.

The near-record prices and eyebrow-raising year-over-year gains we’re still seeing remain a strong sign that our housing inventory hasn’t yet caught up to demand. Many important metrics – from days on market to active inventory, to the supply of homes for sale (in months) – hit record lows as we entered 2021. By our estimation, the actual number of homes for sale in the early part of this year bottomed out at levels we haven’t seen since the 1970s. This will translate to very dramatic year-over-year comparisons over the next six months.

After a wild year and a half, our inventory is only now slowly recovering. In Ada County, the supply of homes for sale rose to 1.39 months (or almost six weeks) in September. That's still below normal for this time of year but marks a huge improvement from the .49 months (or two weeks) of supply we were working with last year. In Canyon County, supply rose to 1.57 months in September versus last year’s supply of .40 months. As a reminder, anything less than two months’ supply of inventory is considered a strong seller’s market; a balanced market is four-to-six-months’ supply of homes for sale.

Here’s another way to visualize how off-kilter we are: We’ve been averaging roughly 900 home sales per month in Ada County over the past year. Currently, there are 1,270 homes for sale in the county. We’d have to hit between 3,600-5,400 listings in order to reach a balanced market.

But short supply is just one part of the picture here. It’s also good to remember that buyer demand significantly outpaced supply over the past year – our total number of home sales would’ve been much higher if we’d had more stock on hand. For instance, Ada County recorded 908 home sales in March this year – even though there were only about 300 listings available at any given time.

More Inventory Brings a Return to Seasonal Trends

After a very atypical 2020, this year we’re seeing a return of the typical seasonality that flows in real estate – e.g. inventory rising throughout the summer (and home prices rising in the spring and dipping in the fall).

Typically, the number of homes on the market peaks in September and then declines until the beginning of the new year. While we’re seeing a return to seasonality in the market, this year we expect the peak in listings to be later than usual as the local market moves closer to balance (but again, not to a balanced market). As we explained last month, the Treasure Valley’s sub-two-month supply of homes for sale has historically suggested double-digit price appreciation. 

We’re also seeing two separate but significant trends this year that normally don’t occur, and each has affected the supply of homes for sale. The first is an uptick in resale listings, which is a nice improvement from the 30% decline we saw in 2020. The second is that some new construction inventory – which builders delayed listing in spring as they switched from a “sell-then-build” to a “build-then-sell” model to offset material shortages and rapidly rising costs – has finally begun to make its way onto the market (with much higher price tags attached).

This new, albeit modest by historical standards, injection of inventory has lured some wary buyers off the sidelines and back into the market. Since Labor Day, we have seen a noticeable rise in inquiries, particularly for luxury homes.

Higher Mortgage Rates Could Significantly Affect Boise Home Prices

Over the last year and a half, low mortgage rates have helped keep homes relatively affordable – or at least more affordable than they otherwise might have been. The current 30-year fixed mortgage rate is 2.99%, which still puts us in the ballpark of 50-year lows.

In the early months of the pandemic, low mortgage rates made higher prices affordable and incentivized people to buy. But as we’ve seen, continuously climbing home prices have more than offset any affordability gains. Mortgage payments are less affordable now than they were even at the beginning of 2021.

Given our relatively sparse inventory, a small increase in mortgage rates may have minimal impact on demand. However, given how stretched affordability is right now in the Treasure Valley, a 1-2% increase could be harder to absorb – particularly if that increase happened in a short period of time. Since we’re not expecting our local supply to grow exponentially and help balance out the market any time soon, interest rates are what to watch. They’ll play a big role in Boise-area home prices over the coming months.

Boise Is Years – and Thousands of Homes – Behind a Healthy Building Schedule

Single-family home construction is running at its slowest pace since 1995. According to CNBC, the U.S. Census “ found that 12.3 million households were formed from January 2012 to June 2021, but just 7 million new single-family homes were built during that time.”

In order to close that national gap, home builders would have to double their production pace over the next five to six years. Locally, builders are even further behind. They were already struggling to keep up when the pandemic sent demand for homes in the Treasure Valley into hyperdrive. 

Simultaneously, pandemic-caused labor and supply shortages made building new homes more difficult. Builders were already reporting critical labor shortages in 2019. You can imagine how much worse those shortages became once the pandemic hit – and compounded builders’ headaches with soaring land and material costs. Even though lumber prices are no longer astronomical, it and everything else from appliances to vinyl is more expensive and harder to obtain than it was at the beginning of 2020.

To cope, builders have been waiting to list new properties until the homes are almost complete. They’re also limiting customization options for buyers. Despite a 30% rise in home prices, the pace of new construction in the Treasure Valley has barely budged.

What's Living in the Treasure Valley Worth?

The latest report from the National Association of Realtors showed that the national median existing-home sales price rose 14.9% in August from the year prior, landing at $356,700. Data for the western region, of which Idaho is a part, shows a median price of $507,900. The association’s data includes non-single-family properties; using the same criteria would have put Ada County's price at $505,000 by comparison.

Until a few years ago, local home prices were $100,000 below other western metros. That relative affordability is part of what has made us such an attractive place to live. The question we have to ask ourselves: Do we deserve to sell at a premium, a discount, or somewhere in between the rest of the West?

Boise Real Estate Market Summary for September 2021

  • Median list price - $494,900 (up 25.6%)
  • Median sold price - $495,000 (up 25.3%)
  • Price per square foot - $302 (up 33.6%)
  • Total home sales - 414 (down 51)
  • Median days on market - 10 days (up 5 day)
  • Available homes for sale - 1.34 month supply (up 0.90)
  • 30-year mortgage rates - 2.90% (up 0.01)

Boise Metro Housing Markets by Area

Median sales price:

Boise Real Estate Agent Lisa Kohl

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) between October 7th, 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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