House prices set new records across the Treasure Valley in March, as buyers hit the spring selling season in force. Scarce inventory continues to plague the market – in March, Boise only had a one-week supply of housing on the market. Ada County had about ten days and Canyon County had under two weeks. It's not just a seller's market; it's a savage seller's market.
But even with our short supply, the monthly and yearly gains we’re seeing in sales prices are staggering. The average annual appreciation we’d expect to see for a home is around 4%. Instead:
- The median sales price in Ada County hit a new record of $469,250 in March, rising by more than $100,000, or nearly 28%, in just one year.
- Boise's median cost of a single-family home rose to $460,000, up $110,000 or roughly 31% from the year prior.
- Canyon County homes prices also rose nearly $110,000 to $382,084, a 40% jump in just 12 months.
In other words, we saw 7 to 10 times more appreciation in the Treasure Valley than we would see in a typical year. At this point, the most shocking thing about the rise in Treasure Valley home prices is how common these new records are becoming. Both Ada and Canyon counties have set new sales price records in 11 of the last 12 months. In fact, March marked the 10th consecutive month of record-setting sales prices in Ada County.
Treasure Valley Homes Are Selling at Record Speed
How did we get here? Unprecedented demand created by near record-low mortgage rates, coupled with a once-in-a-generation shift in people's housing priorities, continues to drive our local housing market. We cannot emphasize it enough: this dynamic is unlike anything ever seen in our local real estate market.
To illustrate just how fierce the competition among buyers is, look no further than how fast homes are selling. In the Treasure Valley, the median amount of time a home spends on the market is five days – which means half of the valley’s homes take less time than that to sell. In the cities of Boise and Eagle, that timespan is just four days.
The main reason more homes aren't selling faster is that bidding wars, which typically take a few days, are keeping homes on the market longer than if the seller had received just one offer.
“Trading Up” Homeowners and Millennials Keep Demand High
Why hasn’t the dramatic decrease in affordability done more to slow down the market? You can thank homebuyers for that – primarily local ones. Last year’s buyers were often characterized as being out-of-state transplants. However, recently, we’ve seen two homebuyer profiles become more prominent in our market: local “trade-up” homebuyers, and millennials.
They’ve got equity to spend. Thanks to skyrocketing housing prices, “trade-up” homeowners are sitting on massive amounts of home equity. Many are also flush with stock market gains, savings that have accumulated faster than normal thanks to a year spent in lockdown, and newly pristine credit scores. All of these factors have allowed this type of homeowner to reenter the housing market when they might not otherwise. They’re in a strong position and eager to trade up.
The pandemic helped their finances. Despite record-high home prices, we’re also seeing more millennials enter the market than ever before. Seeing $300,000 and $400,000 neighborhoods fill up with first-time buyers is not what you would typically expect to see. In fact, it’s the opposite of what you would expect to find in a market that is reaching a price peak.
It’s true that millennial buyers may be getting help with down payments from parents. But it’s also worth noting that the pandemic-driven recession has actually padded the finances of most working professionals. Government stimulus, coupled with unintended savings (due to not being able to go out, eat out, travel, or really recreate) and a shift in priorities has prompted many buyers to enter the market for the first time. This is another great example of new, local demand.
No Signs of a Treasure Valley Real Estate Market Slowdown
It’s hard to predict (or even envision) a cooling off of the housing market when we continue to see waves of new buyers, scarce inventory and low mortgage rates.
As expected, mortgage rates have risen steadily from December’s all-time lows, but they’re still lower than they have been in 49 of the last 50 years. All of the local lenders we work with are reporting they are swamped with new loan applications.
At the beginning of April, the average 30-year fixed-rate mortgage was 3.18%. We predict that rates will need to pass the 4% mark before we see a noticeable pullback in demand. While that is not likely to happen in the near term, rates will likely move higher as the economy continues to rebound.
The armchair philosophers of real estate argue that prices are bound to eventually drop sharply just because they’ve recently risen sharply. But this is definitely not a given. People often forget there are more options than just continuing increases or drastic decreases.
While it’s too early to predict, the trends we’re seeing now could create a situation where reduced affordability leads to reduced demand, creating a pricing plateau. This wouldn’t necessarily mean prices would drastically drop, but it would be enough that (when combined with a bump in inventory) prices would stay flat for a few years.
If the last year taught us anything, it’s that the future is unpredictable. We’re currently living through the strongest real estate market in modern history. While we don’t see that changing in the foreseeable future, eventually the market will shift. Whether it’s to a balanced market or something else, we’ll just have to wait and see.
Don’t Leave Thousands on the Table When Selling Your Home
Should you be getting 20, 30, or even 88 offers on your house?
In a market as hot as this one, it’s not surprising that many new listings receive multiple offers. But if you’re receiving 20 or 30 offers, it’s a good sign that your property was underpriced. Even with competitive bidders, that could mean you ultimately received less than you could’ve for your home.
It’s not your fault – with home prices rising by the day, it’s understandable for a seller to underestimate the value of their property. That’s why having an experienced agent in your corner is vital.
For example, let’s say the market value of your property is $600,000. But you and your agent agree your property is worth $550,000 and list it as such. You receive multiple offers, sell the house for $575,000 and think you (and frankly, your agent) did great.
In reality, your agent left $25,000 or more on the table.
It’s true that when a property is underpriced by $25,000, buyers might spot it and bid it up to market value. But when the same house is mispriced by $100,000 or even $200,000 below what it’s worth – which is becoming more common than you’d think – sellers are costing themselves big.
Here’s why: A home listed at $550,000 won't attract many buyers with a $700,000 budget, even if it's actually worth $700,000. It will mainly attract buyers with $500,000 to $600,000 budgets, who don’t have as much wiggle room to bid on a property.
This is part of the reason we see so many homes selling for tens- or hundreds-of-thousands over their asking prices (remember: if it went for $100,000 over asking, it was probably worth more). While deliberately underpricing a property can be an effective tactic in the right circumstances, it can also backfire on you – especially when done incorrectly or unintentionally.
The smart thing to do is correctly price your property from the beginning. As our name suggests, we know Boise real estate and we’re ready to help you do exactly that.
Boise Real Estate Market Summary for March 2021
- Median list price - $449,900 (up 28.58%)
- Median sold price - $460,000 (up 26.56%)
- Price per square foot - $266 (up 31.43%)
- Total home sales - 331 (down 43)
- Median days on market - 4 days (down 2 days)
- Available homes for sale - 0.25 month supply (down 0.83)
- 30-year mortgage rates - 3.08% (down 0.37)
Boise Metro Housing Markets by Area
Median sales price:
- Ada County - $469,250
- Eagle - $715,000
- Garden City - $365,000
- Kuna - $417,306
- Meridian - $459,755
- Star - $490,000
- Canyon County - $382,084
- Caldwell - $377,070
- Middleton - $425,000
- Nampa - $371,801
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 April 6th, 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.