A Hot Spring Market: Ada County Home Prices on the Rise as Inventory Dwindles
Posted by Lisa Kohl on Wednesday, May 10th, 2023 at 5:25pm
The Ada County real estate market is heating up this spring as home prices jump to their highest point in five months. Limited inventory has sparked intense competition among buyers, fueling the price surge.
The median home price in Ada County soared by $35,600 from the previous month, settling at $517,500—the highest point since November 2022. Despite this increase, prices are still down 13% compared to last April. Boise experienced a similar surge, with home prices climbing $32,505 to $500,000 from the previous month.
Canyon County prices finished April at $389,990, down 18.2% year over year, roughly in line with March.
As the number of available homes for sale continues to decline in 2023, buyers face a significant increase in competition.
In Star, a once quaint rural community west of Boise, home prices skyrocketed to a record-breaking $683,320, a 20.5% increase from the previous year. The city's growing population and high demand from buyers seeking small-town charm have made it one of the few Treasure Valley cities experiencing an annual price increase.
After surging during the pandemic, local home prices fell in the second half of last year as mortgage rates jumped to multiyear highs and economic uncertainty discouraged many potential home buyers. Builders, anticipating slower sales, scaled back new home starts and rushed to cut prices ahead of the seasonally slow winter months.
Entering this year, falling interest rates and reduced competition for homes pulled buyers off the sidelines, helping stabilize prices. While current demand is below typical levels for this time of year, supply is even scarcer.
The number of homes for sale is around half of what it was last fall. This can be attributed, at least partially, to increased mortgage rates making many homeowners hesitant to sell their homes and lose their current low-interest rates.
Usually, buyers looking to make higher-priced purchases tend to have lower-priced homes to sell. However, with fewer homeowners moving, there is less demand for higher-priced homes and fewer lower-priced homes for sale. Consequently, the average listing price in Ada County has risen to $866,000.
This spring, local home builders are experiencing higher-than-anticipated demand due to a shortage of resale home listings. As of early May, newly built homes comprise approximately half the single-family homes for sale—a record level.
Some entry-level builders who had been throwing discounts and incentives at buyers in December are now raising prices, a phenomenon not seen in nearly a year.
Months of supply, a key indicator of market performance, sits at 1.64 and 1.71 in Ada and Canyon County, respectively. These numbers are well below the balanced market average of four to six months of supply, pointing to a seller's market.
Inventory has steadily fallen since peaking at three months in September, creating support for home prices, which leveled out in January when supply dipped below two months. Over the past few months, the further reduction in supply has finally led to a rebound in home prices.
Ada County has a severe shortage of lower-priced homes, leading to bidding wars for properties below $500,000. With few houses on the market, the most desirable listings—those priced right and in good condition—are selling within days.
Despite the competition for budget-friendly homes, overall demand remains lower than in previous years. Notably, even properties receiving multiple offers are not selling for much more than their asking prices.
Moreover, overpriced and even some high-end properties are struggling to find buyers. There is clearly a demand for homes at the right price, but buyers are being selective and seeking value.
Moving forward, we expect demand to remain below average while supply likely stays even lower. Despite a recent uptick in new construction, builders will struggle to keep up with demand for starter and entry-level homes due to a continued shortage of building lots and qualified tradespeople. We will continue to see a shortage of inventory until existing homeowners return to the market.
The Treasure Valley real estate market offers unique opportunities and challenges for buyers and sellers. For buyers, good opportunities still exist, particularly if you know where to look and are prepared to negotiate. Being patient and diligent and working with an experienced partner who understands the nuances of the local market and can help you find the best opportunities are essential.
Similarly, sellers must be well-prepared in this competitive market as well, especially if they are not selling an entry-level home. Ensuring that your property is expertly prepared, priced, and marketed will be crucial in securing a quick sale and achieving the highest possible price.
In a market like this, working with an experienced and knowledgeable real estate agent can make all the difference and help you make the most of your opportunities. Whether you are a buyer looking for a hidden gem or a seller aiming to maximize your returns, our team of local professionals is here to support you every step of the way. Don't hesitate to contact us for personalized advice, and let us help turn your Idaho real estate dreams into reality.
Boise Real Estate Market Summary for April 2023
- Median list price: $500,000, down $53,000 (-9.58%)
- Median sold price: $500,000, down $67,800 (-11.94%)
- Price per square foot: $300 (-8.84%)
- Total home sales: 227 (down 86)
- Median days on market: 10 days (up 4)
- Available homes for sale: 1.19 month supply (up 0.41)
- 30-year mortgage rate: 6.34% (up 1.36)
Treasure Valley Housing Market by Area
- Ada County: $517,500, down $77,500 (-13%)
- Eagle: $850,000, down $18,000 (-2.1%)
- Garden City: $638,000 (*fewer than ten sales)
- Kuna: $416,500, down $78,250 (-15.8%)
- Meridian: $499,945, down $110,055 (-18%)
- Star: $683,320, up $116,480 (20.5%)
- Canyon County: $389,990, down $86,510 (-18.2%)
- Caldwell: $359,995, down $44,464 (-11%)
- Middleton: $444,450, down $105,970 (-19.3%)
- Nampa: $390,000, down $94,450 (-19.5%)
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 May 10th, 2023, and is 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. Months of supply is calculated on a 12-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 can be more volatile and can make comparisons, particularly on a month-to-month basis, less reliable.
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