The Treasure Valley housing market saw home prices and sales decline in January, as rising interest rates and a typical seasonal slowdown ahead of the holidays took their toll.
In Ada County, home prices fell 10.2% year-over-year to $485,000—the lowest level since April 2021. Canyon County saw a 6.9% yearly price decrease, settling at $395,445, a slight increase from December but also in line with the beginning of 2021.
The slowdown in the market can be partly attributed to the seasonal trend of fewer sales and lower appreciation in January; it also reflects purchase decisions made months earlier when mortgage rates were at a 20-year high.
Decreasing affordability and increasing economic uncertainty caused many buyers to retreat from the market, leading to a dip in sales as the holidays approached and buyer fatigue peaked.
The Federal Reserve's efforts to combat surging inflation by aggressively raising interest rates in 2022, alongside the fast pace at which the average mortgage rate increased during the year, also contributed to the decreased demand.
Although mortgage rates never exceeded their long-term average, the rapid increase caught many by surprise and sent local home sales to multiyear lows.
The time a home stayed on the market also increased to a median of 60 days compared to 22 a year ago. High days on market can indicate a wait-and-see attitude among buyers, who may be hesitating before making a purchase.
Despite the decline in home prices and negative sentiment seen in January's numbers, a rapidly decreasing supply of available homes suggests that the spring housing market may see limited price declines—or even a positive turn.
Additionally, since the beginning of the year, open-house traffic and inquiries from potential buyers have notably increased. Local mortgage lenders are also reporting a jump in mortgage applications.
More affordable homes, due to falling prices and lower interest rates, have begun to pull buyers off the sidelines. With fewer bidding wars, more homes to choose from, and more time to decide, the current housing market offers much friendlier conditions compared to recent years.
The number of available homes for sale in Ada County declined to 1,200 at the start of the month, only half of what was seen in September.
Months of supply, calculated by how long it would take to sell the current inventory of homes at the current sales pace, dropped to 1.72 and 1.90 in Ada and Canyon counties, respectively. Historically, a number below four months is considered a seller's market (which predicts upcoming price hikes), while a number above six months is viewed as a buyer's market.
Although both the total number of homes for sale and months of supply measure inventory, the more important metric is months of supply as it takes into account demand.
You would be correct in thinking that falling home prices and decreasing supply are contradictory.
Historically, home prices have been influenced by unemployment rates, income, and affordability. Currently, wages are rising, and unemployment is at its lowest point in over 50 years, contributing to the Federal Reserve's aggressive approach to raising interest rates.
Although affordability remains a challenge, the recent drop in home prices and mortgage rates has resulted in a nearly 20% decrease in the average monthly payment for buyers.
In previous housing market slowdowns, potential buyers continued their search for homes until they found a comfortable price. This time around, the speed of the slowdown left many buyers unsure of what to do, so they did nothing.
Despite this temporary pause, the desire to buy among this group of buyers remains strong, and they are gradually reentering the market.
While a lot can happen in the next twelve months, given the pent-up demand and tight supply, home prices are headed higher this spring.
Boise Real Estate Market Summary for January 2023
- Median list price - $495,000 (down 5.5%)
- Median sold price - $478,450 (down 7.1%)
- Price per square foot - $271 (down 10.6%)
- Total home sales - 178 (down 97)
- Median days on market - 44 days (up 26 days)
- Available homes for sale - 1.23 month supply (up 0.86)
- 30-year mortgage rate - 6.27% (up 2.82)
Treasure Valley Housing Market by Area
- Ada County: $485,000, down $54,995 (-10.2%)
- Eagle: $843,000, up $9,799 (1.2%)
- Garden City: $452,500, up $34,000 (8.1%)
- Kuna: $479,945, down $45 (-0%)
- Meridian: $445,000, down $104,900 (-19.1%)
- Star: $498,500, down $19,462 (-3.8%)
- Canyon County: $395,445, down $29,455 (-6.9%)
- Caldwell: $366,990, down $23,005 (-5.9%)
- Middleton: $572,056, up $97,056 (20.4%)
- Nampa: $403,967, down $16,033 (-3.8%)
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 February 8th, 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.