Buyers Ignore Soaring Mortgage Rates, Send Boise Prices to New Records
Posted by Lisa Kohl on Friday, April 8th, 2022 at 1:42pm
Home prices are soaring to new records amid fierce competition and rising mortgage rates as Ada and Canyon County entered the Spring Selling Season at a full sprint.
While appreciation had slowed for most of the past year, last month brought a staggering acceleration of median home prices never seen before.
Boise saw a $25,000 jump, marking the first time in history that prices have shifted that dramatically in just a month. Ada County also saw a $25,000 increase while Meridian’s month-over-month prices spiked by $47,000. In Canyon County’s “typically more affordable” market, prices rose $19,000.
Overwhelming demand continues to outpace the critically-low supply of available properties, pushing sales to new extremes as sellers enjoy multiple offers, contingency deferrals, and top-dollar returns.
A bump in activity is traditionally expected this time of year as market seasonality blooms out of its winter wilt, but the appreciation severity is stunning buyers who now face significant competition for every property.
On the other side of the real estate equation, it's never been better to be a seller. Boise ranks as the second most "equity rich" city in the nation, and March’s skyrocketing prices are bringing even more value to sellers. Yet, clocks may be ticking for would-be sellers as mortgage rates are predicted to continue spiking throughout 2022.
- Ada County home prices hit a new record of $575,000. As a year-over-year appreciation of $105,750 (22.54%), it’s also a $25,100 jump from February.
- Canyon County gained $18,550 in a month, ending March with a record of $453,000. That’s a twelve-month accrual of $70,916 (18.56%).
- Boise’s record sale price of $549,826 is an $89,826 (19.53%) yearly appreciation.
- Meridian ended last month at $595,000, an astonishing $135,245 (29.42%) leap from March 2021.
- Nampa’s streak of record gains continued as it ended the month at $461,699, up $89,898 (24.18%) from this time last year.
Roaring Demand Rockets Boise-Area Prices to New Heights
Treasure Valley real estate saw once-in-a-lifetime growth throughout 2020 and 2021. Aided by pandemic-led relocations, demand quickly surpassed supply, lighting a fire beneath home prices as Idaho’s most populous counties dug into an extreme seller’s market.
Yet, at the end of 2021, the data showed that appreciation was slowing. Demand was still strong, and homes were still hitting new records—median home prices have nearly doubled over the last three years—but the monthly jumps came in $5,000-$6,000 increments rather than the $18,000-$19,000 leaps seen in 2020.
March blew that idea out of the water as home prices shattered records across the Treasure Valley.
The upswing comes from an additional demand wave as buyers try to get ahead of climbing home prices and rising mortgage rates, further exacerbating bottom-of-the-barrel supply and increasing home costs.
Ada County ended March with just 0.69 months of active listings. Canyon County's 0.80 months of inventory (about three weeks) isn't faring much better under March's swift boost in demand.
A healthy real estate market generally holds around a 4-6 month supply of homes, and at just above two-and-a-half weeks of listings, Treasure Valley inventory is razor-thin.
The lack of homes traces back to the Great Recession, and the significant deficit is driving prices sky-high as demand stacks up in both counties. Further constraining supply, some would-be sellers are choosing to hold onto their properties over fears of the market's rising prices and the risk of not finding another reasonably priced home.
The immense returns are coming quickly for those sellers who enter the market. March's fierce buyer competition had a typical Ada County home selling in just six days—only one day more than the all-time low set in 2020-21.
While that "time-on-market" figure should average around 45-60 days, sellers are yielding incredible returns as buyers race to get ahead of mortgage rate hikes, price records, and the pumped-up Spring Selling Season.
Mortgage Rates See Fastest Three-Month Rise Since May 1994
Mortgage rates are jetting away from their historic lows, hitting a three-year peak of 4.72%. The typical Treasure Valley mortgage payment is up 30% since last February.
Many economists expect the hikes to continue throughout the year, sending homebuyer schedules into overdrive. Waiting a month could now mean much higher rates, price tags, and potentially getting priced out of a home.
Further expanding the hyper-competitive pool, a contingent of pent-up demand has made its way into the spring market.
Buyer fatigue and increasing prices sent some buyers to the sidelines last year, especially first-time buyers who lacked sizable down payments. Along with the shoppers who didn’t find what they were looking for in 2021, many of these pent-up purchasers have decided this year is finally their time to secure a home, further straining the supply and demand gap.
As demand swells throughout the Treasure Valley, sellers can set parameters for their home sales. Those contingencies range from finding a replacement home, waiving inspections, or extending move-out schedules. In February and March’s state-your-price market, buyers were happy to accommodate nearly every request as long as it meant locking in a price and rate before things climb even higher.
Frankly, There's Never Been a Better Time to be a Seller
Whether you're getting ready to sell, just landed your dream home, or plan to stay in your house forever, it's a remarkable time (in more ways than one) to be a homeowner.
Ada County residents who purchased in March 2020 have seen a median appreciation of $209,100, while Treasure Valley home values have nearly doubled over the last three years.
These incredible equity gains ranked Boise the second most "equity rich" city in the nation, according to ATTOM, a real estate statistics company that defines equity-rich properties as having a mortgage balance less than 50% of market value.
With so much value coming so quickly, many locals are searching for the best way to take advantage of the windfall.
For homeowners planning to take full advantage of their incredible equity gains this Spring Selling Season, we expect to see more top-dollar returns as demand swells and mortgage rates soar.
It’s gauging how much further the market will climb that gets tricky.
Historically, heftier mortgage rates lead to cooling home prices, and the Treasure Valley has yet to really see the effects of the latest spikes. March’s astounding numbers are actually the result of January and February’s 3.5-3.75% rates.
As a seller, you might consider entering the market sooner rather than later.
Mounting mortgage rates and price gains are decreasing affordability and limiting the buyer pool. Those priced-out shoppers will potentially bring a reprieve to those who can handle the record rates and price tags, but price appreciation and buyer competition will slow.
Boise Real Estate Market Summary for March 2022
- Median list price - $549,000 (up 22.03%)
- Median sold price - $549,826 (up 19.53%)
- Price per square foot - $314 (up 13.36%)
- Total home sales - 328 (down 3)
- Median days on market - 5 days (up 1 day)
- Available homes for sale - 0.61 month supply (up 0.36)
- 30-year mortgage rates - 4.72 (up 1.59)
Boise Metro Housing Markets by Area
- Ada County - $575,000
- Eagle - $884,500
- Garden City - $412,000
- Kuna - $484,000
- Meridian - $595,000
- Star - $550,990
- Canyon County - $453,000
- Caldwell - $399,990
- Middleton - $513,509
- Nampa - $461,699
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) on April 6th, 2022. 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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