Record-High Prices and Scarce Inventory Turn Treasure Valley Home Buying Into an Extreme Sport
Posted by Lisa Kohl on Friday, August 7th, 2020 at 11:06am
July brought continued great news for home sellers in the Treasure Valley: record-high home prices in both Ada and Canyon Counties, combined with record-low inventory, is making home buying in these markets more competitive than your favorite extreme sport.
While we are seeing the strongest seller’s market ever recorded in the Treasure Valley, there is a silver lining for home buyers. Thirty-year mortgage rates continue to hit new lows, most recently 2.88%, offsetting some of the record high selling prices we’re seeing.
Let’s take a closer look at the numbers before we jump into what is driving this current market:
- The biggest gains we’re seeing is in Canyon County, which hit a median sales price of $300,000 for the first time ever, trumping last year’s sales price by 20%.
- In Ada County, the median sales price jumped to a record $390,000 in July, a 11.6% increase over last year’s sales price.
- The City of Boise also hit a new sales record of $370,000, a year-over-year increase of 10.4%.
One underlying component of the record-setting sales prices we’re seeing is the shortage of inventory in these markets. For example, the entire City of Boise only has 252 homes available – that’s a little more than 0.64 of a month's supply of inventory. Canyon County is doing slightly better with 0.74 of a month’s supply, and Ada County has just slightly more than that with 0.81 month’s supply. To put that in perspective, a balanced real estate market has about a four to six-month supply of inventory.
What's really striking is that despite these record-high prices and incredibly low inventory, the total number of homes sold also jumped to multi-year highs. On-the-fence sellers should take note: people are clamoring for homes in the valley.
The Factors That Make the Treasure Valley Market So Extreme (and Competitive)
The market’s current state shouldn’t be a surprise to anyone who’s been paying attention. What we’re seeing is a continuation of the factors that have been at play for the last year, compounded by the Covid-19 pandemic.
We were already anticipating a record-setting sales year in the Treasure Valley. The coronavirus hit during the onset of the market’s busiest season, momentarily stifling new listings and slowing sales. However, that pent-up demand didn’t dissipate, and when Idaho began lifting its restrictions, the Treasure Valley housing market rebounded in force. What we were left with is cramming a record-setting sales year into a shortened time frame, and with less inventory than expected.
For example, in Ada County, the total number of homes sold jumped 23%, while the inventory of homes for sale plunged 55%, exacerbating an already extreme supply and demand imbalance.
The lack of homes for sale is the only factor keeping appreciation in relative check.
First-Time and Out of State Homebuyers Are Driving Demand in the Treasure Valley
As I mentioned, record-low mortgage rates were a silver-lining for buyers – they’re also one of the primary drivers of demand in our current housing market. If rates had increased 0.75% over the past year instead of decreased, we would not be seeing record home prices right now.
First-time homebuyers, in particular, are jumping on the chance to get their foot in the door. Bloomberg reports that homeownership rates have hit their highest levels since the 2008 recession, increasing from 64.1% to 67.9%, just in the past year.
We’ve experienced a healthy migration of out-of-state homebuyers settling in the Treasure Valley over the past decade. However, the pandemic has created more urgency for big-city dwellers to relocate, while at the same time giving them the excuse to do so now that remote work is becoming the new normal. This means that demand from relocating buyers is higher than we’ve ever seen – by our estimates, it's up 30% from 2019.
What Buyers Can Expect From the Buying Arena (Hint: Bring Your Helmet)
Buyers in the Treasure Valley must be ready to put their best foot forward – and by that we mean a very competitive offer. Bidding wars continue to heat up for homes priced below $400,000, especially in coveted neighborhoods where sellers routinely get 10-plus offers.
In fact, given the intense competition, it is not unusual for buyers across the valley to make offers on houses sight unseen. They are also waving protective contingencies – including housing inspections, financing, and appraisal, to make the offer more appealing to sellers.
These efforts still don’t guarantee success for a buyer if the offer isn’t competitive, and that often means at or above asking price. Even offering the list price for a home advertised at market value doesn’t guarantee your offer will be accepted – or even garner a response. With multiple offers coming in on most listings, sellers are in a position to ignore all but the "plummest" offers at the moment.
That is the reality that buyers currently face, and that reality can be tough. Buyers need to be aware of how competitive the market is and prepared to fight for their dream home with all the tools they have available.
Boise Real Estate Market Summary for July 2020
- Median list price - $369,000 (up 8.56%)
- Median sold price - $370,000 (up 10.45%)
- Price per square foot - $216 (up 10.20%)
- Total home sales - 570 (up 59)
- Median days on market - 8 days (unchanged)
- Available homes for sale - 0.64 month supply (down 0.74)
- 30-year mortgage rates - 3.02% (down 0.75)
Boise Metro Housing Markets by Area
Median sales price:
- Ada County - $390,000
- Eagle - $552,326
- Garden City - $413,125
- Kuna - $351,900
- Meridian - $375,750
- Star - $444,900
- Canyon County - $300,000
- Caldwell - $274,490
- Middleton - $331,624
- Nampa - $305,000
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 August 5th, 2020. 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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