The combination of reduced mortgage rates, limited inventory, and robust demand for low-cost homes has helped stabilize Treasure Valley home prices.
Ada County's median home price in March reached a two-year low, dropping to $481,900, representing a 16.2% decline from the previous year. In neighboring Canyon County, home prices fell to $395,000, marking a yearly drop of 12.8%.
Despite these declines, however, prices in both counties have remained relatively steady since the beginning of the year, signaling a potential end to the downward trend.
Between late January and early February, there was a significant decrease in mortgage rates, bringing them to their lowest point since September. This scenario, along with the drop in home prices, resulted in increased affordability and coaxed buyers off the sidelines.
Homes typically go under contract 30 to 45 days before the sale closes. Hence, March sales data largely reflects purchase decisions made between mid-January and the end of February.
Mortgage rates have continued their downward trend, with the week ending on April 6th seeing rates drop to 6.28% from their peak of 7% in November of last year. This is good news for those looking to buy a home, as reduced mortgage rates can make homeownership more affordable.
However, this trend also has unintended consequences. As many current homeowners have already secured low mortgage rates, often below 4%, they are reluctant to sell their homes. This situation has further restricted the already limited supply of available properties, which has been a challenge for the Boise-area housing market in recent years.
This trend has had a knock-on effect, resulting in fewer buyers in the market. With fewer sellers putting their homes up for sale, there are fewer buyers, creating a self-perpetuating cycle.
As a result, existing homeowners are not participating in the spring selling season as much as usual, which typically sees a surge in demand. However, first-time homebuyers are taking advantage of reduced competition and are finding opportunities.
Months of supply in Ada County remained unchanged from March at 1.54 months. While that's up from what we saw at this time last year, it's about half of what was seen as recently as September. Supply in Canyon County rose slightly to 1.76 months.
The lower the price point, the more meager the supply. A breakdown of the inventory by price range in Ada County reveals that homes priced below $500,000 have a supply of just three weeks, whereas there is a three-month supply of houses priced above $1 million. Resale homes below $500,000 are selling within a week, in contrast to the typical market time of 40 days, further reflecting the demand for the lowest-cost properties.
Despite new listings starting to outpace demand as expected during this time of year, we anticipate inventory levels to remain below balanced levels, which will likely maintain a floor under home prices.
With fewer resale homes available, new construction properties now make up 50% of all houses for sale in the Treasure Valley. While sales of existing homes are declining, sales of newly built homes increased by 18% in March compared to the previous year.
To entice buyers, builders are offering a range of incentives, such as free upgrades, interest rate buydowns, and price discounts. As a result, newly constructed homes currently offer some of the best deals in the market.
However, discounts may vary depending on the city and community, with the best deals usually found in already completed "move-in-ready" homes. Builders don't want properties sitting on the market for too long, as this can cause them to lose value, particularly when prices are trending lower. In contrast, custom and other "to-be-built" homes may not offer as many incentives.
It's worth noting that past sales may not accurately reflect builder motivation. Due to how they're reported, previous sales prices typically don't include all concessions and incentives, which can amount to tens of thousands of dollars in savings and make new home prices seem higher than they actually are.
If you are considering a newly built home, we recommend consulting with a local real estate agent experienced in new construction. These professionals can provide expert guidance on the latest market trends, assist you in finding the best deals, and negotiate the best price for your new dream home. With their help, you can make an informed decision and take advantage of the many incentives offered by builders this spring.
Boise Real Estate Market Summary for March 2023
- Median list price: $475,000, down $74,000 (-13.48%)
- Median sold price: $467,495, down $82,331 (-14.97%)
- Price per square foot: $281 (-12.19%)
- Total home sales: 258 (down 70)
- Median days on market: 25 days (up 20)
- Available homes for sale: 1.10 month supply (up 0.49)
- 30-year mortgage rate: 6.54% (up 1.82)
Treasure Valley Housing Market by Area
- Ada County: $481,900, down $93,100 (-16.2%)
- Eagle: $782,400, down $102,100 (-11.5%)
- Garden City: $443,500, up $31,500 (7.6%)
- Kuna: $385,000, down $99,000 (-20.5%)
- Meridian: $457,245, down $137,755 (-23.2%)
- Star: $600,000, up $49,010 (8.9%)
- Canyon County: $395,000, down $58,000 (-12.8%)
- Caldwell: $359,740, down $40,250 (-10.1%)
- Middleton: $425,000, down $88,509 (-17.2%)
- Nampa: $398,950, down $62,749 (-13.6%)
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 April 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.