The Boise Real Estate Market

The Boise Real Estate Market

 

It’s no wonder Idaho is growing. Fast. The Idaho Department of Labor projects the Gem State’s population will reach nearly 2 million by 2025. The majority of that growth is taking place in Southwest Idaho. The Boise metro area, by several measures, has been called the fastest-growing region in the country by multiple newspapers and magazines. Realtor.com and other national news sources have said Boise is a “Top-10” place to move.

So how does this affect the Boise real estate market? The housing market has become the single greatest beneficiary of Idaho’s flourishing economy. Appreciation rates in the last year have outpaced the national average, and there is nothing to indicate they won’t stay positive for the next 12 months. For all intents and purposes, the Boise real estate market is about as healthy as you’ll encounter anywhere in the U.S.

The population increase is having an extraordinary influence on the area’s housing prices. It seems that every month Ada and Canyon counties are setting records in Idaho when it comes to the cost of buying a home. According to Boise Regional Realtors, last year the median sales price for a single-family home in Ada County jumped to over $334,000 while Canyon County’s average single-family home cost reached $220,000. (Both of these prices were records for the Treasure Valley.)

Here is the current breakdown of the Boise real estate market and predictions for the Boise real estate market in 2019.

Home Prices

It is simple supply and demaind economics—the demand for homes is far exceeding the supply, meaning that there are more people looking to buy than there are homes on the market. The cost to build a new home is a factor in this. Many times, newly constructed homes sell at higher asking prices than already existing homes because construction costs (like materials, land, and labor) go up, so do the sale prices for these new homes. About a quarter of the sales in Ada County are brand new homes, so the median sales price has jumped accordingly.

So what about supply? The amount of new-build homes in Ada County has been on the decline for nearly four years. One reason is because people are staying in their homes longer. Seniors are choosing to “age in place” as opposed to selling. Others are deciding to repair their current home rather than buying new. And, those looking to downsize are seeing the prices of smaller homes go up and deciding to stay put.

Ada County is also in a state of catch-up. Builders haven’t been able to keep up with the buyer demand and population growth, due in part to limited funding and a scarcity of skilled workmen.

The rental market is also playing into the limited supply of housing. During the housing market downturn, many homes were bought by investors. And because the rental market is so strong right now, those investors are choosing to hang on to these homes. Click here to read about the pros and cons of renting versus buying a home in Boise.

There’s also a massive influx of people moving into Idaho. Because these types of buyers don’t usually have a house to sell in Idaho, the traditional “trade-up” isn’t being created, meaning that homes aren’t essentially being “traded” as people move in and out of their homes within the state. Instead, the population is increasing, therefore increasing the demand for new homes.

Why Are People Moving to Idaho?

Being an Idaho local who has lived here her whole life, I can testify that the reasons are many. The strong economy is providing employment opportunities. People are picking Idaho as a place to retire. And, they’re migrating here from higher-priced cities since it’s more affordable. Millennials to consider home ownership, and rising rents and low vacancy rates are enticing some of them to buy a home.

People move to Idaho for non-economic reasons too. For example, Idaho is also a safe place with low crime rates. Families feel comfortable raising their children here. Also, people move to Idaho because of its beautiful outdoors and recreation, like hiking, camping, hunting, and snow sports. Click here to read more about why so many people are moving to Idaho.

2018 proved to be a record-breaking year for inbound migration to the Treasure Valley, and the demand from out of state buyers is expected to be ongoing. For years, Boise has been regarded as a bright spot in western states, a place where people can escape unaffordable housing and high taxes. There are no signs of this perception changing anytime soon.

Welcome Home Accel Realty Partners Parade Home in Boise

All else aside—for someone who is living in California and bought their home ten years ago for $350,000 and can turn around now, sell the same home for $700,000 and pay for a newer, nicer, larger home in Idaho, that is pretty enticing.

And that leads us to predictions for the:

Boise Real Estate Market in 2019

Over the last four years, we’ve seen demand far outstrip supply. There has been more and more demand where fewer and fewer are available. But when supply is so low, it has nowhere to go but up.

The median home price in Boise is approximately $253,358, but that doesn’t tell the whole story. At their current price points, homes in Boise are 12.7% higher than they were at this time last year, and show no signs of slowing down. In fact, there are plenty of people who think median home values in Boise will continue to rise at a rate that outpaces the national average for the next year, at the least. And why wouldn’t they? Boise is one of the fastest growing cities in the nation; it only makes sense that home values would increase in accordance with demand.

It possible that median home values will grow an additional 4.8% over the the next 12 months. Real estate in Boise, or at least median home values, have almost doubled since the depths of the last recession.

The increase in population coupled with the low supply of homes makes for a competitive market. It’s predicted that in 2019, the market may gradually develop into balance, but there are still houses available in virtually all price categories today. Timing the market is difficult—and practically impossible—so it’s a good idea to sell when you know the market is up. Click here to learn the benefits of selling your Boise home NOW. And click here to find a realtor at Accel realty Partners who can guide you through the process of buying or selling.

More expensive real estate means fewer qualified buyers. Houses may take longer to sell in general, but the majority of the increase in supply will probably be in the highest price points, offering little relief to first-time buyers. While properly priced, “move-in ready” homes are still selling quickly, the bidding wars and the buyer contingency waivers are not expected to continue into 2019. We’re likely going to see something we haven’t seen for a while—a Boise housing market that gets a little tougher for both buyers and sellers. There is likely going to be a plateauing demand, resulting in a rising supply of homes for sale.

Regardless of what happens to mortgage rates and home prices, there aren’t many scenarios that will result in more affordable housing over the next 12 months. Home prices may continue to escalate—though at a significantly slower rate—reducing affordability. Many market predictions put mortgage rates somewhere between 5.5% and 6% by the end of 2019. The reality is, no one really knows where interest rates are headed in the short term, however, in the long run, they’re likely headed higher. Rates affect monthly payments which consequently affect purchasing power. A home that would have cost you $270,000 a year ago may cost $323,000 today. At precisely the same time, the mortgage payment went from $1,149 to $1,530.

Pricing high and waiting for the market to catch up won’t work anymore. In 2019 we will trend towards a more balanced market due to higher housing costs, not a significant increase in supply.

Until we see a significant shift in the market, there is no indication of a buyer’s market in the near future. We will still be in a seller’s market, it just won’t be the crazy market we’ve observed over the last few years. Home values will continue to appreciate, only not at the double-digit rates. There will still be plenty of demand from buyers, but higher prices and lower affordability will make it harder for first-time buyers. People will continue moving to the Boise area; there will just be a little less demand in the highest price points.

For Boise to realize its true potential, it needs to add inventory, and fast. That way, it can take advantage of the current population growth and continue its hot streak.

Click here to learn about growing businesses in the Treasure Valley as population increases.

Accel Realty Partners

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Accel Realty Partners

 

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