The median sales price for homes in Ada County reached $575,000 in March 2022, an increase of 22.6% compared to the same month last year, and a new record for the county.
This jump was driven primarily by the new construction segment — accounting for nearly a third of all sales in March — which saw a median sales price of $606,050, up 31.5% from last year. The median sales price for existing/resale homes was up 16.7%, reaching $555,000.
Many economists are predicting that the increase in mortgage rates will eventually temper home prices, but it’s hard to say to what extent, and if inventory will still remain the biggest factor in local home prices.
Looking at historical mortgage rates it’s clear that today’s rates are low, like really low. Since records started in 1971, the historical average for 30-year mortgage rates is just under 8%. So even though today’s rates are in the 4s and 5s, they are significantly under that average. In other words, if you’re in a position to lock in an interest rate, you’d be wise to do it sooner rather than later.
Peak rates occurred in 1981 at over 18% due to record inflation during the fuel crisis of that time. The lowest rates on record were during 2020 due to the pandemic, bottoming out at 2.65%. Looking at the larger trends of mortgage rates, it’s clear that this is definitely still the right time to buy for many potential and existing homeowners to purchase.
Fortunately, inventory has been increasing in recent weeks, with levels up 103.1% from the same time last year. More inventory is definitely good news for buyers, but they will need to make quick decisions once they find something they’re interested in since supply is still constrained.
The number of days on market for existing homes dropped to 15 days, on average, in March, down 34.8% from February. The 15-day average is the lowest since late last summer, which may be a sign that the spring market will once again be competitive. Whether due to limits on affordability or willingness among buyers, existing homes that closed in March didn’t sell for quite as much over list price as they did last year.
The percent of original list price received on homes in March 2022 was 100.8%, on average, compared to 104.1% in March of 2021. Another interesting finding was that fewer existing homes sold over list price this year than last year, with the share dropping from 58.7% in March of 2021 to 41.3% in March of 2022.
At first glance, it may seem odd that home prices have gone up so significantly when, on average, buyers are paying close to asking price. However, it’s important to note how list prices are set. When a similar home sells, it can become a “comparable” property for future listings nearby; so, as homes appreciate, future asking prices tend to rise as well.
But the list price is just a starting point. Sometimes buyers pay more, and sometimes they pay less. Ultimately, a home sells for what the market determines it’s worth.
Although it may be tempting for sellers to price their home lower than what comparable data indicates to encourage multiple offers, it’s important to remember that pricing low doesn’t guarantee a bidding war and may not always be in the seller’s best interest. On the other hand, setting an asking price that’s higher than what comparable data supports may exclude a seller’s property from some search results, potentially reducing the pool of prospective buyers. Using MLS data and market experience, Data Driven Real Estate will provide you with a pricing and marketing strategy that’s right for each property and situation.
This market report is provided by Boise Regional Realtors.
