The median sales price in Ada County for May 2023 ebbed 10.9% compared to May 2022, landing at $534,900 — a $17,400 boost from last month. A breakdown of homes sold in various price ranges highlighted an increased interest in homes between $250,000 and $500,000, leading to a lower median sales price for the month. Mortgage rate hikes over the past year also may have contributed to lower sales prices.
Existing homes faced the largest adjustment in median sales prices this month, bogging by $75,000. The 12.8% fade to the resale sector is slightly steeper than we’ve seen in past months, historically dipping from 2-14% year-over-year since September 2022. New construction welcomed a smaller reduction at 5.1% compared to the 10-20% we had seen year-over-year since January 2023.
There were 1,259 single-family homes available in Ada County in May, a reduction of 17.2% compared to the same month last year. This is the first year-over-year decrease in inventory we’ve seen since June 2021. Resale home options decreased by 22.2% while new construction choices slid by 9.9% compared to May 2022.
According to market highlights released by NAR on June 8th, the US housing market remains shy of 300,000 affordable homes for middle-income families. Boise was listed as one of the metro areas with the fewest affordable homes available for middle-income buyers. Five years ago, the income group was able to afford half of all available homes but that number has shrunk to 23%.
This month’s accelerated market speeds threaten to lower inventory moving into summer months. Comparisons for all sectors remain extended year-over-year, but single-family homes went under contract 19 days faster than the month before for a total of 36 days on market. New construction experienced the greatest shift month-over-month, shortening from 93 days in April 2023 to 66 days this month, while existing homes’ days on market depleted by 7 days. These hastened speeds have brought us back to pre-COVID market times, as shown in the chart below:
While shrinking inventory continues to pose supply issues with the increased market speeds, sales have trickled to 699 closings for the month. This is the fewest number of sales we’ve seen for the month of May since 2012.
The low quantity may largely be due to this month’s starting point. Since 2020, we’ve seen April to May month-over-month shifts of approximately 9-10%. This month, inventory still swelled by 8.3% compared to last month, meaning our market trajectory remains similar to past years. With fewer available homes, the bog in sales should help keep supply versus demand from tipping further for upcoming months.
Tackling supply issues will be a large factor in easing affordability concerns in Ada County. Builders will carry the torch for ensuring we can provide more options for middle-income families. This is echoed by National Association of Home Builders Chief Economist, Robert Dietz, who stated that the best long-term combatant to affordability concerns is to increase inventory, particularly with new construction.
With that said, there are many options out there for assisting those who are looking to buy now — I can help you find the program that best fits your situation. There is inventory out there, especially in new construction where our local builders are pushing incentives to prevent homes from sitting on the market too long. I am also able to help my clients find off market deals when I know exactly what you are looking for in a home. The best way to do this is by attending a free buyer consultation with me. Contact me today to start your home buying journey!
April 2023’s median sales price was $517,500, marking the sixth consecutive year-over-year drop, BUT it was a $34,000 positive surge from last month. Historically March to April is noted as the “spring market,” where more homes come up for sale which causes month-over-month shifts from -4.5% to +3.8%. However, this month we saw a 7.0% uptick which is uncharacteristically hefty for the season and is the highest month-over-month increase we’ve seen in the last 19 weeks. In fact, the bump this month in the median sales price for Ada County was in the pre-winter range and will likely continue to rise if supply recovery dwindles.
Forbes.com had warned that housing market activity could be dampened by mortgage rate changes as it has been in other areas across the country. Mortgage rates went up 15 basis points in April coming off a country-wide sales slump in March. With mortgage rates remaining in the 6-7% range, we’ve seen buyers slow down over the last few months. If the lower purchasing hunger remained, it likely would result in lower home prices. But Forbes’ research anticipates that a nationwide price decline is likely not in the cards.
Based on my experience with listing 2 homes in April and working with multiple buyers, we are once again experiencing multiple offers and seeing buyers waive contingencies or offer escalation clauses to obtain homes within certain price ranges. Days on market has even come down slightly (more on that below).
April showed a significantly slimmer inventory accrual year-over-year at 17.4%. The last time we saw inventory accumulation at less than 20% was June 2021 — the edge of the “COVID market.” Since then, we had seen an average inventory growth of 112.4% with its highest peak reaching 192.9% in June of 2022.
Sales have cooled, as well, giving time for new listings to catch up with demand. There were 645 sales in Ada County, 398 of which were existing homes and 247 were new construction. April marked the fourteenth consecutive year-over-year reduction in sales at 21.0% — 13.1% less than March’s transactions.
Existing homes continue to be the hottest commodity in Ada County, spending an average of 31 days on the market — a surprising 138.5% increase from the same month last year but a 32.6% decrease compared to March of this year. The lurch in existing home sale speed matched the pace of late-summer last year. New construction’s DOM swelled by 287.5% from April 2022, bogging down to 93 days on market — a slight respite from the 106 days we saw last month.
New market landscapes may deter buyers from uprooting due to higher interest rates, but softened prices will ease the blow for those who need to move for life circumstances such as growing families and job relocation. NAR’s Chief Economist Lawrence Yun echoed the uniqueness of the market at this week’s Legislative Meetings in Washington D.C.; the tug-of-war continues between limited supply causing multiple-offer situations — currently 28% of transactions nationwide — and the need for lower prices to account for changes in mortgage rates.
Complications are exasperated by proposed LLPA changes which may affect affordability for some. We will continue to monitor developments on the changes and share them with you.
Down payment assistance programs and rate buy-down programs continue to be an asset to buyers who are hesitant due to recent mortgage rate changes. Whether consumers are purchasing their first home or upgrading to fit their current lifestyle, real estate remains a powerful long-term tool for their financial portfolio. I encourage you as a consumer to connect with me and learn what programs may fit you best for a changing market — both as a buyer and a seller.
In February, the median sales price of homes that sold in Ada County was $492,115 — down 10.5% compared to February 2022, and the fourth consecutive month of annual decline in price. However, this was a slight increase of approximately $5,000 from last month’s median sales price.
More than 40% of all home sales that closed in February were new homes, which typically sell for more than existing/resale homes. This higher-than-average share of new construction sales likely kept the overall sales price a touch higher than the month prior.
Prices are still adjusting to mortgage rates and buyer demand, but this month-over-month uptick in prices may indicate that we’re reaching a new normal with prices. Mortgage rates and supply versus demand will be the ultimate determining factors on where prices go, but we’ll keep watching to see if prices continue to level out.
With 613 total sales for the county, closings were 7.3% lower than the same month last year. However, this is the first time since June of 2022 that we didn’t see double digit annual declines in the number of sales.
Market times continued to slow last month, with homes that closed in February spending an average of 78 days on the market before going under contract. The last time we saw DOM — the average number of days between the time a home is listed and the time it is under contract — higher than 78 days was in February 2012. Despite last months’ market times being similar to February 2012, other metrics indicate that market conditions were quite different.
Inventory counts at the end of February 2023 were roughly half of what we saw in February 2012, when our market was in the midst of recovering from the burst of the housing bubble. In today’s market, home prices are being driven by supply versus demand, not speculation like we saw leading up to the Great Recession.
Another indicator that today’s market is different, is the percentage of distressed sales, or properties are listed in IMLS as “HUD Owned,” “In Foreclosure,” “REO/Bank Owned,” or “Potential Short Sale.” In February 2023, 0.3% of sales in the county were considered distressed, compared to 45.4% in February 2012.
Today’s sellers are in a much better credit position than they were over a decade ago, and that’s a big reason we’re seeing so few distressed sales. With that said, you’ll need to work closely with a qualified and knowledgeable real estate agent to price per the current market and determine the most effective marketing strategy as the market adjusts.
Buyers, on the other hand, have more negotiation power, more time to decide, and more options to choose from than we’ve seen in recent history. There were 1,039 homes available on the market at the end of February, compared to 493 for the same month last year. Potential first-time buyers can also look into down payment assistance programs specific to their circumstances, as well as Idaho First-Time Home Buyer savings accounts to maximize their down payment savings.
If you’re ready to buy or sell, contact me today. We will chat about what it is going to take to reach your real estate goals.
A Note About Mortgage Rates From Gabriel
Mortgage rates are still dominating the conversation when it comes to the real estate market and I have to ask: are you ready to get real about what is happening?
Because truth is, mortgage rates have been artificially low since 2008. Low rates were what people needed to see in order to get back into the market after the crash. The true shock for everyone is really stemming from the large spike in rates (3% to almost 7%) that happened in such a short period of time (less than a year). The sudden spike in rates threw everyone into a period of grief, and now we are working through the 5 stages of grief: denial, anger, bargaining, depression, and acceptance.
Houses are supposed to be expensive. In fact, they are supposed to be one of, if not your biggest, purchase. There’s an old saying that “the best time to buy a house is five years ago…” This is because there is always buyer’s remorse, and the truth here is that the second best time to buy a house is TODAY. It’s not going to be in 5 years or 10 years. Today is your best bet.
So stop suffering from recency and get out of the denial stage when it comes to the real estate market and mortgage rates. The best time to buy a home is when you can comfortably afford the mortgage payment, no matter what the rates are.
For the third consecutive month, the median sales price for homes in Ada County was down year-over-year. In January, the median sales price of homes was $487,495. This is down 9.7% (or $52,500) compared to January 2022. The last time that the overall median sales price was under $500,000 was in July 2021!
Both the existing/resale segment and new construction segment saw year-over-year declines in median sales price, with the biggest drop in new construction. The median sales price for new homes that closed in January was $494,990, a decrease of 16.0% ($93,955) compared to the same month a year ago. The median sales price for new homes hasn’t been down under $500,000 since April 2021.
Sales were also down 32.8% for the county compared to last year, with a total of 454 closed sales in January 2023. Of those, 269 were existing/resale homes, down 41.5% from January 2022, and 185 were new construction homes, down 14.4% from last year.
Demand for housing waned as higher mortgage interest rates and swift home price appreciation put pressure on affordability. Since the housing market continues to be driven by supply versus demand, sellers are having to adjust prices and negotiate with buyers to close the deal. The average Percent of Original List Price (% OLP) received for existing home sales last month was 91.9%, which means on average, buyers paid 8.1% less than asking. This is a huge difference compared to last year, when the % OLP for existing homes was 97.3%! On average, existing homes that closed last month sold for approximately $60,000 less than the original list price.
Will prices and sales continue their downward trend?
Newly pending sales data, a forward looking metric, could indicate that demand bottomed out and is beginning to recover. For the last two weeks, we’ve seen new contract signings up year-over-year. Many Realtors in the Treasure Valley area have also reported that they’ve experienced increased interest from both buyers and sellers. This uptick in activity, as well as the stabilization of mortgage interest rates, is a positive sign as we gear up for our spring market.
Today’s buyers have more negotiation power, more options to choose from, and more time to make a decision. There were 1,169 homes available on the market at the end of January, compared to 441 for the same month last year. This increase in supply is also putting downward pressure on home prices. Market times have slowed as well, and homes that closed last month spent an average of 71 days on the market before going under contract — nearly twice the average time that homes spent on the market in January 2022.
Those looking to sell their home in the coming months need to ensure their expectations are in line with what’s happening in the market. The days of a listing going under contract in a matter of hours for well over asking price are over. You may receive multiple offers, but it’s less likely that you’ll receive more than asking.
This is why it is so important, as both a buyer and a seller, to work closely with a real estate agent that knows the market statistics AND can negotiate in your favor. If you’re ready to buy or sell, contact me today. We will chat pricing (and marketing strategy, if you’re listing) in order reach your goals.
Compared to the last several years, 2022 brought a new set of challenges and opportunities. Demand for housing peaked during the pandemic, with too many buyers chasing too few homes, which lead to bidding wars and a highly competitive market. The Fed’s efforts to reset the housing market to bring balance and slow price appreciation have made 2022 a transitional year.
The increases in mortgage rates due to Federal Reserve rate hikes in the second half of 2022 lessened demand for housing, resulting in lower home sales and downward pressure on home prices.
Ada County ended the year with 20.8% fewer total sales than in 2021, and the lowest number of sales since 2014. Higher mortgage interest rates, combined with the swift home price appreciation in the last several years, have impacted buyers’ purchasing power and ability to afford increased monthly payments. As a result, some buyers have made budget adjustments and others have pressed pause on their home search.
The impact of mortgage rates on demand is evident when comparing the declining monthly sales as rates rose in the latter part of the year. Monthly sales were dampened during the summer and fall months — when we normally see a higher amount of activity — which affected the overall sales for the year.
Home prices continue to be driven by supply versus demand. With lessened demand, the median sales price has declined year-over-year for the last two months, with a 2.5% drop in November 2022 and a 5.5% drop in December 2022.
The Days on Market (DOM) metric —which measures the time between when a property is listed and when it has an accepted offer — has trended up in the last six months, giving inventory a chance to accumulate. In December 2022, DOM was 62 days, compared to 32 days in December 2021. This uptick in supply has also contributed to the downward trend in prices.
Mortgage rates will be a major factor impacting the housing market going into 2023. Dr. Lawrence Yun, National Association of REALTORS® chief economist and senior vice president of research, forecasts that prices will remain stable and expects the 30-year fixed mortgage rate to settle at 5.7% as the Fed slows the pace of rate hikes to control inflation.
Any declines and stabilization to mortgage rates, in addition to price declines, will help with affordability. There are current homeowners who would like to move up or downsize but are locked in with a low rate from the last several years and aren’t motivated to make a move until rates come down a bit. If rates do drop below 6%, we’ll likely see more listings come on the market, as well as an uptick in demand.
Those who are able to buy in today’s market have more options to choose from and more time to shop for a home than they’ve had in years. There were 1,462 homes available for purchase in Ada County in December, 151.2% more than in December 2021. Of those, 662 were existing/resale homes, and 800 were new construction. Buyers who haven’t looked at new homes may want to reconsider, as some builders are offering incentives and competitive pricing to move product, and many new construction homes have features and upgrades that aren’t readily available in the existing/resale segment.
While sellers need to price competitively and may need to offer incentives to attract buyers, home price appreciation isn’t expected to drop significantly. Our area experienced some of the highest price appreciation in the country over the last several years so some adjustments are to be anticipated, but the 40-50% price declines we saw in the last housing cycle are unlikely considering the strong equity position of homeowners.
Trends and statistics are useful for understanding the market as a whole, but it’s no substitute for personalized guidance from a real estate professional. Connect with me today to learn about your options and to formulate a plan to reach your real estate goals in the coming year.
This market report is provided by Boise Regional Realtors.
For the first time since October 2014, the median sales price for homes in Ada County dropped year-over-year. In November, the median sales price of homes sold was $525,000 — 2.5% lower than in November 2021 and 6.5% less than in October 2022.
We have been talking for months now about how home prices are driven by supply versus demand. When prices were skyrocketing in the Treasure Valley area, it was mostly due to the fact that there was such little inventory compared to the demand. Homes for sale were hard to come by at a time when buyers were flocking to our area, increasing the demand. Now higher mortgage interest rates, combined with the swift home price appreciation in the last several years, have decreased purchase power for buyers and lessened demand. As a result, some buyers have made budget adjustments and others have pressed pause on their home search.
Consequently, fewer buyers equated to fewer home sales for the county. There were 548 home sales in November, 39.0% less than a year ago. Of those, 380 were existing/resale homes, down 44.9% from November 2021, and 168 were new construction homes, down 19.2% from last year.
The chart below shows activity for single-family homes with or without acreage, between January 2017 and November 2022. Sales volume is impacted by several factors, one of which is mortgage interest rates as the majority of buyers finance their home purchase. The rapid increase of mortgage interest rates resulted in lower sales throughout 2022.
To attract the buyers who remain in the market, sellers are adjusting prices accordingly or offering buyer incentives like closing cost credits to buy down the interest rate. Lenders are also adapting and offering new programs to help buyers combat higher interest rates.
Those who are able to buy in today’s market have more options to choose from and more time to shop for a home than they would have a year or even six months ago. There were 1,843 homes available for purchase in Ada County in November, 131.5% more than in November 2021. Homes that closed in November spent an average of 47 days on the market before going under contract, compared to 29 days this time a year ago.
So, what’s next? Mortgage interest rates have declined in recent weeks, from the most recent high average of 7.08% on November 10, 2022, to 6.33% on December 8, 2022, according to Freddie Mac, retrieved from FRED, Federal Reserve Bank of St. Louis. While uncertainty remains around what mortgage interest rates will do — especially in response to any future Fed rate adjustments — real estate professionals are hopeful rates will continue to decline or at least stabilize in 2023.
In fact, Realtor.com said in their 2023 housing forecast that “with mortgage rates continuing to climb as the Fed navigates the economy to a soft-ish landing, a moderation in home price growth will not be enough for the housing market to be a buyer’s bonanza. Instead, home shoppers will enjoy advantages such as a growing number of homes for sale, but costs will remain high, challenging affordability at a time when overall budgets continue to be squeezed. If home shoppers and sellers have unrealistic expectations, they could find themselves in a stale-mate in the year ahead. The 2023 housing market could become a “nobody’s-market,” not friendly to buyers nor to sellers.”
For buyers in 2023, there will be some things to look forward to. There will be more homes for sale, homes will likely take longer to sell, and buyers will not face the extreme competition that was commonplace over the past few years. However, affordability challenges prevent 2023 from being a major buyer’s market, especially for first-time homebuyers who already faced significant obstacles.
For sellers, success can be found in this market as long as sellers approach with a home sale with reasonable expectations that are very different from what was the norm less than a year ago.
One thing is for certain, whether you are buying or selling, it is more important than ever to work with a REALTOR who knows and understands the real estate market. You want to work with someone who does real estate full time, is knowledgeable about the shifting market, and can analyze trending data to help you be successful. Luckily for you, that is my specialty! Reach out to me when you are ready to make a move.
This market report is provided by Boise Regional Realtors.
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