The median sales price for homes in Ada County was $561,500 in October, up 4.0% from the month prior and 5.4% higher than October 2021. Until last month, there have been month-over month declines in the median sales price since the peak of $602,250 in May 2022. We haven’t seen a year-over-year decline in the overall median sales price since October 2014.
Higher mortgage interest rates have decreased purchase power for buyers and cooled demand, causing some buyers to make budget adjustments and others to press pause on their home search.
Mortgage rates surged in the first quarter of the year. The war in Ukraine added to upward pressure on inflation. As a result, the Federal Reserve raised its short-term interest rates by 25 basis points in March in its efforts to control elevated inflation. Although the Fed doesn’t set up mortgage rates, Fed’s actions have a ripple effect. A higher rate for banks tends to make borrowing more expensive for consumers affecting eventually long-term interest rates (such as 10-year Treasury bond).
While mortgage rates typically follow the trend of the 10-year Treasury yield, the rate on the conventional 30-year mortgage also tends to rise. Nevertheless, the Fed will continue its tightening policy with additional rate hikes in the following months. Thus, the outlook is for mortgage rates to rise even further. According to the mortgage finance provider Freddie Mac, the 30-year fixed mortgage rate rose to 3.8 percent in Q1 2022 from 2.9 percent a year earlier.
With the steady incline in rates and dampened demand, why didn’t prices dip last month? While there were 32.5% fewer home sales in October 2022 than in 2021, there were still 670 home sales, and the mix of those sales gives us a clue as to why the overall median sales price didn’t budge much in October.
There are two primary segments to housing inventory — existing/resale homes, and new construction homes. New home sales made up 31.9%, or nearly a third, of all home sales in October. The median sales price for new homes was $657,500, while the median sales price for existing homes was $500,000, down 3.7% from October 2021. This significant share of new home sales pulled up the overall median sales price.
Due to rising mortgage interest rates, we’ve watched price growth decelerate on a monthly basis since May of this year. The fact that October didn’t bring any major changes, price wise, indicates home values are not likely poised to plummet, though we may see more adjustments to come. Sales have slowed but won’t disappear — regardless of market conditions, life continues to go on, and some life events require a move.
Buyers who were able to purchase this fall had more negotiation power than we’ve seen in years and used creative tactics, like using closing cost credits to buy down the interest rate, to combat higher monthly payments. With price growth slowing and more inventory to choose from, buyers have been able to snag existing homes at a lower price point than they would have a year ago, with the option to refinance down the road if interest rates go down.
If you decide you’d like to take advantage of a less competitive market and purchase a new home or investment property, please reach out to me. My lender partner can go over the specifics of your financial situation and buying power while I help you search for a new home in the Boise area. Prices are attractive right now and if you have motivation to move, now may be a great time to find a great deal.
After peaking at 44.0% in May 2021, annual price growth has trended down and slowed significantly, due in large part to higher mortgage interest rates. The median sales price for homes in Ada County was $540,000 in September, down 4.4%, or $25,000, from the month prior, but 0.9% higher than September 2021. The median sales price dropped for the last four months, but we’ve yet to see a year-over-year decline in overall prices.
However, when we look at the existing/resale segment, home prices have declined year-over-year. The median sales price for existing homes was $500,000 in September, a 4.8% dip from the same month a year prior.
As we’ve mentioned in previous market reports, low mortgage interest rates drive demand for housing by increasing buyer’s purchase power. The opposite is also true — higher mortgage interest rates decrease purchase power and cool demand. According to Freddie Mac, retrieved from FRED, Federal Reserve Bank of St. Louis, the average 30 year fixed-rate mortgage was 6.7% on September 29, 2022, more than double the 3.0% average in September 2021 and throughout the majority of last year. Now in late October, mortgage interest rates are pushing 7.0% for a 30-year fixed mortgage.
The Federal Reserve’s rate hikes, in an effort to reduce inflation, have had major impacts on the housing market, resulting in slower price growth and fewer sales. Buyers are making budget adjustments or pressing pause on their home search as they face higher monthly mortgage payments.
In the Boise market, we are seeing more sellers offering rate buy-downs to incentivize buyers.
Single family home sales dipped 30.3% last month in Ada County, and September marked the seventh month of year-over-year declines in sales. Compared to last year, sales are 15.1% lower year-to-date.
Lessened demand has also given inventory a chance to accumulate, with 2,420 available listings on the Intermountain MLS at the end of the month, a 93.8% increase from September 2021. More inventory is good news for those who are able to buy in today’s market, as they aren’t facing the fierce competition for homes that we experienced a year ago. If rates drop in the future, buyers may opt to refinance and save on their monthly payments. Additionally, buyers have gained negotiation power.
And negotiate they have — the average original list price received for existing/resale homes in September was 92.5%, which means that on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In September 2021, the average original list price received was 98.0%, meaning that on average, buyers paid slightly less than asking price for existing homes. Another metric that indicates competition that’s made a significant shift from a year ago is Days on Market. Existing homes that closed in September spent an average of 37 days on the market before going under contract, compared to 17 days in September 2021.
With the shifts in the housing market and economists talking about an overall recession, many are naturally asking, “What’s next?”
Understanding what’s happening with the housing market is helpful, but if you’re considering buying or selling a home, it’s more important to consider your unique circumstances and needs. The saying we’ve been using lately is “date the rate, marry the home.” If you have a motivation to make a move, then contact me today. We’ll go over the market and what that means for your exact situation as a buyer or seller.
This market report is brought to you by Boise Regional Realtors.
The median sales price for homes in Ada County was $565,000 in August, down 4.2% from July but 6.6% higher than August 2021. Higher mortgage interest rates and higher home prices have impacted monthly mortgage payments, causing some potential buyers to make budget adjustments, and others to press pause on their home search for the time being.
Home prices in our market are driven by supply and demand. Sellers are responding to the changes in the demand for housing and adjusting their prices according. This has caused the median sales price to come down from its peak of $602,250 in May.
One factor contributing to lower sold prices is the fact that buyers are typically paying less than list price. The average original list price received for existing homes in August was 94.0%, so on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In August 2021, the average original list price received was 99.8%, or just under asking.
While interest rates still pose a challenge, other market conditions have continued to move the right way for buyers — slower price growth, more options, and more time to decide before submitting an offer. Speaking of time, homes that sold in August spent an average of 29 days on the market before having an accepted offer, a much more normal market time compared to the 14 days average in August 2021.
Options abound with 2,374 homes available for purchase at the end of August, allowing buyers who were sidelined when the market was ultra-competitive to resume shopping for their next home. However, the current supply of homes is more nuanced than it appears at first glance.
We’re not out of the woods yet when it comes to inventory. Months Supply of Inventory, or MSI, is our best gauge on how well supply is keeping up with demand. MSI jumped up as demand cooled in recent months, but it held steady at 2.8 months in July and August. A balanced market, or one that doesn’t favor buyers or sellers, is typically 4-6 months of supply.
So, what does this mean for buyers and sellers?
According to the economists at Realtor.com, fall may be the best time to purchase a home, and this year is looking especially attractive since there are more options available. Buyers are experiencing a more balanced market than the last few years – which means they have more time to make decisions, and home prices have trended down. And although interest rates are higher right now, this shouldn’t deter buyers. You can always refinance later down the road when rates fall again (and they will fall).
When it comes to selling a property, homeowners are enjoying record high equity, and despite the recent decrease in home prices, are still receiving great values for their homes. The market has normalized and isn’t nearly as competitive as it was in 2020 and 2021. So if you list your home for sale, don’t expect bidding wars, offers waiving all contingencies, and the home to go under contract within a few days.
Now might be the best time to list your home. Goldman Sachs is predicting 0% growth in home equity in 2023. This means that now is the time to maximize your current home equity when selling, or risk selling your home for less in 2023.
However, there are still things you can do to stand out. Ask me how my expertise on pricing strategy and Data Driven marketing strategy will attract as many buyers as possible in this changing market.
The market is changing in the Treasure Valley! The median sales price for homes in Ada County was $589,990 in July, down 0.4% from June but 9.3% higher than July 2021. Buyers who purchased in recent months faced larger monthly mortgage payments due to higher mortgage interest rates and home prices, which has had a cooling effect on the demand for housing. As a result, home price growth and sales have slowed.
This point is made more obvious when looking the existing/resale segment, which had a median sales price of $549,000 in July, a 3.7% decrease from the previous month, but a 4.6% increase from a year prior. The existing segment can react more quickly to changes in what buyers are willing or able to pay in contrast to new construction which must factor in land, labor, materials, and other fixed costs into the final home price.
The month-over-month price declines indicate that the local housing market continues to be driven by supply versus demand, not speculation like we experienced over a decade ago. As demand decreases and supply increases, prices are responding accordingly.
There were 2,408 homes listed for sale at the end of July, a 128.2% increase from July 2021, and the highest level of inventory we’ve seen since September 2015. Even with the uptick in inventory, the months supply of inventory in July was 2.8 months, meaning, if no additional homes were listed, the supply of homes would run out in about three months. A “balanced” market, or one that does not favor buyers or sellers, is typically between 4-6 months of supply.
July also marked the fifth consecutive month of year-over-year declines in the number of sales. There were 685 closed home sales last month, down 33.8% compared to July 2021. There have been 5,370 total sales year-to-date, 707 fewer, or 11.6% less, than this time last year.
Metrics that indicate competition in the market continued to show signs of normalizing in July.
Focusing on the existing/resale segment, homes that closed last month spent an average of 21 days on the market before going under contract, compared to 11 days in July 2021. Additionally, the average original list price received for existing homes in July was 95.6%, which means that on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In July 2021, the average original list price received was 101.3%, meaning that on average, buyers paid more than asking price.
Higher mortgage interest rates have done what the Fed intended and cooled demand for housing, which in turn, has also slowed sales and price growth. However, it’s important to remember that 2020 and 2021 were out of the norm for our market — we experienced a surge of demand for housing while we had record low inventory, which drove home prices up at a very rapid rate. Today, we’re in the midst of a shift to a more normal market, one where bidding wars are less common, buyers have more time and choices, and appraisals and home inspections don’t have to be waived in order for an offer to even be considered.
If you have a property that you are considering selling, now is the time to put it on the market. Wait any longer, and you may find yourself giving up more concessions as the seller as the Treasure Valley real estate market continues to balance out. Give me a call today to schedule your free listing consultation. We’ll take a tour of your home together through the eyes of a potential buyer, go over comparable properties that have sold recently, and you’ll receive an in-depth comparative analysis with list price options. Do not wait to get in touch with me today – let’s get your property SOLD!
The data reported is based primarily on the public statistics provided by the Intermountain MLS (IMLS), a subsidiary of Boise Regional REALTORS® (BRR).
After passing the $600,000 mark in May 2022, the median sales price for homes in Ada County dropped to $592,090 in June. Although the median sales price in June was 12.8% higher compared to the same month a year ago, this is the first price drop we have seen in 2022. Since 2005, the average year-over-year percent change in home prices in Ada County has been 8.1%.
As I’ve been saying for the last year or so, the Boise area real estate market can be explained in simply economics – supply vs demand. Going into late 2020 and early 2021, our housing market was already undersupplied and was struggling to keep up with the demand placed on it as Boise experienced an influx of people moving to the area from out of state. This caused housing prices to shoot up prior to the pandemic.
The incredible price growth we’ve seen since the onset of the pandemic was fueled by a rapid increase in demand for housing as people transitioned to remote work, the continued household formation of millennials, and historically low mortgage interest rates.
We’ve since seen the buyer pool shrink due to higher mortgage rates and an overall buyer attitude of being “fed up” with home prices. Combine that with concerns about inflation and recession fears, and you’ll understand why there has been a slight cooling on demand in the Boise area. This has given inventory a chance to catch up a bit, giving the remaining buyers slightly more options – or at least better odds at having their offer accepted.
There were 2,135 homes available for sale at the end of June, a 192.9% increase from June 2021, and the highest inventory we’ve seen since September 2016. Even with the welcome inventory gains, the months supply of inventory in June was 2.4 months. A “balanced” market, or a market that does not favor buyers or sellers, is typically between 4-6 months supply. So while we are seeing a bit more inventory on the market, it is still a seller’s market in the Boise area.
Metrics that indicate competition in the market continued to show signs of normalizing. Focusing on the existing/resale segment, homes that closed last month spent an average of 14 days on the market before going under contract, compared to 10 days in June 2021. Additionally, the average original list price received for existing homes in June was 98.4%, which that on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In June 2021, the average original list price received was 103.9%, which means on average, buyers paid more than asking price.
Sales also continued to lag in June. There were 818 closed home sales last month, down 16.0% compared to June 2021, and the fourth month of consecutive year-over-year declines.
The housing market conditions we experienced for the last two years were unique. Historically low inventory, coupled with rampant demand, resulted in above average price growth and a highly competitive market. The changes we’re seeing in price growth, inventory, and slower market times is moving us toward a more normal market — one where bidding wars are the exception and not the rule, and buyers aren’t having to make split-second decisions and waive contingencies for their offer to even be considered.
It’s so important to note – and for buyers & sellers to understand – that these market shifts in the Boise area are not indicative of a housing “crash,” especially one like 2008. This is a re-balancing of a unique market situation.
Because of this, as the Boise area market shifts, sellers may have to adjust their expectations slightly. Offers may not fly in within the hour or first day you list, and your home may not sell for over list price. This isn’t necessarily a bad thing — in fact, it may make your experience less stressful, and sellers are still receiving great values for their homes. Your best bet for selling in today’s market is to price your home appropriately, based on the relevant data, relevant comps, and expertise offered by your real estate agent, and then allow your agent to market your home on the multiple listing service to reach the widest audience possible.
As the market begins to change in the Boise area, it’s more important than ever that as a seller you work with an experience listing specialist. This means using a REALTOR who is full time, understands the market dynamics, and has a proven track record of selling homes before the unique high flying market we experienced over the last few years. It is going to take more than just putting a “for sale” sign in your yard to get your home sold these days.
So when you are ready to make a move and sell your property, please do not hesitate to reach out to me. As a top producer in the Boise area, it would be my honor to sell your house.
May was an interesting month in terms of Treasure Valley real estate. The median sales price for homes in Ada County reached $602,250 in May 2022, an increase of 16.1% compared to the same month last year, and again set a new record for the county. Like we saw in March and April, higher prices in the new construction segment contributed to overall price jump. In fact, new home sales made up 28.2% of all sales in May at a median sales price of $639,105 – up 17.5% from last year.
Existing home prices (resale) also rose to a new record with a median sales price of $586,750, a gain of 16.0% over last year. There were 894 closed home sales in May 2022, a decrease of 5.8% compared to May 2021, and the third month of consecutive year-over-year declines.
While continued price growth is somewhat puzzling when national economists are predicting a slowdown in prices and sales due to higher mortgage rates and home prices, the data is also beginning to show signs of a shift when it comes to pending sales, or properties with an accepted offer that are expected to close within 30-60 days.
In Ada County, there were 1,446 pending sales in May, down 12.7% compared to the same month a year ago. Pending sales have declined year-over-year each month since May 2021.
“Pending contracts are telling, as they better reflect the timelier impact from higher mortgage rates than do closings,” said Dr. Lawrence Yun, NAR’s chief economist. Referring to the national sales data as a whole, Dr. Yun noted that, “The latest contract signings mark six consecutive months of declines and are at the slowest pace in nearly a decade.”
Competition in the market waned some compared to a year ago. Existing homes that closed last month spent an average of 11 days on the market, compared to eight days in May 2021. Additionally, 50.7% of buyers paid over list price, resulting in an average original list price received of 100.9% for existing/resale homes in May 2022, compared to 105.0% in May 2021.
Overall higher interest rates, price growth, and economic uncertainty are top of mind. But prospective buyers will have more options than have been available in over two years because of the increases in housing inventory we’ve seen in recent months. On the flip side, sellers have continued to receive great values for their homes.
I have been talking about this shift with my clients and database for a few months now. It’s extremely important that as a current homeowner, investor, or potential homebuyer, that you pay attention to these market trends. Buying a home is one of the largest investments that most people make in their lifetime.
With a shifting market, it is more important than ever that you work with a REALTOR® who analyzes market trends to stay ahead of the curve. I am still seeing agents in the Treasure Valley price homes at the top of market value (or even above market value) with the hopes of getting the most for their listing. These are the homes we are seeing sit on the market longer and go through multiple price reductions before receiving an offer.
It’s a bit tricky to watch and understand as a general consumer, and one might think the market is shifting drastically (cue crash talks) but to an experienced REALTOR® I know the agents in these scenarios are not doing their job well to start with.
When you are ready to make a move, contact me. While go over your specific scenario, get a game plan in place, and make sure you are moving forward with confidence in this market.
This website uses cookies to improve your experience. Accept or you may choose to opt out. Cookie settingsACCEPT
Privacy & Cookies Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
