Although the entire state of Idaho is still under COVID-19 restrictions this August, life has resumed a “new normal” for most people here in the Treasure Valley. Our home prices continue to be driven by a shrinking supply of existing homes available for sale compared to demand, more new homes selling at ever higher prices, increased purchase power due to low mortgage rates, and now, buyer activity being compressed into a shorter time period as a result of COVID-19.
ADA COUNTY
The median sales price for all homes sold in Ada County in August reached $400,000, up 12.7% year-over-year, surpassing the previous high in July 2020 of $390,000. The number of existing homes for sale has trended down for years now, and there were only 239 existing homes available for purchase at the end of August. This is a dramatic decrease of 72.1% compared to the same month last year, and a record low since BRR began tracking the metric in May 2006. To further illustrate this imbalance, the months supply of inventory for existing homes in Ada County was also at a record low of 0.3 months as of August. For reference, a balanced market would be between 4.0-6.0 months. This lack of inventory is putting tremendous pressure on existing home prices, which reached a median sales price of $385,500 in August.
Another factor impacting prices is the mix of sales. With fewer choices among existing inventory, many homebuyers are purchasing new construction, increasing the demand in that segment. In August, new homes made up 32.9% of all closed sales, at a median sales price of $444,900. In addition to greater buyer demand, new construction prices are being driven by rising lumber prices. According to the National Association of Home Builders, “The price of lumber has staged a staggering increase in recent months, rising roughly 80% since mid-April… [which is adding] thousands of dollars to the cost of a typical newly-built home.”
Third, the historically low mortgage interest rates are allowing buyers to purchase at higher prices points. For comparison purposes, the rate in August 2006 (the market’s previous peak) was at 6.5% versus 2.9% in August 2020. This has kept monthly payments at roughly the same as what they were during the previous peak in 2006, despite the increase in home prices.
Finally, after a brief COVID-related slowdown earlier this spring, home sales rebounded in August with 1,251 homes closing during the month, up 18.9% compared to August 2019. Interestingly, closed sales year-to-date versus the same period last year were nearly even, with 7,737 and 7,547 sales, respectively.
CANYON COUNTY
Canyon County is experiencing similar numbers to Ada County. The low inventory has caused the median sales price to rise 14.6% to $282,000 while new construction pricing has sky rocketed to $331,490. Canyon County has been known as the area to move to if you’re looking for more house for less money. However, as inventory continues to drop and pricing rises, Canyon County is becoming just as competitive of areas of Ada County. Towns like Nampa and Caldwell are growing rapidly.
Off-market new inventory is allowing us to have consistent sales numbers despite low inventory. With so many buyers looking at new construction, builders can sell homes that are not yet built, and therefore, not yet reflected in the IMLS as inventory. In August, nearly 25% of newly built homes sold were not previously listed on the MLS showed up as a closed sale. This should give hope to homebuyers that while inventory is low, there are options available.
Identifying new construction opportunities, in addition to options in the existing market, is just one more way a REALTOR® can bring value to your home search. If you’re ready to make a move, contact us today!
*This market report is provided by Boise Regional Realtors.
