What is Going On?
Gas prices going up, house prices going up, multiple offers again and interest rate concerns! What is going on in the Boise housing market?
Let’s find out.
Welcome back to my blog, I’m Summer Aston, a realtor in the beautiful Boise Idaho area with Summer Aston Real Estate group at SilverCreek realty group, and my team and I are ready to help you buy or sell your home in the Boise area…but first, you’ve got to know what the heck is going in the Boise housing market.
So, if you’ve been following the Boise housing market, or watching my market updates, you’ll know that we had a slight…very slight…lull in our market from about the end of October 2021 to the end of January 2022…and that is actually completely normal for our market to have a little softening for several weeks into the winter months and holidays. It wasn’t a huge event but, there were fewer multiple offers and some lucky people even got contingent offers accepted.
Beginning about the middle of February 2022, that quickly became a thing of the past…again. With low inventory and buyer demand increasing, we began to see multiple offers with over asking prices again, and that is heating up here. So, let’s talk a little bit about all of this, and what it means for you if you are going to buy or sell in the Boise area in the next few months.
As I said, we are experiencing very low inventory at the moment, but one notable difference between this early spring or late winter, and last year, is that our new construction market is really struggling to get new inventory out there. I am not going to pretend to know all the reasons why this is happening, but the gist of it, on the surface, are a few things here:
- Many builders finished out their semi-custom homes jobs towards the end of last year and switched to building spec homes, homes that they choose all the finishes and don’t list until they are about 8 weeks from completion…so there is this gap in new construction as we wait for those spec homes to become available. Many are not going to start coming on the market until late summer and early fall of this year (2022).
- Cities are getting very slow with permitting… I have heard so many different reasons why this is happening, and to be honest, I don’t know which of them are the true reasons, so I’m just going to leave it at that. But it is causing a big blockage in new homes coming down the pipeline,
- Supply chain problems continue and so do labor shortage issues. Both of these have slowed new construction considerably.
- Builders are becoming hesitant to price homes and sell them too early in the process as with the gas prices increasing, along with the rest of inflation, they are hesitant to jump the gun and price homes, only to find that inflation and gas prices will drive things up so much, it will seriously eat into profits in a few months down the line.
What does this mean for you if you are considering buying new construction in the current Boise housing market?
You’ll have the best certainty on pricing and avoid increasing interest rates over the time of the build job if you buy a new construction home that is, at the very least permitted, but preferably moving along past foundation stage and maybe even completed. I know, it’s hard to give up the dream of choosing finishes and starting from the ground up, but you’ll need to be prepared for massive delays, price increases, and interest rate increases if you really want to custom build a dream home.
Let’s circle back to those interest rates. At the end of December 2021, I was still closing clients who had under 3% interest rate on a 30-year conventional with 20% down and good credit. That same buyer profile is now looking at just over 4% interest rate, higher if you don’t have 20% down. Also, 2nd home loan interest rates were very comparable to the 30-year conventional in 2021, and they have risen quite a bit in 2022 as well.
There are some lending experts who say we’ve had the bulk of our interest rate increases, and that the rate increases will be smaller as the year goes on, and there are other lending experts who say we may see rates get closer to 6% in 2022… I am not going to predict exactly how much they will raise, but the bottom line is, the sooner you can buy in 2022, the better for your rate.
Many people think that those rising rates will equate to home prices dropping. Eventually, in a more balanced Boise housing market, that could be true, but for right now, we are not seeing any indication that that will happen anytime soon. It all goes back to the old supply and demand. Supply is much less than demand. Has the demand dropped from 2021? So far, yes it has, slightly…but our supply of both existing homes and new construction homes is lower, so those prices not only hold, but they continue to rise.
When I made my 2022 prediction video, I had hoped that we wouldn’t see the huge over asking price offers that drove the market up the last 2 years… well, it’s only been about 3-4 weeks into our multiple offer market again, and I hate to say it, but in certain price points, we are seeing that once again, homes are selling for $10-$50,000 over asking price, even with the rising interest rates.
The median home price for Ada County, which is Boise and most surrounding areas, was up to $549,900 in February of 2022, and with the numbers I have just begun to see, I expect that will keep rising. This means that it is very, very difficult to find a home under $400,000 in our area, and the competition on that price point under $550,000 is fierce, between investors, downsizers, and first-time home buyers.
So why is inventory so low? I explained why it’s low in the new construction market, but in the existing home market, we have plenty of potential sellers who would like to upsize or downsize, but they hesitate due to the fact that they have low interest rates now and would likely have to go to a higher rate after they bought a new home.
They also are hesitant to buy and sell at the same time and are hesitant to jump on board with new construction without knowing hard closing dates or pricing. We also have the uncertainties going on in Europe causing people to reevaluate things.
If you are in this boat, thinking of selling but aren’t sure how to go about it, watch my video, 5 Ways to buy and sell at the Same Time, because it can be done, and the Boise housing market is a sellers’ market, so sellers make the rules. One guarantee is that when we market it and price it correctly, you will certainly get a high price for your home.
What does the current Boise Housing Market mean for buyers?
Well, it is similar to the last couple of years. Buyers need to be prepared, they need to know the rules, be intentional, get pre-approved, and should consider buying sooner rather than later as prices and interest rates rise. There are many ways to get your offers accepted. Check out my video I made about bidding wars that outlines all the possibilities.
Those of you thinking you should wait to buy until there is possibly a crash…well, if you have the resources to buy, you need a home, and you don’t want to be at the mercy of drastically rising rents, then buying now is the best option as you have to remember that buying homes is a long-term investment strategy and is still the best way to build long term wealth.
I don’t know exactly what the future holds for the real estate market, but I do know that the Boise housing market looks very, very different right now than they did in 2008. This is a bit of uncharted territory, with the aftermath of the pandemic and all the other things going on…and it’s important for people to understand that what is happening in the Boise housing market is happening all over the United States. Our markets have become so intertwined with everyone working from home and all of the issues going on being on a national level, so even that is really different than before the pandemic when each market was a bit separated and really went up or down according to the local factors.
Having said all of that about what is going on in the Boise housing market, just because things are different and changing doesn’t mean they are bad. It just means you gotta figure out how to work with it. That’s how humans survive and thrive… We work through challenges and work with change. At Summer Aston Real Estate Group, my team and I are experts at helping you navigate buying and selling in our market, and we watch closely to try to get a big picture of what is going on, and what it means for you.
Follow us on Instagram for more tips and information about buying and selling in Boise. As always, we have some very helpful guides under our “Helpful Links and Guides” heading on our website.
