March 2024 Boise Housing Market Update (and a Bit on the NAR Settlement)

Houses just got cheaper! Buyers will save thousands! Eminent market crash in 2022…no wait… 2023…no wait 2024! What do these headlines all have in common? Well, they are simply not true.

I am sure that you have all heard about the big National Association of Realtors (or NAR) news this week and some of the absolutely sensationalized and misinformed headlines, and we will get to that, but first, business as usual, let’s talk about what is going on here in the Boise Housing Market for your spring Boise Housing Market update. 

Well, the housing market has not crashed, and, in some sectors of the Boise Housing Market, home prices are actually going up. I know, not the news many people want to hear with the interest rates holding on, but it is true. So, just as expected for the early spring housing market, March 1st hit, the sun came out with lovely weather, and the buyers are ready to jump in. Except… there is not much to jump into. Our inventory in most sectors of the Boise Housing Market is incredibly low. Yes, due to the typical early spring market, we are getting more listings. But unfortunately, not enough for the demand, and…. Multiple offers are back. 

So, this past week, the feds announced that they are holding the fed rate, which in turn will prevent the mortgage rates from dropping anytime soon. They are still saying that maybe later this year they will drop, but not for this spring or early summer market for sure. That is continuing to keep sellers trapped in their home by rates as they don’t want to give up a 3% rate for a 7% rate, or maybe even couldn’t afford that even if they wanted to. And on the new construction side of things, as I pointed out in last year’s market update videos, builders pulled significantly fewer new permits last year, and that is now evident in this spring’s low new construction inventory. 

But…even with the high rates, cash buyers, and buyers who can afford the payment on a mortgage with a higher rate, well, they are ready to go and very frustrated with our lack of inventory. I have had a couple of buyers in the past few weeks come to look for a home, and we literally only have 2 or 3 houses to see. If they are homes that have been on the market for a while, then there is a reason, like they are overpriced, have too much deferred maintenance, and have some other undesirable feature. And if they are new to the market, priced well, and ready to go, they are getting multiple offers. Now, so far… people are being cautious and trying very hard not to push the over asking prices up too much. So, on an average priced home around $600,000, over asking prices may be going 5 to 10 thousand over. And we had a good little run through the winter this year where sellers were willing to accept offers with home sale contingencies, but with the return of multiple offers, making an offer contingent on selling your home will put you at a very large disadvantage in most cases. 

And let’s revisit what’s going on with builders and their incentives, and how that indicates a shift in our market. So last year, in 2023, in the first 6 months of the year we saw a huge increase in sales of homes in the $400-$500 thousand price range – which is just a bit below our area’s median sales price. And because of that, home builders like CBH were not offering incentives and willing to do very little in the way of closing cost contributions. However, last spring we saw fewer sales in the $800 thousand and above price range, so builders like Boise Hunter Homes had great incentives early last year. What was happening was all of those buyers who did not have extra money to pay over asking price in 2022 were getting into the market since the competition was less in 2023. So, lots of VA and FHA buyers. And buyers over $800 thousand or so, if they were getting financing, they hesitated due to the high rates, and if they were cash buyers, they were hesitating to see if the housing market would hold or not. 

But this year, even in just these first 4 months, it has kind of flip flopped from the buyer profile of 2023. What has been happening this year is that many people in that $400-$500 thousand range just can’t afford the house payments with the 7% rates, so builders like CBH are keeping in their incentives to move inventory by helping their ideal buyer buy down the rate, while builders of homes over the $700 thousand mark or so have gotten rid of all of their incentives, and in some cases, they are raising their prices. And really it isn’t that demand is going crazy right now like in 2022, but, buyers who can afford the more expensive homes, mostly cash buyers, but still some are getting financing, well they are tired of waiting and are feeling more confident in the market, more motivated to get the heck out of dodge and into Idaho, and combined with that, the inventory is so very low for this price point. And because it is so low, many buyers are going to have to turn to doing a new construction build job to get a house. And builders are being very calculated about how many lots they release, many don’t have a lot of new phases opening up, so there is low inventory on builder options as well. 

So, I expect this trend to continue into the early summer. One advantage of having a YouTube channel is that I speak with many people in the early stages of their planning a move to Boise, so I can predict pretty well what is coming in the way of buyer demand, and definitely, the majority of the people I am talking to who are preparing to move here this summer are looking at the higher price point and will be facing the low inventory issue. So, of course we are happy to help you navigate that, but just pack some patience and be prepared to consider new construction, which, if you are an out of state buyer who cannot be here in person, we help people just like you through the new construction process all the time. 

So, switching gears now… I really don’t want to get too into the weeds with this whole NAR settlement, which, by the way, as of March 25, the settlement is still just a proposal and has actually not been officially reached, but they expect it will be. But as a lot of you ask my opinion on this, I will just say, please, for the love of all that is good, please think for yourselves and don’t just believe what the media is saying. Unfortunately, they have so many false and misinformed headlines right now. The crux of the lawsuit is fixed commissions, which real estate commissions have never been fixed, and the crux of the media cry is that through this settlement, it will make homes cheaper and therefore more affordable for buyers.

I did read the entire 107-page settlement, and I will link that below for you; the most important part is the changes that will take place and that is in section H number 58. And by the way, as a side note, the terms of this settlement will end 7 years after it gets put into place. 

So, in the current system, a seller signs an agreement with a listing agent. In that agreement, it is outlined that the listing brokerage will receive a certain percent, and that the seller will agree that a certain percent will be shared with the buyer’s agent as compensation for bringing the buyer to the home. And as any of you who have relocated to a totally new area know, it’s not as simple as just popping into a new home with your buyer’s agent and purchasing it. Before we even get to the point of offering on a home, we spend months, sometimes years, helping you research the area, narrow down location, visit, research homes, all those things before you narrow it down to the right house at the right location. And that is a severe oversimplification of that process and not to mention what goes into everything after you are under contract. 

So, because right now both buyer’s agents’ and listing agents’ commissions get paid out of the seller’s proceeds, the gist of this new proposed settlement is that the seller does not have to pay the buyer’s agent’s commission out of their proceeds. Now let me be clear, sellers never did have to pay the buyer’s agent a commission. But if they didn’t, they would risk putting themselves at a severe competitive disadvantage. And they probably still will risk that disadvantage going forward. So, the media is spinning it that since sellers can now offer the buyer’s agent nothing (which again they always could do that before), then home prices will drop, and it will make homes more affordable for buyers. 

Let’s think for ourselves for a minute here using our own knowledge and experience and I’ll share how I think this will go. All of our current home prices are appraised with both agent’s commissions wrapped into that appraisal. Builders have many build jobs under contract and want to protect the future appraisals of their buyer’s homes. Sellers and builders will not just suddenly drop their prices by 2 or 3% since they don’t quote unquote, have to pay buyer’s agents anymore. Right now, if you go to a builder and are not represented by a buyer’s agent, you pay the same price for a home, and the builder does not pass any kind of discount onto you for that. And largely because that would negatively impact appraisals on build jobs that are underway… Similarly, if, as a listing agent, I have negotiated with a seller a lower commission, and they choose to pay a buyer’s agent a smaller commission split, they do not lower their home price to offset that. The seller just earns more money. And now that is all well and good for the seller and that helps them on the next home purchase. But clearly, that “savings” does NOT get passed to the buyer. 

And currently, buyer’s agents know how much the seller agreed to pay them on their listing agreement because that number is put on the MLS, as well as it is out there for the public to see on public websites- contrary to what the NPR story I heard said that agents are sharing commission with a wink and a nod behind closed doors and it’s all very secretive. No, it’s not. It’s literally on the public websites for anyone to see and agreed to in contracts. 

And here’s the kicker, according to the proposed settlement, what the seller is willing to pay the buyer’s agent can no longer be disclosed on the MLS. Which blows my mind on how this is going to help transparency. So under the proposed settlement,  we can try to negotiate that the seller will offer a concession to the buyer to cover the buyer’s agents fee, or there are a few other ways to try to get it covered outside of the buyer coming up with the extra money to cover the fee, but ultimately, my concern is that this will become even more of  a pay to play game if sellers don’t offer some sort of way to cover the buyer’s agent’s commission, and those who can’t pay, won’t play, making it even harder for our first time and home buyers, VA and FHA buyers to purchase. And as of right now, the VA won’t even allow the buyer to pay a buyer’s agent commission. So how in the world will this even help VA buyers? I expect that the VA will need to come up with something to protect the VA benefits when it comes to buying a home. 

So, when this settlement is agreed upon, we will see changes in our contracts and forms to address the language, we will still have negotiable commissions, as we do now, we will still have representation agreements, as we do now. But buyers will not save money and home prices will not suddenly be cheaper because of it. 

And I will just say this, on the surface, the media is making it out to be about agent commissions. But it is much deeper than that, and do not get distracted by the smoke and mirrors of what this path of making home ownership so difficult is really about. Not to mention Biden throwing out at the State of the Union that Title Insurance will be waived under certain situations when title fraud is already on the rise exponentially, and we need our deeds and titles to our homes protected now more than ever. 

So, my friends, stay vigilant on seeing things as they really are, and we are going to stay focused on business as usual, providing the highest level of service to all of our clients, and continue to provide you with quality information about living in and moving to the beautiful Boise area. 

Link to the NAR settlement: