What's Happening with Boise Real Estate Market Right Now?
Sellers’ market? Buyers’ market? Balanced market? Increasing? Decreasing? Crashing? Are you curious about what’s happening in Boise real estate right now? If so, this somewhat-lengthy article is for you! 
It’s Been Hot! And I Don’t Mean the Temperature
As you’ve probably heard from the numerous news articles, Boise has been pretty HOT the last few years. That’s no surprise to those of us who live here, Boise is a great place! Combine our city’s awesomeness with people fleeing traffic, crowds, and (sometimes) rules — moving to Boise has been on a lot of people’s lists! That said, the other lists we’ve been on include, ‘most overpriced housing markets,’ and ‘top U.S. cities for home price appreciation.’
And when the Federal Reserve started raising the federal funds rate — the rate that is charged to banks — in an attempt to slow inflation, the lists became a little more concerning.
Changes Afoot
When banks are charged higher interest rates, they in turn charge higher interest rates to consumers, which means home mortgage rates have gone up … a lot! If you are buying a home for $550,000 and putting 20% down, the monthly payment at 3% interest, excluding taxes and insurance, is $2,082. At 6%, it’s $2,866 — nearly $800 per month more!
As you can imagine, these increases have caused many buyers to experience a bit of sticker shock, prompting some to reduce their max purchase price or even abandon their search altogether. That has caused a fairly dramatic decrease in showing activity on listings, an increase in the amount of time it takes a home to sell, and nearly eliminated bidding wars, with a few rare exceptions.
And the lists we’re on now? I’ve seen Boise on lists like ‘cities most at risk of a housing downturn’ and ‘Zoomtowns now seeing a massive slowdown’ — the latter referring to places people moved as soon as they could ‘work from anywhere.’
Should You Be Freaked Out?
Is it time to panic? Certainly not. While we’ve all gotten used to very low interest rates, the interest rate on my first mortgage was 7%. And I was thrilled because it was considered a low rate!
Are we going off a cliff like we did in 2008? Unlikely. Although I don’t have a crystal ball, there are some key differences between then and now.
After the financial meltdown, the government stepped in and highly regulated how banks must ‘vet’ consumers when giving them a mortgage. You actually have to have a job, a down payment, and good credit … like in the olden days!
According to a May 2022 article from ‘Investopedia’, the average homeowner has $185,000 in equity in their home. This gives homeowners options most didn’t have in 2008 because they’d purchased with 100% financing and had no equity to cushion them.
Inventory is still very low. Builders haven’t caught up from four years of little building during the last crises. Although the number of homes on the market has more than doubled in Ada County since this time last year, it’s not anywhere close to what it was in 2011.
What Does This Mean for You?
Overall, from a 10,000-foot view, it’s a good thing.
While the huge rise in prices over the last two years has been good for sellers, it was also quite volatile. Because of the auction-like environment, buyers made quick decisions with little information and sometimes changed their minds. Or even if the buyer was all in, sometimes the house didn’t appraise. And if a seller was also buying, they experienced what all the other buyers did, with the added stress of trying to time everything perfectly so they didn’t end up homeless!
For many buyers, the dramatic increases made buying a home in Boise difficult. First-timers and people we’d consider to have good ‘normal’ jobs: teachers, nurses, social workers, etc were struggling — particularly if they were single-income households and wanted to live close to downtown.
The recent increase in inventory gives buyers more time to make decisions, more homes to choose from, and the possibility of negotiating a little bit. Some people who were hesitant may be able to pull the trigger. We want our fellow citizens to own homes! Homeownership is good for a city, promoting a sense of attachment to the neighborhood and community.
Unfortunately, in the short term it will be painful for sellers. This is especially true for those who had planned to have their home on the market in early spring and for a number of reasons weren’t quite ready — and then things changed. It’s reasonable for them to be disappointed that things shifted so quickly and what they thought they’d get for their home may no longer be possible. It’s my job to help them through this transition so they can do what they wanted to do when they decided to sell.
What Does This Mean for Us?
For realtors, this shift will be good for some and not-so-good for others. Most of the agents in our market now have only been in a sellers’ market! They don’t know how to counsel sellers on price/price corrections, talk to them about the market, and have frank conversations each week as sellers anxiously await showings and offers while prices are declining.
Nor do they know how to help buyers narrow down what they’re looking for when there are so many choices and help them make decisions about their future when it feels so uncertain to them — what if next week they could buy this house for less?
Whether you are a buyer or a seller, it’s more important than it’s been at any time in the last 10 years to have an experienced agent helping with your largest financial transaction. You want to work with someone who is knowledgeable, experienced, and able to be open and honest with you and tell you what you may not want to hear. You want someone who has been through it before and, although it’s been a while, can dust off those skills and be your guide through these tricky times. I happen to know one!
