Home prices in Ada County are now at record highs, another discouraging development for moderate-income buyers but a boon for sellers.
So where, then, are the sellers?
As prices keep climbing, supplies of homes remain tight. As a result, the median price of Ada homes reached $278,000 in August, up 9.6 percent from a year earlier, according to Boise Regional Realtors. The median price in Canyon County fell to $183,000, down about $3,000 from July but still up 11 percent from August 2016.
The median is the midpoint, where half of homes sell for more and half for less. New homes usually cost more than used ones. But resale-home prices in Ada County are robust: The median climbed to $259,850, up 10.6 percent from a year earlier. In Canyon County, the resale median was $173,500, up 8.4 percent.
You might think that’s enough to encourage more people to put their homes on the market. But Katrina Wehr, president of the Boise Regional Realtors, said several factors are holding them back:
▪ Some people doubt they could find a house they want when supplies are so tight, so they stay put. That’s more perception than fact, Wehr said.
▪ Few low-priced, entry-level homes are being built.
▪ Across the country, people are staying in their homes longer than they used to. “They get comfortable where they are,” Wehr said. And moving could bring new problems: “As our population increases, there are commute-time increases as they move.”
▪ Some would-be sellers would still fall short of a down payment big enough to buy a home they want, even though prices have recovered fully from the Great Recession.
Ada County has just 1.4 months worth of resale homes for sale at the current sale pace, one-third to one-fourth as many needed to reach what real estate agents consider a market that is balanced between supply and demand.
Rising prices have boosted tax assessments; prompted new apartment, condominium and town house construction in Downtown Boise; caused bidding wars among buyers; and limited builders who want to meet demand but are constrained by labor shortages and high costs of land and material.
Four new but small modular homes in Boise’s Collister neighborhood, offered for less than $170,000 each, recently sold in one weekend.
The median price of a newly built Ada County home is now $354,000, more than six times the Ada County median household income of $56,346. All signals suggest prices will keep going up.
Still, Wehr thinks the market is fundamentally sound — much healthier than it was before the housing bubble burst a decade ago.
“The difference between today’s market and 2006-07 is that back then, we had lots of houses for sale, lots of inventory, and the prices were increasing every month,” she said. “It was crazy. Now the prices are based on supply and demand.”
Though it’s little consolation to buyers, the rate of price acceleration is slowing. Ada County prices have increased 7.9 percent per year on average since January 2015, down from 13.2 percent per year from 2012 through 2014, according to Boise Regional Realtors.
Wehr said the rate must slow further.
“There will come a point where the 9 or 10 percent in year-over-year sales price increases will slow to 3 or 4 percent,” she said. “That’s OK. Where we are is OK as well.”