Robert Shepard was hardly starting from scratch when he moved his young family from the Detroit area to Meridian in July. Grandparents lived in nearby Eagle to babysit his daughters, ages 3 and 9 months, and to provide a support network.
While not rich, Shepard described his family as “solidly middle class,” with he and his wife, Chelsea Shepard, each earning around Ada County’s annual average wage of $45,396 per year.
Shepard, 31, figured that was enough to buy his family a “forever house” in Meridian. The couple wanted a home big enough for their daughters to have their own rooms and for an office where he could do his at-home human-relations consultancy work.
But, after several months of house shopping, Shepard concluded his family wasn’t going to be able to buy the size and quality of house they wanted in the areas they sought.
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“Considering all of the building going on and the fact that the economy still isn’t amazing, I was thinking that I could easily get a move-in-ready newer house for under $200,000,” Shepard said. “It turns out you may need to concede on a couple of your requirements to get that house.”
Would-be home buyers like Shepard face a list of factors either limiting the inventory of affordable homes or pressuring home prices upward. While home ownership remains realistic in the Treasure Valley, average earners must often expand their search area or expect to plunk down thousands on needed renovations.
$227,000Ada County median home price, through nine months of 2015
$142,000Canyon County median home price, through nine months of 2015
Real estate agent Lacey Beauvais tells clients looking to spend less than $200,000 to save time by crossing the Valley’s most expensive areas off of their lists.
That starts with Eagle, where the median home price was nearly $382,000 through the first three quarters of 2015, according to the Intermountain Multiple Listing Service. Beauvais, who works for Sheila Smith Real Estate Group in Boise, also steers spendthrift clients away from east Boise ($379,000) and the North End ($309,000), saying the few affordable listings there often need major renovations or roof replacements to be livable.
But most areas in Canyon County have median sale prices under $200,000, Beauvais said. South Nampa — where more homes were sold in the first three quarters of 2015 than any Valley area other than northwest Meridian — had a median price of $160,000.
Most affordable Ada County areas with more than 50 sales: The Bench ($161,000 median), West Boise ($175,000) Kuna ($159,000) Intermountain MLS
“Many first-time homebuyers who don’t make huge salaries are purchasing more in Nampa and Caldwell, just because they can afford it there,” Beauvais said.
About 37 percent of homes sold in Ada County in 2015 were for less than $200,000, though many of those were fixer-uppers, Beauvais said. Budget-minded buyers — especially those wanting (or willing to accept) smaller homes — are targeting the Boise Bench and its $161,000 median price.
“If you are looking for under $200,000 in the North End, you won’t find a ton of options, and you may have to put in a ton of work,” Beauvais said. “But you can get an awesome house for under $200,000 on the Bench.”
The Idaho Housing and Finance Association offers programs designed to help low- to moderate-income Idahoans secure home loans, including homebuyer education classes that allow buyers to qualify for the association’s low-down-payment loans or down-payment assistance. A quasi-governmental agency, the association administers federal Housing and Urban Development Department programs in the state. It typically offers lower interest rates for home loans than most lenders do.
Most of the local buyers who take out loans through the association make between 60 and 100 percent of the area’s median income, Executive Director Gerald Hunter said.
The 3,936 local borrowers through Dec. 3 had average incomes of about $47,000 per year and borrowed an average of about $153,000, Hunter said.
Inventory is very short. That’s an issue for first-time home buyers all across the country and in the Treasure Valley as well. That’s the main culprit.
Idaho Housing and Finance Executive Director Gerald Hunter
Eighty percent of the association’s Valley borrowers are first-time home buyers, Hunter said. For many, market forces that are squeezing inventory and driving prices upward are a greater obstacle to home ownership than loan availability is.
Builders are not building new homes in those borrowers’ price range, especially in Ada County, where fewer than 2 percent of the new homes built in the first three quarters of 2015 sold for less than $200,000.
The cost of land, labor and materials has increased since the Great Recession. Given the tight inventory and demand, builders have a difficult time — and little incentive — to price new homes where association borrowers can afford them, Hunter said.
“It’s difficult for builders to pencil out a new construction home in the price range we’re talking about,” Hunter said.
Nationwide, 77 percent of homeowners paid more than $1,000 per month for mortgages in 2014. U.S. Census
Nationwide, 42 percent of U.S. homeowners paid more than $1,500 per month for mortgages in 2014. U.S. Census
But that’s nothing new, he said. First-time homebuyers have traditionally sought smaller, already-built homes before moving up to bigger houses to accommodate their growing families, supported by their growing incomes.
“But today, we’re not seeing a lot of those home buyers moving up, creating supply for the next first-time buyers to purchase,” Hunter said.
Median home prices have steadily increased across the Valley. They were up 8 percent in Ada County through the first three quarters of 2015, and 7 percent in Canyon. That is partly because out-of-state buyers are inflating the market, Hunter said.
Beauvais was one of a handful of agents who have told the Statesman this year that 40 percent or more of their buying clients moved from another state. Many of those buyers sold homes in high-dollar markets in California, Washington or Oregon and bought larger houses for less money in high-end Valley neighborhoods.
Those buyers drive up prices even though they usually stick to the higher end of the Valley market, Hunter said.
“If you drive up the upper end of the market, that will have a pulling effect on lower-price homes as well,” Hunter said. “You can’t segregate them.”
Cash-rich buyers entering the market can also close more quickly than local, median-wage-earning buyers who need to line up financing, Beauvais said.
“Last summer, I worked with buyers from Oregon, California, Colorado, and a lot of times we beat locals out of the market just because sellers like cash buyers,” she said.
SIZING UP OPTIONS
Unable to buy the house he wants in any of locations he wants, Shepard says he has shifted his house-hunting priorities to fit within his budget. That means looking outside of more expensive areas in Boise and Meridian to listings in west Boise, Star and east Nampa, he said.
I’m 31, so I am still close to the sense-of-entitlement generation, that I deserve this nice house for cheap. But it is frustrating to work so hard and still not be able to easily get what you want.
Househunter Robert Shepard
“We have even started looking at foreclosures and seeing what it would mean to buy (a house) that needs work, and to put money into it right away,” he said. “But, again, that takes out-of-pocket money.”