Audrey Hendricks, 21, and her husband moved to Nampa from Washington last spring. They wanted to be closer to her family.
The couple started to house-hunt in early May, hoping to stay in the Nampa area. Of the six homes they’ve looked at, they’ve made offers on four.
“The issue is that all of the homes we have put offers on, we are one of 10, one of 15, one of seven,” Hendricks said. And with a Federal Housing Administration loan, their offer is “out the window” against someone offering cash, she said.
Canyon County housing prices have been setting records this year. The median sale price in April was $248,500 — an 8% increase from the previous month.
The Treasure Valley is one of the hottest housing markets in the nation. But wages aren’t keeping up. For locals who want to buy their first home, that makes the hunt feel like a race against the clock — or a race whose finish line seems infinitely distant.
The Boise area isn’t the only one getting squeezed.
In the seven years since the housing crash ended, home values in more than three-quarters of U.S. metro areas climbed faster than wages, according to an Associated Press analysis of data from the CoreLogic, a housing data firm, and U.S. Bureau of Labor Statistics.
Nationally, home prices since 2000 rose an average of 4% a year, while incomes grew 2.6% a year.
That gap is driving some first-time buyers out of the most expensive cities and into places like the Treasure Valley. They feel pressured to buy something — worried that if they don’t, they’ll be completely priced out of the market.
Millennial buyers ‘just have more roadblocks’
New-home construction in Boise stalled in the mid-2000s, when the bubble burst.
While builders are busy again, housing inventory still hasn’t caught up to Boise’s population growth, real estate agents and analysts say. The short supply of affordable rentals only adds to the competition for a place to live.
The high cost of homeownership is putting extreme pressure on 20- and 30-somethings as they try to balance mortgage payments, student loans, child care and their careers.
“They do want all the same things that previous generations want,” said Daryl Fairweather, chief economist for the brokerage Redfin. “They just have more roadblocks, and they’re going to have to come up with more creative solutions to get the homes that they want.”
A Redfin analysis found these buyers are leaving too-hot-to-touch big-city markets — among them, San Francisco and Seattle, where the tech boom sent housing prices into the stratosphere. Many millennials are instead buying in midsize metros like Salt Lake City.
That, in turn, is driving up housing prices in those communities.
“It’s pretty rough” to be a first-time buyer, said Boise-based real estate agent Jill Giese.
The bad news: Treasure Valley wages, real estate prices
Local housing prices have grown faster than wages for several years.
That ‘housing affordability’ gap is now wider than it was at the height of the housing boom in 2007.
While it’s still much cheaper to buy in Boise than in famously expensive San Francisco, Seattle and Portland, the housing affordability gap in the Boise metro last year was worse than even those metro areas, according to an Idaho Statesman analysis of data from CoreLogic and the Bureau of Labor Statistics.
Housing inflation is mostly to blame for that. Last summer — shortly after the Hendricks family moved to Nampa — the Boise metro ranked No. 1 in the U.S. for year-over-year price changes, according to the data.
A recent report by the Brookings Institution warned that Boise’s economy is at a crossroads.
“Population growth (in Boise) resulted in part from retirees who drive housing prices, but who have less incentive to fund public goods such as education and workforce development,” the report noted.
It said Boise’s data on earnings for local jobs “implies that the metro area’s economic growth is disproportionately benefiting high-wage workers, even as it disproportionately generates low-wage jobs.”
The analysts suggested that state policymakers are key to solving that problem. Without more state investment in things like early childhood education and workforce training, the Boise area will struggle to keep high-wage, highly skilled jobs, they said.
Student loans are a growing factor among first-time homebuyers, agents said.
More and more people in their 20s and 30s are paying off student loans, so banks won’t approve them for as much mortgage debt. That limits how much they can offer to pay for a house.
“If you have baby boomers aging out of housing, and you have first-time homebuyers not being able to buy until later, then you have an increase in inventory,” Giese said.
The good news: Treasure Valley real estate may cool off
Even with the widening gap, a dollar still goes further in Boise than it does in Seattle or San Francisco.
The median home price in 2018 in Boise was $263,500 while the median income was about $45,430, according to the Bureau of Labor Statistics and real-estate industry data provided by Boise Mayor Dave Bieter’s office. Seattle’s numbers were $501,400 and $78,832, respectively.
And the housing price boom may be abating, which could give first-time homebuyers a break.
Builders are breaking ground on more housing units in the Boise metro area, and local real estate agents say the market seems to be calming down in West Coast cities, slowing the exodus to Idaho.
“Real estate cycles are typically five to seven years, and we’re in our ninth year of increases,” Giese said. “We’re due for things to slow down, settle out, shift in some way.”
Newcomers to the area include early retirees from California and other places, Realtors told the Statesman. They’re cashing out their million-dollar properties there and buying desirable homes in the Boise area.
As long as Boise keeps getting national attention for being a great place to live, people will want to move here, Giese said.
“But they’ll have to be able to sell their houses where they’re moving from, and everywhere else is the country is slowing,” she said. “They’re already experiencing some shifts” that will ripple out to Boise.
What can city government do?
Local governments can’t force people to stop moving here. Since the Idaho Legislature has banned local governments from raising the minimum wage, they also can’t mandate that employers pay people more. State lawmakers also banned rent control, a mechanism to limit skyrocketing rent increases. And the federal government has cut back on programs that help pay for affordable housing.
“I went to a conference maybe six or seven years ago, and the speaker said, ‘Use this, this, this and this, and laid out four approaches (to affordable housing),” Bieter said. “I raised my hand and asked him, ‘Well, what do you do if you don’t have a single one of those tools?’ And he was just flummoxed. He hadn’t run into a city without any of those tools.”
But cities do have some levers to pull.
Bieter pointed to recent initiatives such as Grow Our Housing, to “maintain the city’s high livability in the face of dramatic growth brought by this success.”
Pulling together various stakeholders, Bieter said projects like Adare Manor are an effort to meet demand for affordable housing. Adare Manor is a 134-apartment development on Fairview Avenue just west of Downtown Boise. The vast majority of those units will go to people under a certain income.
Bieter also said that Boise won’t shy away from touting its rankings in best-of lists — but doesn’t spend any money marketing itself to out-of-state residents.
Garden City Mayor John Evans takes a more free-market approach to the housing-affordability gap.
“Part of what we do is what we don’t do,” he said. “We don’t create zones that make it difficult for high-density, lower-priced products from being built.”
That’s why you see condos and “live work” dwellings popping up along the Greenbelt, and smaller homes being built elsewhere in Garden City.
But the crux of the problem, he said, is the cost of land and construction in 2019.
“At the end of the day, somebody’s got to make it work financially,” he said.
In some parts of the Treasure Valley, the cheapest house is in the $200,000 price range, he said, and “it’s hard for somebody making 12 bucks an hour to afford that.”