Bye-bye bidding wars: Boise-area home prices fall. Sales too. What’s happening right now
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Affording Boise: Homeownership
Soaring rents. Skyrocketing home prices. The double-digit rates of increase in the costs of Boise-area housing until 2022 have created increasingly urgent problems for low-income, working-class and even moderate-income Idahoans who need places to live. Affording Boise is a series of Idaho Statesman special reports on housing. This collection focuses on homeownership. A separate collection focuses on rental homes, including apartments.
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Boise real estate agent Kerri O’Hara calls it the fluff on top of housing prices. There was a lot of that floating around when prices in the Boise market boomed throughout the past two years.
But that fluff, or juice or froth, as O’Hara puts it, is the first to disappear once the market starts to correct itself.
That’s what’s happening now, as prices dropped from May to June, according to a new monthly report from the Intermountain Multiple Listing Service. While O’Hara said she thinks fear is driving some of the price drops, she also called it healthy.
“It was uncomfortable for agents, it was uncomfortable for buyers and sellers,” O’Hara said by phone. “It just felt so frothy for so long. A market can’t continue like that. And so I think overall, yes, it’s an excellent thing.”
The median price of a single-family home in Ada County in June was $592,090, marking a $10,160 decline from May and a 12.9% increase year-over-year. In Canyon County, it was $444,990, the second straight month of a price drop and a 5% increase from June 2021.
With mortgage rates rising, Boise-area housing became slightly more affordable as inventory surged. Homes took longer to sell. The Boise Regional Realtors reported Monday that the number of homes available for sale reached its highest level in nearly six years.
Homes stayed on the market longer, and average sales prices were below list prices. Perhaps most notably, sales fell sharply — to 818 homes, down 16% from June 2021 and the fourth straight month of decline.
Last year’s bidding wars “are the exception and not the rule, and buyers aren’t having to make split-second decisions and waive contingencies for their offer to even be considered,” said Becky Enrico Crum, president of Boise Regional Realtors, in a news release.
“The numbers don’t lie,” said O’Hara, who works for Better Homes and Gardens 43 Degrees North Real Estate. “... Instead of having a gradual shift, it seems to have [been] a more dramatic shift. Maybe a month ago was when we started to see it where all of a sudden the demand had dropped off. And just like we saw in July of 2020, when it was like the water turned on, we’ve seen the opposite.”
The median Ada County price has dropped from one month to the next six times since May 2020. The most recent one is the biggest. The closest comparison is from July to August 2021, when the median price dropped $9,500, from $540,000 to $530,500.
Inventory on the rise
At the end of June, there were 2,135 homes for sale. That’s a 192.9% increase from June 2021 and the highest inventory since September 2016. It added up to an inventory of 2.4 months, meaning if no more homes came on the market, the available homes for sale would all be sold in that time.
That inventory was 1.7 months in May and 1.1 months in April. A market is generally considered balanced when there’s between four and six months of inventory.
“Buyers know for the first time in a very long time that they have more power,” O’Hara said.
It’s a big change from June 2021, when the median price was $525,000, a 40% year-over-year increase.
“A year ago, you literally had to give a firstborn and a kidney with your offer in order to get something accepted,” O’Hara. “… That seems so jarring, almost 200% increase [in inventory]. Yeah, but 200% from zero. Practically nothing.”
Market correcting, not crashing
As a result, O’Hara said it’s crucial for sellers to price their homes appropriately. If done right, she said those homes are still selling.
O’Hara doesn’t see a crash coming. Lending practices from the mid-2000s aren’t used any more. Supply and demand are still driving prices. Vacancy rates for rentals are still low. Those factors lead O’Hara to believe the market is correcting rather than crashing.
“(Buyers) are not going to pay outrageous prices,” O’Hara said. “The outrageous prices came because of the outrageous demand — that’s over. I think now we return to more of a stable market.”
Other details from the latest monthly listing-service report:
- Ada County homes spent an average of 15 days on the market, one fewer than in May and one more than in April.
- Canyon County homes averaged 20 days on the market, a slight drop from 21 days in May, despite the median price drop.
- Seventeen percent of newly built homes in Ada County sold for less than $500,000 while 35% of existing homes sold for less than $500,000.
- Highest median prices: Northeast Boise, $960,000; Eagle, $940,000; North Boise, $774,500.
- Lowest median prices: Parma, $345,000; Southwest Caldwell, $395,500; Northwest Nampa, $419,995.
This story was originally published July 13, 2022 at 4:00 AM.
