It’s a ‘buyer’s market’ for Boise area homes. Here are ways to capitalize as prices fall
It’s safe to say the ball is in the homebuyer’s court. As interest rates rise, and demand for ownership wanes, sellers are making concessions that were unheard of a year ago.
The shift in negotiating power marks a stark change for the Boise-area real estate market, according to Cory Swain, president and CEO of Premier Mortgage Resources. He said there are a few tactics buyers are using to make their monthly mortgage payments more manageable.
“Multiple bids on properties was not uncommon a year ago,” Swain told the Idaho Statesman by phone. “If you’re a buyer now, guess what? You have some choices.”
For many months following the arrival of the COVID-19 pandemic, soaring home prices squeezed would-be buyers out of the market. In the Treasure Valley and across the country, buyers waived inspections and other contingencies in the hopes of beating out several other offers, usually offering far over the asking price.
But in the past several months, the housing market has seen a marked decline in the price of single-family homes. Swain said he’s seen multiple homebuilders and sellers drop their prices dramatically, in some cases by as much as $50,000 to $70,000.
“It’s substantial,” Swain said. “You can make a deal with the seller, and you can buy for less.”
The median price of an Ada County home in November was $525,000, according to a new report from the Intermountain Multiple Listing Service. That’s a $36,500 drop from October and a $77,250 drop from when the price peaked in May. In Canyon County, the median price in November was $415,000, down $44,995 from May.
As the market has shifted, Becky Enrico-Crum, president of the Boise Regional Realtors, said sellers are offering incentives like closing cost credits to buy down the interest rate and lower monthly mortgage payments.
For example, a seller could shave $5,000 off the closing price or offer that amount for the buyer to use as they please. Enrico-Crum said builders are more likely to give a monetary concession to buy down the interest rate rather than simply reduce the selling price.
“We’ve had many years where the buyers just had to buy over asking and didn’t have any concessions at all,” Enrico-Crum told the Statesman by phone. “Now, we’re getting back to what real estate was before. It’s really a buyer’s market.”
To curb inflation, the Federal Reserve has continued raising its benchmark interest rate since March, pushing the rate up again Dec. 14 to just under 4.5%, according to NPR. In October, average long-term mortgage rates were above 7%, the highest since April 2002, according to PBS NewsHour. One year ago, the average rate for a 30-year mortgage was just 3.1%.
“Historically, these rates aren’t really high,” Swain said. “The problem is, everything’s a lot more expensive than it used to be.”
His advice for buyers? Perhaps you’ve heard it before: “Date the rate and marry the house.” Swain said people looking to purchase a home now can use seller concessions to lower the mortgage rate for the first few years and then refinance — assuming rates eventually go down.
Swain hasn’t seen temporary buy-downs in roughly two decades, he said. In fact, he’s had to teach his loan officers how to do it because many of them never have before. He called it “an old trick that’s new again.”
“It gets them into the house where their payments are comfortable, and then they can refinance later once interest rates change,” Enrico-Crum said. “Nobody’s ever married to their interest rate.”
Other details from the latest monthly listing-service report:
- The median price of newly constructed Ada County homes in November was $623,237, a 3% increase from the previous year. In Canyon County, the median price of newly constructed homes in November was $480,990, a 4.8% increase.
- The median price of existing Ada County homes in November was $497,000, a 2.6% decrease from the previous year. In Canyon County, the median price of existing homes in November was $360,000, a 5.9% decrease.
Highest median prices in Ada County: Eagle, $850,000; Northeast Boise, $830,000; Northwest Boise, $738,000. Highest median prices in Canyon County: South of Lake Lowell, $667,324; Middleton, $580,000; Northeast Nampa, $430,326.
Lowest median prices in Ada County: Garden City, $320,000; Boise Bench, $384,950; West Boise, $415,000. Lowest median prices in Canyon County: Parma, $199,000; Melba, $359,999; Northwest Nampa, $367,995.
