Smaller homes take a step forward as Boise area’s housing shortage blazes. What to expect
Is the American dream of buying a big home dead?
If you ask some folks, maybe. But while home prices continue to crack records across the country and in Ada County, there are also hints that the dream of a big home is fading for the average Idaho buyer.
According to Elizabeth Hume, the president of Boise Regional Realtors and associate broker at Stack Rock Realty, there has been a shift in homebuyer interest away from larger homes to smaller homes in prime locations.
“I think people are interested in quality of life now, so they’re more interested in where they’re living and what they can do,” Hume said by phone.
Plus a bigger, more expensive house generally means higher taxes and more upkeep, Hume said.
A smaller house offers the opposite and allow its owners to spend more time enjoying the region’s amenities, such the Boise River, rather than mowing the lawn, Hume said.
“North (and) Northeast Boise new construction is going to be smaller because there’s not as much land and there’s a lot of desire for being there,” Hume said. “It’s close to things.”
Booming prices, smaller Boise homes?
The shift in home sizes, though, could be attributed to more than just lifestyle choices, Hume said. Instead, it could come from a variety of factors including price and the homebuilding market.
As the price to buy a home increases, potential homebuyers may be increasingly hesitant or unable to fork out more money on a big home — especially with higher taxes and higher mortgage rates, Hume said.
In April 2011, the median price for a home in Ada County was $133,000, according to Boise Regional Realtors. In June 2024, that number was about $570,000.
Your household would need to earn about $188,000 per year with $0 in monthly debt and a $30,000 down payment to afford the median home price, according to Zillow’s affordability calculator. The median household income in Boise was about $81,000 in 2022, the latest numbers available from the U.S. Census Bureau.
As prices have increased, so too has the average price per square foot of a single-family home.
The average price per square foot of a single-family home sold in Ada County launched upward from about $121 per square foot in 2014 to a high of almost $306 in 2022, according to Boise Regional Realtors. It has since decreased to about $291.
Hume said price per square foot is a popular metric and can be a good early temperature gauge for the real estate market, but it can be somewhat inaccurate as a number of variables, such as neighborhood density and home upgrades, can skew the numbers.
Generally, price per square foot is more accurate in cookie-cutter neighborhoods or older, established neighborhoods, she said.
But while prices have gone up, the average size of newly constructed single-family homes sold in Ada County have dropped since 2014, according to Boise Regional Realtors.
There was a spike during the COVID-19 pandemic, but Hume said this could be partly attributed to a panic among homebuyers who wanted bigger homes to accommodate work-from-home situations.
The average size of a newly built single-family home sold in Ada County between January and June was about 2,380 square feet in 2014 and dropped to about 2,258 in 2024, according to Boise Regional Realtors. For all new homes, including condos and mobile homes, the average dropped from about 2,330 square feet in 2014 to about 2,202 in 2024.
Existing homes sold in Ada County have seen an overall increase since 2014, rising from about 1,937 square feet to about 2,085. But this could be changing.
Between May and June, the square footage of new homes versus resale homes flipped, according to Taylor Gray, director of communications for Boise Regional Realtors.
“Previously, sold existing homes averaged smaller than new builds,” Gray said. “In June, however, they switched. Existing homes took the lead with an average of 2,268 square feet while new construction shrank to 2,160 (square) feet.”
According to a study from RealtyHop, a New York-based brokerage, you could get a 1,274 square foot home in Boise for $400,000, or about $314 per square foot — placing it 30th out of the 100 largest cities in the nation for the least amount of space per dollar. That’s three places worse than Phoenix, Arizona, and three places better than Portland, Oregon.
Idaho home builders grapple with unfavorable conditions
There could be several driving forces behind the increase in smaller homes, Hume said. For one, the cost of real estate development has increased as homebuilders struggle with a labor shortage, expensive materials and high interest rates.
“My guess is that new construction is driven by what they can afford,” Hume said. “(In) 2011-12 they were able to get land for very little.”
With cheaper building materials and land prices, builders were able to build bigger homes and still make a profit, Hume said. Nowadays, building smaller houses means builders might be able to fit another house on a single lot and recoup more of their investment, she said.
“Prices of land have gone up, and prices of materials have gone up,” Hume said. “Everything is more expensive.”
This story was originally published August 6, 2024 at 8:45 AM.
