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Desperate buyers offer more than sellers ask, but still lose as Boise’s home prices skyrocket

Pocket neighborhoods provide an affordable alternative to rising home costs

Bud Compher, CEO of NeighborhoodWorks Boise, highlights the virtues of pocket neighborhoods like the Adams Street Cottages in Garden City. The cluster of homes share a courtyard and are designed for community interaction.
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Bud Compher, CEO of NeighborhoodWorks Boise, highlights the virtues of pocket neighborhoods like the Adams Street Cottages in Garden City. The cluster of homes share a courtyard and are designed for community interaction.

So you think you want to buy a house in Boise? Where the region’s median home prices are at record highs, construction is still below precrash levels and West Coast ex-pats are flocking in, flush with cash and amazed at all the real estate “bargains”?

Buckle your seat belt. And take a little hard-earned advice from Mike Daniels.

He is 47, a blue-collar worker and Chicago native who fell in love with Boise, wanted to buy a house on a tree-lined street in the City of Trees and grow old here with his wife, Dee.

Sadly, the capital of the fastest-growing state in America played hard to get. Because it could.

In June 2017, the middle of the Daniels’ home search, 35 percent of the houses sold in Ada County went for more than their list price. One in five was sold for cash. Houses were spending less time on the market than they had since 2006, the climax of the last housing boom.

Realtors and home seekers decried the lack of inventory. That problem, they say, has only gotten worse this year. The result? In Ada County, the median home price in March was $308,950, up more than $11,000 since February and 24 percent higher than the previous March. Only four houses countywide, all used, sold for less than $160,000 that month.

BI sales graph

And neighboring Canyon County, the Treasure Valley’s low-cost alternative, saw March’s median home price rise 21 percent over the year before, to $211,945.

Everyone has a tale of woe: The agent who wrote nine offers for three buyers but only one was accepted. The downsizing homeowner who sold his house and can’t find another to save his life.

And the Danielses. The first house the couple tried to buy was a modest bungalow in the wildly popular North End. They offered the asking price: $269,900. They got into a three-way bidding war and upped their bid to $280,000. It still did not end well.

“We ended up losing, we found out afterward, to someone who paid only $500 more,” Daniels said. “But it was a cash buyer. My wife was really upset. She was, I don’t want to say heartbroken, but she was emotional.”

Hence Daniels’ hard won advice for buying that dream house: “If you know that it’s in a neighborhood where there’s going to be full-price offers and it’s going to go to bidding, you’ve got to come in strong right off the bat. In today’s market, if you’re confident, and it’s what you want, spend the extra 10 percent.”

Mike and Dee didn’t want to end up in Chicago. They’d spent years researching cities that fit their criteria, a checklist filled with big-city tastes and small-town hopes: Affordable housing, Daniels said, “kind of like the market was in some places like 10 to 15 years ago.” Low crime. A Whole Foods. A Trader Joe’s. A co-op. An airport reachable via public transportation.

Boise was always on those “best place” lists — best place to live, best place to retire, best place to raise a family, best place to visit, best city for young professionals, best place to eat Basque food. So they booked an Airbnb in the North End (without knowing its charms and its steep housing prices) and flew in for their first visit on St. Patrick’s Day weekend 2017.

“And we were like, ‘Oh, my gosh, these houses are so cute’,” he recounted. “Everything kind of fell into our criteria. ... There were two little girls riding their bikes. Neither one had a helmet on. There were no parents around. ...

“I was like, ‘Whoa, I haven’t seen that in years.’ When I saw that, I was like, ‘This is where I want to get old.’”

house construction 2
P.J. Perkes tidies up around a house then under construction in Eagle’s Laguna Pointe subdivision, where million-dollar homes are common. Katherine Jones

House hunting from afar

About six weeks after the Danielses lost out, they got a text and an email from their real estate agent. Another agent in her office was listing a house in the North End later that afternoon for $264,888, she told them at 10:02 a.m. on July 18.

But they were back home in Chicago and couldn’t check it out. So she went on their behalf.

At 12:47 p.m. she arrived at the modest bungalow. “There’s a line of people out here,” she texted.

“If you think it’s worth it, let’s offer an even 300k and we won’t ask for them to pay closing costs,” Daniels responded. “That is a 13.25% offer over asking price.”

At 12:55, the agent texted: “Call me on Skype I’m in.”

So she walked from room to room in the 112-year-old house, holding up heriPad and giving Daniels a virtual tour of all 936 square feet. He saw the built-ins in the dining area, the single bathroom off the master bedroom, the hardwood floors, the gas stove, the pantry, the baby-blue cedar siding.

“She’s Skyping me, I’m looking at it on my laptop, and I’m filming it with my phone,” Daniels recounted. “Because with Skype, it’s live, and I want my wife to be able to see it when she gets home from work. My wife gets home, and I play the video for her on the TV.”

By 3:03 p.m., Daniels had sent earnest money to the agent. His wife had not yet seen the video. By 3:14, the agent hademailed an offer for their electronic signatures. After two days of gyrations, Daniels received a congratulatory text.

“Schedule the moving truck!” the agentwrote. “You just bought a house :) congrats!!”

Open house home on Bench by Katherine June 2017 (2)
Crystal Scott, a Realtor with Mountain Realty, hosts an open house at 1312 S. Roosevelt Street on the Boise Bench, long considered an affordable alternative to the North End. This home was purchased and remodeled by a real estate agent who listed it last May for about $195,000. Bench homes in February sold for a median price of $221,000. The North End median was $459,000. Katherine Jones

Too many people, too few houses

The problem facing home seekers in the Treasure Valley is that population growth has outpaced construction for more than a decade.

At the Ada County construction peak year of 2005, builders put up 6,668 houses, townhouses and condos and an anemic 28 apartment units. That same year, the county’s population grew by 13,829 people. That’s 38 new residents every day — and 18 new houses.

Then the housing bubble burst, the Great Recession followed, home-building dried up, people lost their jobs. The market hit its nadir in 2011, when 1,237 houses, townhouses and condos were built in Ada County, and just six apartment units. Each day, the population grew by 21 people, but only three new houses were built.

Today, it feels as if the entire Treasure Valley is under construction. Cranes soar above Downtown. Streets are torn up. Vacant lots sprout signs boasting subdivisions to come. Neighbors pack community meetings and government hearings to voice their fears.

But for all of the frantic activity, Ada County Assessor Bob McQuade looks at the construction statistics and worries. In 2017, the county gained 4,084 single family homes, townhouses and condos and 1,322 apartment units.

It seems like a lot, but it’s 20 percent fewer units than were built in 2005. And, McQuade said, the pace of subdivision lots drawn so far this fiscal year “is slowing down considerably.”

Much of the current population growth is coming from out of state. New residents are flocking from high-cost states such as California, Washington and Colorado, having sold pricey houses and pocketed big profits.

Realtor Tamara Rowe has more than a few million-dollar stories. There’s the 50-something client who sold her Colorado home for slightly over a seven figures, bought a brand new house in North Boise for $325,000 and plans to live comfortably on what’s left.

“I just closed on a home Friday, all cash,” said Rowe, an agent with Silvercreek Realty Group in Boise. “The couple is going to buy another house here for their son with the proceeds from their California sale. They’ll be able to purchase two homes for what they had in California.”

Linda Lester
Linda Lester on the porch of the Airbnb where she and her husband lived for months. The couple sold their Northwest Boise home to a cash buyer who wanted to move in before the Lesters even started looking for a new house. Maria L. La Ganga

The down side of all cash

But selling your house for cash can be a painful process, too. Just ask Linda Lester, whose Northwest Boise home went to an all-cash buyer from the West Coast.

The retiredclinical social worker and her husband listed their house at the end of November and promptly left for a short holiday in Oregon. The next day, while they were hiking on the coast, her cell phone rang. It was her agent — with good news and bad.

The good: They had an offer. All cash. At the list price. The bad: The buyer demanded an answer that day. And wanted to close in less than two weeks. And the Lesters hadn’t even begun looking for a new place of their own.

“Their real estate agent told our real estate agent that [the buyer] had lost out on a couple of houses,” Lester said. “They were outbid with cash. We moved on Dec. 21. It was pretty rush, rush, rush, ‘You do what we want.’ We felt we weren’t treated very respectfully.”

Nearly everything the Lesters own is in storage. They have spent the months since their house sold living in an Airbnb and house hunting. They ended up in a multiple-player bidding war for the first house on which they placed an offer. They lost.

They won their second bidding war with an offer $15,000 over the asking price, paying less than $350,000 for a four-bedroom house with a small yard in the Collister area.

“This has just been a real strong learning curve for both of us,” Lester said. “I grew up a little bit in terms of real estate.”

Karl Maier stands in front of one of five properties he and his wife were interested in buying to upgrade from their current home in Boise. A real estate agent, Maier said the market right now is “insane.” Thirty-two percent of homes sold were above list price in February, and 19 percent of homes sold were all-cash transactions. Darin Oswald

Even being a real estate agentdoesn’t help in the quest for a reasonably priced home in this “insane” market.

That’s Karl Maier’s description, by the way. He’s an agent, his wife Angel is a nurse, and their daughter, Zoe arrived four months ago. They’ve been happy renting a two-bedroom duplex not far from the Idaho Botanical Garden, but they need more space and want to buy.

“We came here to escape the rising home prices in California, and now they’re rising here, too,” the 29-year-old said. “I work with sellers. We try to get the best price for their property. And now I’m trying to get into the market.It’s complicated.”

The Maiers have tried five times to buy a house. They were outbid on three. They wrote up two other offers but changed their minds when they realized the houses were already in bidding wars.

The worst experience was trying to buy a ‘70s-era house near Hill Road and 36th Street. The bathrooms needed updating, but the floor plan was perfect for the young family, and it had a big yard for Zoe to romp.

The list price: $310,000.

“I called the agent 48 hours after it was listed,” Maier recounted. “She said, ‘It’s insane.’ They’d received nine offers. I said, ‘We’re approved at $350,000.’ She said, ‘Even at $350,000, writing an offer would be an exercise in disappointment.”

This story appears in the April 18-May 15, 2018, edition of the Statesman’s Business Insider magazine as part of special coverage of residential real estate. Maria L. La Ganga: 208-377-6431, @marialaganga

Valley neighborhoods ranked by home prices

Median prices in February from highest to lowest, including new and used homes:

Ada County

Eagle $474,888

North End $459,000

Northeast Boise $445,000

Southeast Meridian $387,200

Northwest Boise $350,000

Southwest Meridian $333,490

Star $330,448

Northwest Meridian $298,700

Southwest Boise/Meridian $291,990

Southeast Boise $270,750

West Boise/Garden City $253,500

South Boise $248,000

Northeast Meridian $246,900

Kuna $239,500

West Boise $224,450

Boise Bench $221,000

Excludes Garden City, where just 1 house sold

Canyon County

Middleton $239,225

Northeast Nampa $214,399

South Nampa $201,990

Northwest Caldwell $187,274

Northwest Nampa $184,167

Southwest Caldwell $174,500

Excludes Parma (6 houses sold), Wilder (3 sold), Melba (0 sold), Greenleaf (0 sold), other rural Canyon (2 sold)

Source: Intermountain MLS