The Treasure Valley Housing market is clearly changing. But while speculation on what might happen next is rife, it’s unclear from the hard data what might be ahead – especially in a fast-moving environment.
For May of 2022, Ada County and Canyon County started to move in a different direction after generally being in lockstep in recent years. The median price of a home for sale in Ada Co. hit $602,500 – up from the previous month, and crossing the $600,000 barrier for the first time. In Canyon Co, however, the median price ticked down, hitting $459,995, falling 3.5% from April.
The median price is the halfway point of all listings in the county – meaning half the homes are priced higher, and half are priced lower. The data comes from the Intermountain Multiple Listing Service.
It’s important to note that the numbers are price — as in what the houses are listed at. The numbers do not reflect what houses actually sold for. The MLS collects, but does not release publicly, that data.
Price cuts common
Data compiled by another party – Redfin – indicates changes are afoot. The firm uses a combination of MLS and proprietary data to look at the Boise Metro area – which includes both Ada and Canyon Counties. It shows that as of May 25th, 10.4% of all houses on the market have dropped their price since first listing.
The figure has ticked up all year, and neared a similar peak last fall. The data point indicates homeowners and real estate agents are listing houses, and then dropping the price to attract buyers.
April Florczyk, the founder of 208 Market Real Estate, told BoiseDev that dynamics are shifting – especially in Ada County, which she monitors. The difference between the public “for sale” median price and the private “sold” median price illuminates some of the dynamics, Florczyk said.
“The average active price is almost $150,000 higher than the sold price,” she said.
Inventory way up
When looking at existing homes for sale — taking out newly built houses, inventory moved up rapidly from April to May
“Inventory levels between the month of April to the month of May more than doubled on existing homes in Ada County,” she said. “We had under 500 homes as of the end of April. At the end of May, we had 1,015 homes on the market.”
Her data tracking shows there hasn’t been this many existing homes for sale in quite some time.
“The last time we had this many active existing homes on the market was in 2017,” she said. “Our inventory has been so low for so long, we have not in the last ten years seen it double in a 30-day period.”
For now, the MLS data shows the average time it takes to get a deal in place remaining very low – 14 days in Ada Co. and 21 days in Canyon. But Florzyck says that metric is already climbing.
“With the huge adjustment in inventory, our days on market is going to go up,” Florzyck said. “It’s still phenomenal but I anticipate it will go up to closer to 30 days where it’s been under two weeks.”
Interest rates a major factor
Rising interest rates are also a factor, continuing to slow the market both in the Boise Valley and nationwide. In Ada County, a total of 894 homes sold in May, while in Canyon Co. 496 homes found buyers. While those numbers are both up from one year ago, they did drop from April of this year.
Data from the St. Louis Fed shows the average interest rate nationwide on a 30-year fixed-rate mortgage peaked on May 12 at 5.3% – nearly double the average of 2.65% on January 7th. The interest rate did start to decline in June, dropping back down to 5.09% as of June 2nd. Nationally, mortgage demand hit its lowest point in 22 years.
Last year, the local real estate advocacy organization touted low interest rates as helping offset price gains. The rising rates cut the other way.
Here’s a real-world example.
Using the February 2021 Ada Co. median price ($452,400) and average interest rate (2.97%), a 30-year fixed mortgage would cost $1,900 per month (not including taxes, fees, mortgage insurance or any down payment).
But using the same figure for May of 2022, with the Ada Co. median price at $602,500 and the peak interest rate of 5.3%, that same ‘median’ home would cost $3,346 per month – again, without those taxes, fees, or a down payment.
That’s an increase of $1,446 in 15 months, which dents what a buyer can purchase.
Florczyk says the data will continue to be in flux in the next few months as some of the price reductions and below ask deals start to work their way into pricing. She also thinks the next year, while it won’t be as heady as the last few years, can be a positive.
“I think the next twelve months are going to be difficult but a much-needed adjustment. (The Federal Reserve) can’t keep doing rate adjustments of half a point,” she said.
And overall, things might slow down a bit.
“Buyers who didn’t have time to process don’t need to rush. They can think a week and go back to the open house. The majority of people want to think it through – and in the past few years have had to rush to make a decision.”