Boise Idaho Housing Prices Drop AGAIN - Real Estate Market Update August 2022

Home prices and the Boise area slipped again this month and we got the new inflation reduction act and the new inflation data. What does all this mean if you're looking at buying or selling here and specifically if you're maybe relocating here to the Treasure Valley area.

We've got a lot happening this month with home prices that did dip a little bit, the new Inflation Reduction Act that came out, which I think we can all agree that's not going to be reducing inflation, if anything that might increase inflation but we'll see how that all plays out. And then we have the new inflation data that just dropped.

First we're going to take a look at median home prices. This is for Ada county and we are now at $589,000 for the median price of homes in Ada county. That slipped a little bit from $592,000 and a high of $602,000 the prior month.

Overall, we are down a couple percent, but only about 0.4% from last month, a couple thousand dollars. That's really not much. Now that's combined for resale homes and for new construction homes.

Days on market are up a bit. We were at 13 days before now we're up to about 21 days. Certainly homes are taking a little bit longer to sell and there are price reductions occurring.

In fact, Redfin had a report recently for June, 60% of homes in the Boise area did have price reduction. What does that mean though? Why are these homes having price reductions?

Frankly, it's really because a lot of sellers just thought they were going to get a lot more money for their house and the houses were overpriced. Even though so many homes are having price reductions. That's why we're seeing just a slight reduction in the actual median price, because home prices  are starting to come back down into reality.

I will say, if you are shopping for a home right now, you have so many more options than you did a year ago. Inventory is up significantly. We had less than a month of inventory available and just a couple of months ago. And now we're closing in 3 months of inventory available.  So far many more options to choose from in both the resell market, in a bit in the new construction market as well.

And the new construction market will increase that number of inventory as well over time. We are seeing price reductions on the new construction side and builders are giving credits. If you look at CBH, depending on the community, they're looking at $20,000 to $30,000 in credits.

These are often for move-in ready homes, and if you look at Hubble, they're offering credits of around $20,000 right now for “to be built homes”. That's a home that has not actually been constructed yet. They're offering credits and there's also price reductions occurring on move-in ready homes.

Other companies like Toll Brothers, they're also offering credits as well, usually in the $30,000 to $40,000 range as well, depending on if moving ready or if it's to be built. There's a lot more options.

Prices are getting a little bit more reasonable again. You can choose the home that you want and instead of having to get into a massive bidding war and get beat out right away and waive your contingencies, that's really good. You can keep your contingencies. You can get credits that you can use towards rate, buy downs or towards improving the home after the fact.

I myself have been going through this as well. I am purchasing right now and I struggled with it myself too as a buyer. When the shoes on the other foot (on my foot) and I'm in that same boat as you, I have to think really hard about this: “Do I want to spend this kind of money on a home?” I chose to move forward with it. I've got an excellent rate at less than 5% at 4.75%. And the way that I look at it is this. I think that prices will come down here in Boise and I don't know how far they're going to come down.

There's a lot of headlines that claim that Boise isprime to have the largest drop in equity, we'll see. A lot of people are still moving here, projected over a million people over the next few years we'll be moving to Boise and the state only has 1.7 million people currently.

There's a lot of people still coming. If that influx of people still continues to come because of the red politics here, the freedom that you get to experience, then I see that being a temporary situation where home prices do come down and then they come back up.

If you're trying to time the market perfect, good luck. I don't think that's possible. That's why I chose to continue with the purchase of the home, a new build home and move forward with it. Because I look at this with a long-term horizon personally,

I don't plan on ever selling that home. And the reason I say that is because I will turn that home into a rental and then purchase another home at some point and keep rolling like that.

I look at it as when I look back 10 years from now and say, "I'm glad I purchased that home" or "I wish I had purchased that home". For me, the answer was, yes. I would look back 10 years from now and say, "I'm glad I purchased that home" because I do believe in real estate. And I believe that over time, home values do rise.

It's not just a belief, it's a fact. In the past 50 years, only has been twice where home prices have dropped. And of course, 2008 being the most significant one, but ultimately they recovered certainly within that 10 year span.

I mean, just a couple of years, the homes that are now being sold for $600,000 or $300,000 in homes that were being sold for $120,000 or $500,000. That kind of thing here in Idaho.

Over time they will rise. And so I look back as, "yes, I believe this will be a good investment for me and my family". I could ultimately turn into a rental. I can then start taking depreciation and expenses off that. And so that's why I am moving forward.

You just have to decide for yourself what's best for you. I decided not to try to time the market perfect. I did negotiate some price reductions and credits for myself that made it more palatable, and I'm very happy with it now and we're moving forward.

That's what's going on in the housing market here. You got the inflation reduction act as I mentioned, I don't think that's actually going to reduce inflation. They're having 80,000 IRS agents. That'll be interesting how that plays out.

I will say that inflation did drop over all this month prior to that reduction act coming into play. We're at 8.5% for inflation right now, still very high, but certainly better than just over 9%. We'll see how that continues to play out.

That's great news for mortgage rates. Mortgage rates were over 6% about a month ago, they actually have fallen despite the Fed raising interest rates by 0.75%. The market really dictates what interest rates are for mortgages, not the Federal Reserve.

The fact that the Federal Reserve did not raise interest rates by a full percentage point, the market reacted favorably to that, and rates actually ended up going down. For just a hot minute there, they were below 5%. That's what I locked in and now they're climbing again, but they're bouncing around.

It's a little volatile right now. $5.50% a day, $5.35% back down a 5.13% right now.

If you're looking at where you were a month or month and a half ago, just over 6%, and now you can lock in at 5.1% for the median priced home here in the Boise area. 

You're going to be saving over $200 a month with that percentage point drop. That's a really, really favorable thing. That's also encouraging buyers to maybe get off the fence again, as they're kind of watching what's happening with mortgage rates and go ahead and move forward on purchasing a home.

That's what's going on in the Boise market.

Curtis Chism, Realtor
208-510-0427 | Mobile
boise@chismteam.com 
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