Are you in the market for a new home? Or simply looking to sell your home? You might wonder how the Boise real estate market is shaping up this year. It’s a difficult time to purchase a home right now since there are increasing interest rates and not many homes on the market, but that doesn’t mean you can’t do it. And it’s certainly not a bad time to be a current homeowner. Here is everything you should know about the state of the real estate market right now.
Real estate trends
Whether you’re looking into buying, selling, renting, or developing, it’s essential to understand what’s going on with the housing market. Here are some of the real estate market trends you should know about:
Rents are on the rise, but they’re slowing down compared to last year.
The new construction market is seeing affordability limits.
The best time for refinancing your mortgage has already passed.
Rising interest rates mean that buying a new home is a little more difficult and that homeowners are less inclined to sell their homes.
Buying a home
Are you looking for homes for sale in Boise, Idaho? Mortgage interest rates have been historically low for the past two years, since the beginning of the COVID-19 pandemic, but buyers are struggling to locate homes on the market. Keep in mind that there is home inventory on the real estate market, but it’s just disappearing within a few days. Aggressive competition among various homebuyers has led to increased home prices, and that trend has continued this year. Median home sale prices in the first quarter of this year were about $595,000 for Ada County. This represents a 17.59% increase over 2021.
Mortgage interest rates have been increasing since the end of 2021 after spending almost two years of the pandemic either near or under 3%. The average mortgage interest rate was over 5% for a 30-year, fixed-rate mortgage in May. Mortgage rates are still historically low but higher than in recent years. Since there are higher interest rates, the total home cost for buyers is astronomically high. For this reason, some buyers might choose not to buy a home this year. The prospective buyers who decide to go ahead and buy likely won’t need to worry as much about bidding wars with other buyers. And home prices will stabilize as the year goes on, which should offer some relief to buyers.
Selling a home
Sellers aren’t losing out, even as the home prices begin to stabilize. Home prices will most likely keep rising in most housing markets, simply at a slower pace than they’ve increased since 2020. Keep in mind that the rate at which home values have been appreciating over the past couple of years is simply unsustainable over the long term since homebuyers can’t keep up with the increased home values. That being said, in most housing markets, including Boise, the average annual equity gain for homeowners is still higher than the average growth of their salaries.
Fewer homeowners will put their homes up for sale as interest rates continue to rise since sellers will most likely need to buy a new home to move into and don’t want to trade their current mortgage for a mortgage with a higher rate and less equity. In previous years, homeowners have received a much lower mortgage rate, so selling a home now to buy a new one costs additional money. Current homeowners also aren’t likely to refinance their mortgages anytime soon since there is little to no incentive to refinance at a higher interest rate.
New construction and development
New construction and development likely won’t significantly impact housing demand this summer or for the remainder of 2022. Developers are building new houses at a fair pace, but they are unable to get the houses finished since there are supply chain problems with appliances and building materials. This means that completing a new construction property is often delayed, and there are holdups in the home construction process.
Builders feel the most confident about single-family home sales and the least confident about the traffic of potential homebuyers. New construction has dropped over the past year, and the decrease in buyer activity for new homes is tied to reduced affordability. Fewer buyers opt to buy new homes since they are less affordable due to rising prices, rising interest rates, and higher costs for building materials. Customers are beginning to pull back from the prospect of new construction and say they’re not ready to buy new homes at the moment.
Renting a home
Like home prices over the past year or two, rents have also dramatically increased. Rents hit an all-time high this spring. One-bedroom apartment rentals have increased about 13% yearly, while two-bedroom apartment rentals have increased about 14% yearly. That being said, rents have only increased 0.3% for one-bedroom apartment rentals and 0.7% for two-bedroom apartment rentals month over month, so the increase in rents might be slowing down.
Home sales are beginning to slow down due to the rise in inventory and interest rates, so the slowdown in rent increases in the spring could mean a less chaotic rental market in the coming months. However, rents are unlikely to see significant decreases, and home prices might have reached a plateau, but rents in most markets, including Boise, are unlikely to do the same anytime soon. Rent tends to impact customers early on, and high rents could become an issue as financial pressures increase, especially as the everyday consumer starts to stress more about finances.
Partner with a Boise real estate agent
Looking for new homes for sale in Boise, Idaho? Reach out to the trusted Boise real estate team King & Edge for guidance. Both Manda Edge and Stacey King are passionate about ensuring their clients find the home of their dreams or make it through the selling process unscathed. They are long-time community members who look forward to helping you in your real estate journey.
