The Boise housing market has been one of the hottest locales in the country, and the capital of Idaho shows no signs of slowing down—even as the globe recovers from a pandemic. Despite all that has happened across the country, in fact, real estate in Boise appears perfectly capable of remaining at the forefront of the national housing sector. Due—in large part—to pent-up demand, relatively low interest rates and a healthy job market, the Boise real estate market not only fared better than most of its counterparts over the last few years, but it appears ready to outpace averages across on a national level.
All things considered, the Boise housing market is setting the bar in today’s constantly evolving landscape. While a small degree of uncertainty persists and rising rates could serve as a headwind, the city appears more able to weather the storm than just about everywhere. As a result, buyers, sellers, and investors are well-positioned to capitalize on the active market. In particular, opportunities are growing in the rental sector. Not only are profits looking easier to realize, but demand should remain strong for the foreseeable future.
Boise Real Estate Market 2022 Overview
Median Home Value: $533,538
Median List Price: $664,967 (+25.9% year over year)
1-Year Appreciation Rate: +11.1%
Median Home Value (1-Year Forecast): +13.7%
Weeks Of Supply: 8.5 (+0.7 year over year)
New Listings: 902.5 (+102.8% year over year)
Active Listings: 2,464 (-16.2% year over year)
Homes Sold: 300.2 (-21.8% year over year)
Median Days On Market: 8.2 (+1.5 year over year)
Median Rent: $1,437 (+4.8% year over year)
Price-To-Rent Ratio: 30.94
Boise Unemployment Rate: 2.4% (latest estimate by the Bureau Of Labor Statistics)
Population: 237,446 (latest estimate by the U.S. Census Bureau)
Median Household Income: $63,778 (latest estimate by the U.S. Census Bureau)
Total Active Foreclosures: 59
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Boise Housing Market Trends In 2022
The Boise housing market has had the privilege of pacing the national real estate sector for the better part of the pandemic. If for nothing else, Boise was not only more insulated than many other metropolitan areas from economic damage caused by COVID-19, but it may have actually benefited from the pandemic. As more people were granted the ability to work from home, many chose to call Boise home during the pandemic because of its relative affordability and wide-open spaces.
The massive influx of buyers over the last two years has established many Boise housing market trends in 2022, not the least of which include:
Supply Trends: The Boise housing market is home to somewhere around 2,464 active listings. Over the last year, listings are actually down about 16.2%, but 2022 has seen an increase in inventory levels. Year-to-date, listings are up about 75% and gaining momentum. It is worth noting, however, that while inventory is up, there’s still only about 8.5 weeks of inventory. Balanced markets typically have about six months of inventory, so the Boise housing market has a long way to go. The latest increase is a modest start, but a start nonetheless.
Home Price Trends: The Boise housing market has seen its average home increase significantly in recent history. Over the last year alone, supply and demand trends have resulted in an 11.1% appreciation rate. Local home values have appreciated even more since the beginning of the pandemic, and the momentum will continue over the course of 2022. The same fundamentals which increased prices in the last two years are still in play and will keep driving prices up for the foreseeable future.
Interest Rate Trends: Interest rates are shaping most markets across the country, and the Boise real estate market is no exception. On a national level, the average commitment rate on a 30-year fixed-rate mortgage has jumped from 3.45% in January to 5.23%. The increase has resulted in fewer mortgage applications, but demand is still strong enough to push prices up because of a lack of inventory. That said, if rates keep heading higher, activity will most likely cool off and perhaps even drop home prices a little.
Investor Trends: With home prices at historic levels and interest rates still relatively low, the most viable exit strategy is building a long-term rental portfolio. Profit margins are too low for many flips and years of cash flow can help offset today’s higher prices.
Ada County, Idaho Housing Market Trends
Boise housing market trends extend to each of the counties surrounding it, not the least of which include Ada County. Containing the Boise real estate market and the area directly south of the city, Ada County is experiencing its own hot market. While the number of homes sold are down, inventory is surging and prices are near all-time highs.
Here’s a quick snapshot of the Ada County real estate market:
Median Sales Price: $586,250 (+15.0% year over year)
Number Of Homes Sold: 876 (-14.4% year over year)
Median Days On Market: 8 (+1 year over year)
Elmore County, Idaho Housing Market Trends
Elmore County is east of the Boise housing market and extends from the mountains around Sawtooth City in the North to Hammett in the South. As recently as the second quarter of this year, home prices in Elmore County were up 13.3% year over year, selling for somewhere in the neighborhood of $340,000. At their current price point, homes are lasting about six days on the market. Still, rising rates are starting to impact Elmore County. It is only a matter of time until rates reduce demand.
Here’s a quick snapshot of the Elmore County real estate market:
Median Sales Price: $340,000 (+13.3% year over year)
Number Of Homes Sold: 47 (-13.0% year over year)
Median Days On Market: 6 (+1 year over year)
Gem County, Idaho Housing Market Trends
Located northwest of the Boise housing market, Gem County offers homeowners a small-town feel that’s not too far away from a big city. In fact, Gem County saw home sales increase year over year, most likely because more residents were working remotely. Gem County gave the residents of Boise an opportunity to seek more affordable living without sacrificing proximity to a big city.
Here’s a quick snapshot of the Gem County real estate market:
Median Sales Price: $504,072 (-0.39% year over year)
Number Of Homes Sold: 24 (+4.3% year over year)
Median Days On Market: 8 (+1 year over year)
Boise Foreclosure Statistics 2022
Foreclosures across the country have been suppressed during the pandemic. Government assistance and foreclosure moratoriums actually prevented many distressed homeowners from entering into the foreclosure process over the last two years. That said, aid is running out and foreclosures are starting to return to more normal levels.
At the start of the second quarter, “there were a total of 30,674 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — down 8 percent from a month ago but up 160 percent from a year ago,” according to ATTOM Data Solutions. At the same time, the Idaho real estate market saw one in every 8,262 housing units enter into the foreclosure process.
Currently, the Boise real estate market has somewhere in the neighborhood of 59 total foreclosures. Of the distressed homes in Boise, 34 are at risk of being foreclosed on (pre-foreclosure) and 25 are expected to be sold at auction. As a result, the Boise real estate investing community should prioritize pre-foreclosures and auctions if they intend to acquire a distressed property.
Boise Median Home Prices 2022
Few cities—if any— have had their home values fare better than those in the Boise real estate market over the last decade. In the wake of the Great Recession (the first quarter of 2012), the city’s median home value bottomed out around $150,000. However, since the recovery began to today, real estate in Boise increased in value at a pace few cities could keep up with.
From its lowest point of the Great Recession to today, the median home value in Boise has increased 255.7%. Riding a wave of increasing sentiment, improving economic conditions, and a lack of inventory, the median home value in Boise is now $533,538.
While prices in the Boise housing market increased for ten consecutive years, the most significant increases took place during the pandemic. Since the start of COVID-19, local home values have increased 55.5%. In the last 12 months (alone), the median home value in Boise increased 11.1%. The only reason home price appreciation in the Boise housing market hasn’t kept pace with national trends in the last year is because prices had already run up too much.
It is worth noting that appreciation rates are expected to continue, despite their recent run-up. The scale of supply and demand is greatly leaning in favor of demand, and competition is likely to send prices upwards for the foreseeable future. As long as inventory remains tight and pent-up demand drives acquisitions, prices will appreciate. The latest forecasts are calling for a 13.7% increase in Boise home values in the next year.
Prices will rise for the foreseeable future, but the top appears to be getting closer. As the Fed raises interest rates to combat inflation, buying a home becomes incrementally more expensive and demand drops. If rates continue to rise, competition will dry up and sellers will be forced to lower their asking prices.
Boise Housing Market Forecast For 2022-2023
The Boise housing market looks like a strong candidate to pace national trends. If for nothing else, real estate in Boise appears to have cooled off a little sooner than most of its metropolitan counterparts. If trends hold, Boise could potentially provide valuable insight into how the rest of the country will act moving forward. With that in mind, let’s take a look at a Boise housing market forecast which is likely to come true:
Home Values Will Rise: Home values in the Boise real estate market have risen at a faster rate than most other cities across the country in the last decade. In fact, the pandemic has seen the city’s median home value increase as much as 55.5% in as little as two years. Moving forward, prices will continue to increase, perhaps as much as 13.7% over the next year. Supply and demand constraints will see to it that prices keep rising for the foreseeable future, but it’s only a matter of time until rising interest rates weigh them down.
Rents Will Rise: Rental rates in the Boise housing market have increased nearly five percent over the last year because of increased demand. Since housing inventory is too low, more people were forced to rent, and the trend is expected to continue. Rents will increase moving forward and availability will subsequently decline.
Interest Rates Will Rise: The Fed has already increased the benchmark interest rate to fight inflation, and more increases are on the way. The exact amount isn’t yet known, but it is safe to assume higher rates will increase the cost of homeownership in the Boise housing market sooner rather than later. The mere threat of rising costs will also increase demand, further boosting home values.
Should You Invest In The Boise Real Estate Market?
The Boise real estate market has remained incredibly active, despite the spread of the Coronavirus. In fact, the local real estate market has done well maintaining the “status quo.” Prices continue to increase in the face of rising demand. Few cities, for that matter, have enjoyed a better 12 months than the Boise housing market.
Investments in the Boise real estate market appear to be paying off, which begs the question: Should you invest in the Boise real estate market? Is there still room for a profit after so much appreciation has already taken place? The answer is simple: yes.
Flipping real estate remains an attractive exit strategy, but it’s true: home value appreciation has eaten into profit margins over the last 10 years. Finding deals below market value is harder than in recent years. That said, the Boise housing market appears to be more suitable for passive income investors. Otherwise known as rental property owners or buy-and-hold investors, passive income investors are the beneficiaries of several positive market indicators:
Interest rates on traditional loans are rising, but remain relatively low
Lower borrowing costs increase monthly cash flow from operations
Years of cash flow can easily justify today’s higher acquisition costs
A 30.94 price-to-rent ratio suggests high home prices will increase rental demand
The idea of building a rental property portfolio is perhaps more attractive than ever before. Despite high home values, borrowing costs are still attractive (but going less attractive by the day). As of the second quarter, the average rate on a 30-year fixed-rate loan was 5.23%, according to Freddie Mac. While rates have already increased year-to-date, they are still historically low and significantly reduce the cost basis of buying a home in Boise.
Lower mortgage rates make the prospect of buying a home with traditional financing more attractive. That said, there’s another way for real estate investors to justify buying rental property in today’s market: cash flow. Several years of cash flow can warrant an acquisition at today’s high prices. With a median rent price of $1,437, many long-term investors should be able to pay down their mortgage using someone else’s money.
In addition to low mortgage rates and cash flow potential, the city has a price-to-rent ratio that leans heavily in favor of investors. At 30.94, the price-to-rent ratio in the Boise housing market suggests homes are expensive. Subsequently, fewer people can afford to buy, driving up rental demand and the amount landlords can charge.
The Boise real estate investing community is lucky to have several viable exit strategies at its disposal. Still, none appear more attractive than building a proper rental property portfolio at the moment. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.
Other factors suggesting the Boise housing market is a great place to buy and hold real estate include, but are not limited to:
Growing Student Market
Quality Of Life
Growing Student Market
The Boise housing market is home to Boise State University. With 24,103 students enrolled last year, the downtown district is already home to a lot of younger renters. As more students start to attend classes in person, the need for affordable housing will increase, giving local real estate investors a great opportunity to capitalize on. In fact, Boise real estate investors who are able to secure a rental property within close proximity to the school should find themselves with plenty of demand.
One of the most attractive reasons to invest in the Boise housing market is the job market. In addition to having an unemployment rate that’s nearly half the national average, Boise boasts encouraging future growth prospects. Whereas the United States expects job growth to increase 6.3% over the next ten years, Boise is expected to see a job growth rate of 21.9%. The difference is primarily thanks to the lumber and food processing industries, but Boise is quietly becoming a technology hub. Companies like Micron Technology, Hewlett Packard and Simplot are expected to draw a larger and younger workforce in the coming years.
Quality Of Life
The Boise housing market’s quality of life is one of the main reasons the city has had such a rise to prominence in recent history. As work-from-home trends became more popular during the pandemic, more people chose to Call Boise home because of its quality of life. With plenty of outdoor recreational activities and plenty of affordable housing, it was an easy decision for many to trade their living arrangements for a home in Boise.
The entire state of Idaho, not excluding the Boise real estate market, has a fairly moderate tax burden. Residents can expect to pay about 10.7% of their income to taxes, which is in line with many of its neighbors: Oregon, Washington and Montana. However, relative to California, Idaho has an objectively low tax burden. As a result, Idaho has seen a lot of transplants from The Golden State.
There’s no doubt about it; the Boise housing market is one of the strongest in the country, both before and after the introduction of the Coronavirus. In fact, there’s an argument to be made that the pandemic actually stimulated the local housing sector. That’s not to say the pandemic won’t impact real estate; it will, but real estate in Boise appears to be more insulated than many other cities. As a result, the Boise housing market should remain a hotbed of activity for investors, buyers and sellers.
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