By Sydney Kidd
Home prices in Ada County dropped in the month of June, according to data from the Boise Regional REALTORS.
And this trend looks like it may continue for the near future, said Boise Realtor Sheila Smith who says she expects home prices to continue dropping for the next couple months.
“I always say I can’t predict the future. But you can generally see what’s going to happen in the next month,” Smith said.
In May, median sales price for homes in Ada County passed $600,000. But it dropped to $592,090 in June, according to the data.
Smith said mortgage rates doubling, prices reaching a peaking point and so many people rushing to put their homes on the market have led to this rapid change.
“There is a dip, but mostly it is a lot of price dropping and the inventory is doubling,” Smith said. “It used to be that there were twice as many solds as actives and almost no back-on-markets or price changes, and it is consistently now for the past six weeks, been the opposite.”
According to Brent Hanson, owner and CEO of City of Trees Real Estate at Keller Williams Realty Boise, a lot of this dip in prices came from builders adjusting their prices with the new interest rates.
“They’re the first and fastest to make decisions when a market shifts,” Hanson said.
For every point interest rates go up, prices would have to drop by 10% in order to match the same affordability level, Hanson said.
In recent years, the trends for average home prices in Ada County have steadily increased month-by-month. But the new report of lower prices may show doors opening for people who previously couldn’t get their foot into the market.
“We’ve seen the buyer pool shrink due to higher mortgage rates and home prices,” 2022 Boise Regional REALTORS President Becky Enrico Crum said. “Cooling demand has given inventory a chance to catch up a bit, giving the remaining buyers more options.”
According to Smith, if a home gets listed according to prices that previous homes sold for, it is now overpriced and sellers will likely have to drop the cost to sell their property.
Homes that closed last month spent an average of 14 days on the market before going under contract, compared to 10 days in June 2021, according to Boise Regional REALTORS.
The average original list price received for existing homes in June was 98.4%, which means that on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In June 2021, the average original list price received was 103.9%, which means on average, buyers paid more than asking price.
“It’s still a seller’s market. But it feels like a buyer’s market because it’s this radical switch,” Smith said.
There were 2,135 homes available for sale at the end of June, a 192.9% increase from June 2021, and the highest inventory Ada County has seen since September 2016, according to data from Boise Regional REALTORS.
Smith said she thinks Ada County is on track to be an even market in a couple of months, which would be the first time this has happened in about a decade.
“Buyers have more of a voice. People with special financing are finally able to get a loan. These poor FHA (Federal Housing Administration) buyers are finally like ‘This is our moment,’” Smith said. “They’re able to do inspections, are able to ask for repairs and they’re able to have a choice in what they buy. And they don’t have to compete and say, ‘Hey, I’m going to cover the difference with cash.’”
Smith said the days of a bidder coming in and out-bidding the rest of the prospective homeowners by $50,000 in cash are over.
In fact, she said what she is seeing as a listing agent is a lot of people who moved to the area during the early stages of the COVID-19 pandemic are now turning on their heels and leaving.
“I have all these people that are moving back to California,” she said. “Or just saying, ‘Hey, I have so much equity in my home. I’m gonna go live near family.’ But a lot of the people that moved here, most of them were from California, they’re like ‘I miss my family.’ Or ‘My job is wanting me to go back in the office. I can’t work from home anymore.’ Or ‘I want to go back and work in the office’ or ‘I miss my lifestyle there.’”
Smith said across the board, other agents she has spoken with are seeing the same thing. People are leaving town and selling their investment properties.
Hanson hasn’t necessarily seen much of that dynamic in his business interactions, but he wouldn’t be surprised if there were some people who moved here to work remotely and are now having to leave as they are called back into the office.
Hanson said the frenzy of home selling and buying and prices appreciating at breakneck rates seems to be tapering off, calling the previous trends “not sustainable.” The typical number of offers on homes has decreased to one to two per property and the amount of days the homes are listed for has increased. Even so, he doesn’t expect a Great Recession-level crash.
“I don’t believe the market is going to tank. I think that knee-jerk reaction is going to taper off. … And I think that will end up somewhere in the three to four months of inventory range which is extremely healthy,” Hanson said.
A market correction, Hanson said, would benefit both the buyers and sellers by creating stability. There will be better availability for buyers and a better environment for sellers because they won’t be rushed to put their homes on the market. But all in all, Hanson’s main takeaway is that it is a great time to be a buyer.
“Buyers have a little bit more leverage to go in and not just pick a house because it’s the only one available,” he said. “They can go out and look at three or four or five houses and pick the one that best fits their needs.”
