Dear Owner/Clients –
While the housing bubble hasn’t burst, there has been a slight leak.
The Treasure Valley housing market is currently experiencing a slight slowdown with some price adjustments. While the national housing market has seen a decline in prices since mid-2022 due to high interest rates, a sudden and drastic crash is unlikely based on the current market conditions.
Boise’s emergence as a popular destination for remote workers during the pandemic has contributed to the significant growth in housing demand in the city. Many individuals and families, who are now able to work remotely, have chosen Boise due to its relative affordability compared to other tech hubs like Seattle and San Francisco. As a result, home prices in Boise soared by an astounding 63% between March 2020 and May 2022.
However, the rapid increase in mortgage rates last year has had an impact on the local housing market, leading to a correction. While the housing bubble hasn’t burst, there has been a slight leak, causing a temporary slowdown in price growth. Despite this correction, experts remain optimistic about the long-term stability of the Boise housing market.
From a rental property point of view, it is important to note that Boise’s housing market experienced a slight decline of -0.2% in June. While this may seem insignificant at first glance, historical data reveals that Boise’s home prices have only declined on a month-over-month basis in June six times in the past thirty years. It is noteworthy that in all of those previous years, home prices went on to decline further during the second half of the year.
Industry experts, including Moody’s Analytics, have raised concerns about the housing affordability in Boise. Despite income gains, Moody’s Analytics reports that Boise’s housing market was considered 54% “overvalued” at the end of the first quarter of 2023.
From the perspective of a rental property, it is noteworthy that in Boise, the inventory of available homes in June 2023 was down by only 13% compared to June 2019, while showing an increase of 80% from June 2021. In comparison, the national inventory on Realtor.com during the same period was down 47%.
The presence of higher existing inventory in Boise suggests that the market may be more susceptible to price softening as the year progresses from the typically strong first half to the milder second half. By the end of June, existing home prices in Boise had decreased by 11.2% from their peak in May 2022, but were still higher by 44.6% compared to March 2020.
These figures indicate a potential shifting trend in Boise’s housing market, which has immediate implications for rental property owners in the area.
Sources:
https://realestate.usnews.com/real-estate/articles/when-will-the-housing-market-crash
https://finance.yahoo.com/news/housing-market-head-fake-boise-135738235.html
Read more: June 2023 Market Update.
Matthew Johnson
Johnson Property Management, LLC