If you scroll through the Build Idaho blog feed over the last 6 months, you will find that we’ve written dozens of articles about the current real estate. Since the COVID-19 lockdowns in mid-March, real estate had an impressive an unexpected turnaround around the country. Boise is no exception. Even in our high-demand market, both buyers and sellers have distinct motivations. Here is a breakdown of these motivations.
The Boise Buyer Motivation #1: Historically low mortgage rates
Due to the pandemic-induced recession, mortgage rates have plummeted to under 3%—the lowest rates ever. This has motivated two actions: Homeowners started a wave of refinancing to save money on their mortgages; and home buyers who may have been skeptical about buying have jumped into the market. Having rates under 3 % will save home buyers thousands of dollars over the life of a loan. Take a look at the numbers:
- Buying a house in 2010
- A 30-year, $300,000 mortgage at 4.09% means payments of $1,448
- Buying a house in 2020
- A 30-year, $300,000 mortgage at $2.86% means payments of $1,242
- Paying $206 less per month amounts to saving $74,160 over the life of the loan.
In addition, lower rates raise the buyers’ purchasing power. According to National Mortgage News: “Purchasing power rose 10% year-over-year…With interest rates hitting record lows, buyers were able to afford $32,000 “more house” as of July 23 than they could the year before with the same monthly payment.” With more purchasing power, buyers can literally afford to look at more homes with higher price points.
Tying into better purchasing power, a further motivation to buy now is the amount of equity homeowners gain. Idaho homeowners gained the most equity in the country in 2019: a whopping $26,000 on average. Since homeowners are living in their homes longer and home prices are rising faster than anywhere else in the country, Idaho homeowners are earning larger and better shares of their property’s value simply by living in a home.
Bottom line: buyers are motivated to buy now and ride the wave upward instead of waiting and losing money.
The Boise Buyer Motivation #2: COVID-19 upgrades
The lockdowns and stay-at-home orders that were issued to quell the spread of the Coronavirus forced many employees who were fortunate enough not to lose their jobs to work from home. Spar bedrooms, kitchen tables and countertops quickly became conference rooms, schoolhouses, and offices. Many people have started searching for homes with spare rooms, home offices, outbuildings, and bigger yards to accommodate working from home, home gyms, summer vacation play, and now schooling from home. This has resulted in increased demand for homes in suburban neighborhoods instead of close to city centers.
The Boise Seller Motivation: Low housing inventory
The laws of supply and demand state that when supply is low and demand is high, prices rise. As a side note, have you seen the price of toilet paper after the nonsensical panic buys in March? When it comes to homes—especially in Boise—fewer homes on the market means higher prices. Since new home construction cannot keep up with demand, and fewer existing homes are coming on the market. According to the latest Boise real estate market dynamics, Ada County median home prices are up 12.7% year-over-year to $400,000, while the number of listings on the MLS is down 64.5% compared to 2019.
The result of this is that bidding wars have quickly become common across all price ranges, multiple offers come in as soon as the property is listed, and nearly every home is selling for over the listing price. Because of this, sellers can easily get top dollar for their home sale. Homeowners looking to downsize or upgrade after their sale will have plenty of funds to do so.
In summary, the current real estate market has given both buyers and sellers strong motivations to jump into the real estate market. To help navigate the the hot seller’s market that Boise is experiencing, Build Idaho’s team of local real estate experts are here to help make your home buying or selling journey as easy and fast as possible. Give us a call at (208) 724-9636 to get started.