- New record high for Ada County home prices driven by consumer demand and population growth, not the market speculation seen a decade ago.
- Last month’s drop in the median new home price was due to more lower-priced homes becoming available and selling, not a lack of demand for the segment.
- Historically low interest rates and a strong local economy are keeping affordability in check, despite the higher home prices.
Last month we noted that home prices are typically the highest in June, July, and August each year—and this year will be no exception. In June 2016, the median sales price for new and existing homes combined reached $253,000 in Ada County, a new high surpassing the previous record set in July 2006.
A 10.0% year-over-year jump in Ada County’s existing median sale price was behind the increase, reaching a record high of $239,900 in June 2016. “Compared to 10 years ago, consumer demand versus supply is causing home prices to rise—not market speculation,” said Carey Farmer, 2016 President of Boise Regional REALTORS® and Broker Associate with Group One Sotheby’s International Realty.
Pending sales for existing homes were up 19.6% over last year, while inventory was down 22.7%.
In contrast, the median sales price for newly constructed homes in Ada County saw a decrease of 7.7% from June 2015, settling at $304,500 in June 2016. This drop in price is not from a lack in demand, but rather, more lower-priced new construction becoming available and then selling, pulling down the median sales price for the segment overall. Looking at June 2015 vs. June 2016, sales of new homes priced under $300,000 jumped by nearly 71.0%.
Christine Comstock, Sales Coach Director with CBH Homes, and Director on the Intermountain MLS (IMLS) Board, had this explanation: “CBH and other builders are finally able to offer more lower-priced new inventory to meet consumer demand, and they’re selling fast.”
Pending sales for newly constructed homes increased a whopping 45.1% over last year, while inventory remained flat, looking at all price points combined.
Comparisons to 2006 home prices beg the question of whether or not we are in another housing bubble. Economists say “no.” Today’s lending environment is so much more regulated than it was back then, and the national and local economy is much stronger. What is really behind the consumer demand is population growth, both in the number of people moving to the Boise region, and the huge number of Millennials—the largest generation in history—aging into homeownership nationwide.
While record high prices raise concerns of affordability, persistent low mortgage rates are keeping things in check. According to the U.S. Federal Reserve Bank of St. Louis, FRED Economic Data 30-Year Conventional Mortgage data, the 3.57% mortgage rate for June 2016 was 10.3% lower than last year at this time, and was down 7.8% from January 2016.
“When we look at the income needed to purchase a median priced home in Ada or Canyon County, based on today’s mortgage rates and local income levels, things are still quite affordable,” said Farmer.
EXPLANATION: The following charts look at each county’s estimated median household income and the income distribution, compared to the income needed to purchase a median priced home based on the June mortgage rate of 3.57% on a 30-year conventional fixed mortgage.
“Buyers at or above the median household income in Ada County should have no problem purchasing an existing home even with a 5% down payment,” explains Farmer, “… and while a smaller down payment may make things a bit tighter when looking at new construction, it’s certainly not out of reach. Canyon County also remains very affordable in both existing and new construction for most buyers.”
For potential homebuyers struggling to save a down payment, Farmer encourages them to talk to their mortgage lenders and REALTORS® about financing options or down payment programs from groups like Idaho Housing and Finance Association (IHFA) to help people get into homes.
Additional information about trends within each county, and by price point, by existing vs. new construction, and by neighborhood, are now available in the June 2016 Market Report. This report includes an explanation of the metrics and notes on data sources and methodology.
Download the market snapshot graphics for Ada County and Canyon County:
# # #
This report is provided by the Ada County Association of REALTORS®, which began doing business as Boise Regional REALTORS® (BRR) in 2016. BRR is the largest local REALTOR® association in Idaho, with over 3,700 members and two wholly-owned subsidiaries — the Intermountain Multiple Listing Service, Inc. (IMLS) and the REALTORS® Community Foundation. This report is based primarily on the public statistics provided by the IMLS, available at: intermountainmls.com/Statistics/Static.aspx. These statistics are based upon information secured by the agent from the owner or their representative. The accuracy of this information, while deemed reliable, has not been verified and is not guaranteed. These statistics are not intended to represent the total number of properties sold in the counties or cities during the specified time period. The IMLS and BRR provide these statistics for purposes of general market analysis but make no representations as to past or future performance. || The term “single-family homes” includes detached single-family homes with or without acreage, as classified in the IMLS. These numbers do not include activity for mobile homes, condominiums, townhomes, land, commercial, or multi-family properties (like apartment buildings). If you are a consumer, please contact a REALTOR® to get the most current and accurate information specific to your situation.
1 Comment