Idaho’s housing market is largely stuck in an expensive place, as is the nationwide market, with high interest rates keeping many people from buying and selling.
“We’re all just kind of sitting here frozen in place, waiting for this thing to unthaw,” Idaho Department of Labor Economist Sam Wolkenhauer said.
Wolkenhauer on Tuesday provided an overview in a Department of Labor webinar of local and national housing market conditions and how the current boom in housing prices compares to the boom immediately preceding the Great Recession of 2008. Luckily, the conditions this time are different, Wolkenhauer said, and there’s nothing to indicate another dramatic tank in the market in the near future.
Housing prices have skyrocketed in the U.S. and Idaho, with the median listing price of a single-family home in the state sitting at just over $500,000, which is above the national median of around $430,000. Idaho’s average income is lower than the national average, which puts housing out of reach for many residents. Idaho’s median household income was $72,785 in 2022, according to the most recent data from the U.S. Census Bureau.
The ratio of housing prices to income in Idaho is about 7 to 1, he said. The typical goal to have affordable homes is to have a ratio of around 3 to 1, he said.
“When you contextualize our abnormally high home prices against incomes in the state, housing is clearly unaffordable in Idaho for many, many households,” Wolkenhauer said. “As so we can come to this very firm conclusion that housing affordability and housing availability are really at record lows in Idaho.”
With the high mortgage interest rates and high prices, many people are choosing not to move. Wolkenhauer cited a University of California Berkeley and UC Irvine study that estimated 660,000 Americans who would have moved between late 2022 and 2023 did not because of the high mortgage rates.
The Federal Reserve sets the interest rates for banks to borrow from each other, which can impact mortgage rates. While Federal Reserve officials have indicated that they may soon start slightly decreasing interest rates , Wolkenhauer said he thinks it’s unlikely mortgage rates would decrease enough to significantly change behavior.
This has also impacted labor mobility — or the ability for workers to move to find new jobs.
“You go from 2021, which is sort of this wild west of all-out telework, to 2024, where telework is really evaporating quickly and people can’t afford to physically move because of the interest rate differential,” he said.
The inventory is getting somewhat of a boost from new construction. Idaho has seen a steady increase in residential building permits over the last decade, however much of this is catching up from the housing crash of 2008.
“This increase reflects Idaho trying to dig its way out of a deficit,” he said.
Building activity plummeted in Idaho in the 2010s, just before the state’s population really began to skyrocket. The financial crisis also severely impacted construction employment, which didn’t recover to pre-2008 levels until 2021.
For those who already own homes and are locked into a lower mortgage rate, there’s historically high levels of real estate wealth. Across the country, American households own around $45 trillion in real estate assets. Those Americans are largely older, with people age 70 and older owning about a third of the real estate.
In 1990, people under 40 owned about a quarter of all real estate. Now, that age group accounts for about 12% of home ownership, Wolkenhauer said.
Because many of the homes are owned by older residents, this could mean that there might be a lot more turnover of housing in the next decade, Wolkenhauer said.
Renters in the U.S. and Idaho have also been facing steep costs, although, since 2020, rent hasn’t risen quite as quickly as home prices. In Ada, Bannock and Kootenai counties, more than half of renters are considered cost burdened, meaning they spend more than 30% of their income on housing.
There’s been some relief in the last five years with several multi-family projects coming available in the U.S. There’s been a surge of construction activity for multi-family units, but much of this isn’t new construction and is instead a backlog of projects being completed. New building permits for multi-family units in Idaho have been declining recently after increasing between 2023 and 2024.
“Once those are all completed, that supply surge is going to slow down,” Wolkenhauer said.
Wolkenhauer said the “silver lining” in the analysis is that while the country is experiencing a rapid increase of prices at a similar pace to the run-up preceding the financial crisis of 2008, the conditions now are different.
Unlike today, in 2006 and 2007, there was a lot of buying activity, especially with people taking out mortgages they couldn’t afford.
“It had a lot of kinetic energy that was driving prices up,” Wolkenhauer said. “Today we have a supply constraint. … In essence, the market is, once you look past the veneer of high prices, the market is sort of the literal opposite of what you had in 2007.”
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