Housing Prices Won’t Decease Any Time Soon in Boise — Here’s Why

idahostatesman.com

Quick question for you: “What is the most common sign you see in the front yard of houses in Boise?”

If you answered, “For Sale,” you are wrong. That used to be the case, where houses would get listed in the local Multiple Listing Service (MLS), and then the listing agent would have a For Sale sign planted in the front yard. Most Real Estate agents have gotten away from what used to be the standard sign, like the one below

boisedev.com

That sign would indicate that the house was FOR SALE, just as the sign says. But today’s hot real estate market makes those signs wither a bit misleading, or too much work to maintain. Why? Because houses don’t stay on the market for very long before an offer has been accepted, or at least a pending offer is accepted.

activerain.com

The business-savvy agents today use the sign primarily as a marketing tool because very few of the buyers actually come from drive-by house hunters. The sign has the name of the real estate company; typically the agent; a phone number, and an email address. There might be a FOR SALE topper on the sign, but, if so, lately it has been quickly swapped out for a SALE PENDING topper.

A recent article by Keller Williams Realty Boise showed just how dynamic the real estate market has been in Boise.

• Median List Price: $491,000, which is up 34.6% from one year ago
• Media Sold Price: $500,000, up 38.9% from one year ago
• Days on Market: 5, down 5 from last year (so even last year, houses were on market for only 10 days)
• Months of supply of houses: 0.63 (or 19 days), down 0.22 (about 7 days) from a year ago.

Here we go again with basic economics of supply and demand. We are seeing the supply of available houses decreasing while we are seeing more people moving into Boise. So, as the demand continues to go up, even with a constant supply (which it isn’t), prices would go up. But with both factors changing -- increasing demand AND decreasing supply, that harkens a double-arrow up for prices, which is shown in the 38.9% increase in the median sold price for houses in Boise in the past year.

“Median” price is not the same as “Average” or “Mean” price. In mathematics, the Mean is the number you get when you add up all the values and then divide by the number of values. In the case of housing prices, if you had a few houses that sold for $5,000,000, those would be called outliers (because they are way out of the range of most of the values), and they would pull the average up.

The media is the value in all of the values for which there is an equal number of values above it as well as below it. So with the case of those super-expensive houses, they would not impact the media value because they are just a few values on the high end. What the Keller Williams article is saying that in the past year, there have been as many homes that sold in Boise for over $500,000 as sold for a price under $500,000.

The year’s data for the prior year had the median price at about $360,000, much lower than the half-million dollar mark.

Low interest rates are also a factor in Boise, with the same Keller Williams article showing the past year’s average 30-year fixed mortgage rate at 2.98%, down 0.18% points from last year. Lower interest rates have been an encouraging factor for people to stop paying rent and purchase a home.

Will housing prices stop skyrocketing in Boise?

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