Boise’s once red-hot housing market is in the midst of a price correction as higher mortgage rates and record-setting home prices outpace local incomes.
But the metro area remains one of the fastest growing in the nation, with population and households increasing by 2.4% and 2.7%, respectively. So as mortgage rates begin to retreat, favorable demographic trends have buoyed demand, and builders have been working quickly to capitalize on the opportunity.
Realtor.com ranked Boise seventh for the most new-construction homes planned. New-home sales increased by 26.7% in Ada County in the first quarter, boosted by the limited supply of existing homes on the market.
Strengths
High mortgage rates have had a negative impact on existing inventory because homeowners are locked into their low mortgage rates. As a result, the market share of new homes has been growing. In Canyon County in the first quarter, half of home sales were new construction.
Weaknesses
As layoffs mount, there is growing unease about the economy. Job growth and unemployment are still favorable, but Idaho had the ninth highest layoff rate in the nation in the first quarter. Micron, one of Boise’s major employers, is looking to cut its global headcount by 10%.
Supply
Quarterly housing starts decreased 56.5% from the first quarter a year ago, while the number of available developed lots sits at 10,347 up 27.2% over the same quarter last year. In terms of supply/demand balance, the market area is 1.33% undersupplied.
Sales
New-home sales in the Boise metro area decreased 13.7% year over year to an annualized rate of 3,743 units in March. Over the past 12 months, 237 sales were attached units and 3,506 were detached. Existing-home closings for the 12-month period ending in March posted a year-over-year decline of 37.9% to an annualized rate of 11,184 units.
Prices
The average list price for a detached home in the Boise metro decreased 17.6% from 2022 to $474,610 in March, while the average list price for a new attached home decreased 13.9% over the same period to $370,583. Homes priced over $550,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 26.8% in March.
Economy
Total non-farm employment in the metropolitan statistical area increased 3.7% from the same period last year to 391,000 payrolls in February. There were approximately 700 more jobs in February compared with the previous month. The local unemployment rate increased to 2.6% in February compared with 2.5% in the previous month. February’s jobless rate is lower than it was this time last year when it stood at 2.7%. Zonda forecasts the region’s unemployment rate will finish the year at 2.5%.
Community
The current population for the Boise metro area is approximately 854,630 people. Population in the area is projected to increased by 2.4% in 2023. There are approximately 311,960 households in the region, which is up 2.7% year over year. Incomes increased by 7.9% from the previous year to $83,190.
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