Reading Time: 4 minutesEvaluating the Boise Real Estate Market
Inflation, recession, pandemic, housing market crash—there are a lot of scary words thrown around in the media and conversations these days. And, for people living in Boise, Idaho, it leaves one question on a lot of people’s minds: will the Boise housing market crash in 2023?
To answer this question and dive further into the state of the Boise real estate market, we sat down with Jordan Thompson. Jordan is the CEO of Oakmont Custom Homes, a local company committed to building premier custom homes in Boise.
Jordan’s sitting right in the middle of all the fluctuations and challenges with the building and real estate markets, so he’s the perfect person to discuss the Boise real estate market with.
Here’s Jordan’s take on if the Boise housing market will crash in 2023 plus other insights into what’s going on.
Will the Boise Housing Market Crash in 2023?
Short answer? Probably not. But the question of “will the Boise housing market crash in 2023?” is more complex than that. Jordan believes there won’t be a housing market crash in 2023, but there is a softening and compression to pre-COVID growth numbers. The pandemic was an isolated, unexpected event that—combined with demand in the Boise housing market—caused massive price inflation. And, now, the market is simply compressing back to normal growth levels before the pandemic.“There was this insane inflation of numbers, this insane appreciation of housing prices because of the COVID pandemic and the demand on the Boise housing market. And all it is doing is compressing back to normal growth levels before the pandemic, the outlier event we had.” -Jordan Thompson, CEO Oakmont HomesIn contrast, a true market crash would result in a 20% (or more) housing value reduction. That is not currently happening in Boise, as the year-over-year prices show an average decrease of just 4% to 5% in Boise, as of October 2022. So, will the Boise housing market crash in 2023? Again, not likely. But prices are compressing to pre-pandemic growth levels; 70% of homes for sale in Boise had a price drop earlier this year, the later half of 2022 has been more stable.
Factors Impacting the Boise Housing Market
There are three major factors that are impacting the price compression in the Boise market right now:-
- Interest rates: Jordan believes this is the biggest factor impacting housing markets right now. With the sixth interest rate hike of the year announced in November, borrowing money is now more expensive than anything in recent history. Not only does it directly impact the affordability of houses through rising mortgage rates, but all short-term debt is becoming more expensive, with many Americans feeling the economic pinch.
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- Economic uncertainty: There is a general uncertainty about the US economy right now. The pandemic and other global movements continue to make the economy unstable. More than that, consumers are worried and feel the uncertainty, so it’s both a reality and a mindset. Despite a slight uptick in recent months, the last few years have seen a significant decline in consumer sentiment, indicating concern and worry about the economy.
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- Unemployment: This fits into the general economic state, but unemployment is a specific problem currently impacting many people. Without job security, most people feel that it’s not a good time to buy a home. Unemployment rates are 3.7% across the country and 2.9% in Idaho as of October 2022. Both figures are a slight uptick from earlier in 2022.
“As there’s uncertainty, unemployment rising, and people are worried about their jobs and job security—they don’t feel like it is a good time to buy a home.” -Jordan Thompson, CEO Oakmont HomesHypothetically speaking, if one of those things gave (i.e., interest rates decreased or housing prices decreased), the market would be more affordable again. But, with the combination of high prices and high rates, many people can’t afford the monthly payments necessary to purchase a home. Jordan brought up an additional factor that impacts the situation. Inventory levels have not increased like people predicted they would. Because of this, there are fewer houses available—supply is staying flat, even decreasing in some areas. This phenomenon contributes to the stabilizing of the market and prevents prices from decreasing significantly (crashing). So beyond economic conditions, a change to the supply of housing is also a factor that impacts if the Boise housing market will crash.
Is Boise a Good Market to Buy In?
Let’s summarize where we are so far: Will the Boise housing market crash in 2023? Unlikely. What’s happening with the Boise housing market? There’s compression to pre-pandemic growth levels. Prices are not at the same inflationary level as during the pandemic and economic uncertainties and rising interest rates are impacting affordability. The last question we want to know is this: Is the Boise market good to buy in? Jordan believes so. He thinks that Boise is poised for upward growth because people still want to live there. Boise is more affordable than states like Washington or California, and people are continuing to move here.“I would say [Boise] is poised for upward growth because it is still a market that people want to be in.” -Jordan Thompson, CEO Oakmont HomesThe interest in Boise is obvious by the demand for rentals, which means people are still moving here. Demand has caused the average rent in Boise to increase by nearly 25% in 2021, though it remained more stable in 2022. People want to live in Boise, which means there’s demand for the market. But, because of the lack of affordability in the housing market, they’re renting until the time is right to buy.
