What will the 2024 Boise Housing Market Look Like? (It will depend on these 3 factors)

As everyone knows, it has been a long time since we've had a "normal" real estate market.  Since the early 2000's we have roller-coastered from hot to cold to hot to cold again.  Although that 5 to 7 year pattern is typical of real estate everywhere, Boise has been among the fastest growing and most volatile markets for nearly 2 decades.  So… will Boise real estate track the subdued years of 2022 and 23 or return to the sales frenzy of 2019, ’20 and ’21?

Here are the key factors that will determine the answer to that question.

1. Interest Rates

Annual home sales in Ada County increased 230% during the 12-year period from 2008 to 2020.  However, in 2023 Ada County sold 38% fewer homes than it did the peak year.  One of the primary factors accounting for the remarkable drop-off was the rise in interest rates.

The Federal Reserve raised interest rates 11 times in 2022 and 2023 — the fastest pace of increases since the 1980s.   As a result, mortgage rates sky-rocketed.  Specifically, in January of 2022 the average 30-year fixed rate mortgage was 3.22%, but by November of 2023 the rate was 7.66%.

On a $500,000 mortgage, that represents a monthly payment increase of $1,417.  No wonder so many potential buyers decided to stay put for a while.

2. New Move-Ins from Out of State

Although we have not yet seen reliable 2023 move-in numbers, it is well-known that Idaho is growing fast.  In 2022, Idaho saw a 1.8% increase in population--second only to Florida (1.9%).

According to data from the Census Bureau, Idaho’s population increased by 87,949 in 2022.  The top 3  states people relocated from are

1. California
2. Washington
3. Oregon

Although we won't address the reasons people are moving (particularly from these states) will not be addressed in this blog, it is safe to say that those reasons still exist.

3. Housing Inventory

Did you know that from 2020 to 2021, Ada County home sales actually decreased 11%?  And that was before even the first interest rate hike.  Why?  Because Boise literally ran out of houses to sell. In the summer of 2021, available homes fell below 300 and the average days a home sat on the market before receiving an offer fell to just 4 days.  In the first week of 2024, there were 1400 available homes.  However, that represents just over two months of inventory.  If rates drop and move-ins continue, current inventory levels will be insufficient to handle demand—driving prices up again.

In short

• If interest rates continue to drop, more buyers will enter the market AND
• More buyers will be entering the market as people continue to move to Idaho from out of state
• Unless a large number of existing home owners are willing to sell AND new construction continues to increase, the Boise area will not have enough homes to fill the demand and prices will increase.

Stay tuned for our 2024 Ada County home sales prediction coming out the first week of February.  (Spoiler alert—at this point we are predicting a stronger 2024 market than we saw in 2023.)