When COVID-19 first hit the US last Spring, it was a shock. Many industries had to slow down and are still waiting for the upcoming vaccine to get back into action, but luckily not every market got hit too hard. The real estate market has adapted to recent changes with virtual tours, virtual open houses, and virtual sales. Sellers have benefited from the last few months, and hot markets have only gotten hotter: Idaho has seen continued growth even before 2020, and now it’s projected to be one of the top housing markets to watch in 2021.
Here are some of the most important trends that could impact the Idaho housing market as we move into a Post-Covid world.
Housing Prices Will Climb
Home values in Idaho were already climbing before Covid-19, and they’ve only continued to rise. From December 2015 to December 2019, home values in the Boise Metropolitan Area jumped from $206,000 to $317,000, a 53% increase in four years. From April 2020 to January 2021, home prices have increased from $329,000 to $387,000, an 18% increase in just ten months!
This trend is expected to continue: overall prices could rise by 5% by the third quarter of 2021, compared to only 3.5% in Q3 of 2020. Darius Bozorgi, CEO of Veros Real Estate Solutions, put it bluntly last October: “During the next 12 months, no major metro area is forecast to show notable home price depreciation.” Not only that, but in the same report Veros listed Boise as the top strongest market for their 12-month prediction, forecasting a 12.1% increase in local home prices by Q3 of 2021!
Mortgage Rates will Still Encourage Buyers
Historically low mortgage rates have contributed to the market’s strength. Low rates make it safer and easier for buyers to consider purchasing homes: mortgage applications to purchase homes increased by 27% in August of 2020, compared to the previous year.
While mortgage rates may not stay at their historically low point right now, they will likely remain low through 2021. The Federal Reserve has confirmed that it expects to maintain a near-zero short-term interest rate at least into 2023. The Mortgage Bankers Association found that 30-year fixed mortgage rates averaged 2.8% in 2020 and predicts a slight increase to 3.2% by the end of this year.
While refinancing will likely slow down later in 2021 with an increase in mortgage rates, home buying is likely to remain attractive. In the words of Michael Fratantoni, chief economist of the Mortgage Bankers Association, “even if mortgage rates are going to be high enough to curtail refi, they’re still going to be low enough to keep housing affordable.” Borrowers will want to find plans that account for the possibility of a slight increase in mortgage rates but should remain encouraged by low borrowing costs.
Inventory Remains Low
The 2020 National Migration Study found that Idaho was the top moving destination of that year, with 70% of moves being inbound and 75% of movers settling into Boise! Between low mortgage rates and this population growth, the Boise housing inventory has been at an all-time low—at the start of December 2020, only 154 existing homes were available to buyers.
While home values continue to increase, making this a great market for sellers, the low inventory does mean that many buyers will struggle. The competition will be fierce as newcomers continue to make their way to the Gem State; realtors should prepare potential buyers (especially first-time buyers) for the expensive offers made on homes in this tight market.
Overall, the Idaho housing market is looking strong. While vaccinations against COVID-19 may put an end to some of the housing protections—such as frozen mortgages—payments are likely to come back slowly over some time while mortgage rates are expected to remain low. While prices are high and buying remains competitive, Boise has a high quality of life, a strong job market, lots of students interested in renting, and low taxes that all contribute to continuing long-term growth.
As a real estate agent, you must offer up-to-date information to your clients and know how to navigate a competitive market. Continuing Education keeps you informed on the latest developments and prepares you for new scenarios and issues that you might face in the dynamic world of real estate. Register for online classes with Boise Real Estate School today to build the skills you need to thrive in the post-Covid Idaho market.