July 2016 Boise Real Estate Market Update

Here is to enjoying this beautiful summer! Even with the rising home prices and reduced inventory of the last few months, pending home sales are down from last month, indicating sales will be slower in July and August. This peaking of home sales in July has been the trend since the market bottomed-out in late 2010. This does not mean prices will fall, but the tight market will soften.

Here is a review of the 2016 year-to-date pending home sales in Boise:

• January: 1,056
  % Change: (baseline number)
• February: 1,305
  % Change: +23.6%
• March: 1,559
  % Change: +19.5%
• April: 1,722
  % Change: +10.5%
• May: 1,810
  % Change: +5.1%
• June: 1,709
  % change: -5.9%

The softening of the market could be a good sign for first-time home buyers and possibly investors.  Now is a good time to take advantage to lock in a low interest rate for the next 15 to 30 years.

On a final note, to touch on the looming question of, “Are we in another housing bubble?”, the answer is, No! 

When we saw prices peak ten years ago, real estate was much less affordable than it is today. Many of the purchases at that time were being made by investors buying their fourth, fifth or tenth properties. A good part of the financing was based on low or no down payment loans with a complete disregard for incomes and credit scores. Today, the majority of the demand is from real buyers who intend on living in the property. To get a home loan- a down payment, credit history, and income are required. Only a small part of real estate purchases are being made by investors.

In its simplest form, real estate market demand is driven by population. In Boise, the population has increased by 9% from 2006 to 2015. In Meridian, Idaho the population has increased by over 50% in the same time frame. That is a lot of new demand.