Bellwether Housing Market Boise Shows Signs of Deflating
There is a leveling off of prices in Boise, which led all markets in last year’s surge.
Two trends that were fueling each other like tornadoes touching down in the same place simultaneously—millennials migrating from urban centers to smaller markets and spiraling housing prices—may be colliding and sputtering out at the same time.
Ground zero for what could be a leading indicator of an approaching housing market slowdown is Boise, ID.
Housing prices in Boise, a millennial magnet and red-hot tech market that boasted an affordable, idyllic quality of life amid scenic grandeur, took off like a booster rocket during the first half of last year, leading the nation with a 4.1% surge in June.
But during Q4 2021 and Q1 2022, the home price surge in Boise has deflated like a balloon with a hole in it, recording a paltry increase of 0.4% last month, according to Zillow data reported by Bloomberg this week, making it the first of the country’s top 100 housing markets to approach negative growth.
Inflation popped the balloon in Boise, and the lack of affordability it creates is now slowing down the stampede of millennials to Idaho’s capital.
According to Oxford Economics, Boise home prices are now about 70 percent higher than the median household income of local residents, the highest percentage among US markets that Oxford ranks.
The median sales price of homes in Ada County, ID, which includes Boise, reached a record high of $575,000 in March, a 22.6% increase from the previous year. The rise in housing prices in Boise was led by sale prices for new construction, according to a report last week from KTVB7.
Median sales of new homes were $606,050, while the median price of resales reached $555,0000, KTVB7 reported.
Researchers at Florida Atlantic University and Florida International said home prices in the Boise metro have risen more than 78% above their long-term income trend, the largest divergence in the US, Bloomberg reported.
In January, GlobeSt.com reported that the two Florida universities, which monitor housing prices in 100 US markets, had identified Boise as the nation’s most overvalued market at the end of 2021. At the end of last year, Boise buyers paid a premium of 76.39 percent, followed by Austin at 62.33 percent.
The inflationary spiral of housing prices has begun to cool off markets across the US, as first-time buyers who increasingly have been squeezed out by a nationwide shortage of inventory now also are being priced out of medium-sized secondary markets like Boise.
GlobeSt.com reported this week that home-price appreciation out-paced weekly wage growth in the first quarter of 2022 in 81% of US counties, according to numbers crunched by data analytics firm ATTOM, with some of the hottest markets in the US leading ATTOM’s list, including counties located in Los Angeles, Houston and Phoenix.