Located near the foothills of the Rocky Mountains, Boise, Idaho consistently ranks highly among other metro areas for its quality of life and fast growth. Boise is a hub for many industries and a growing tech sector has helped boost the small city’s economy.
But like many areas of the U.S., the Boise housing market experienced elevated home prices, high buyer demand and a low housing supply. Mortgage rates have come down to the mid-6% range, giving prospective homebuyers with affordability concerns a little bit of relief as they jump back into the market.
“The way people were buying and selling homes in Boise changed a lot in 2023,” said Will Elfering, owner of Boise Home Offers. “For a few years before 2023, sellers had the upper hand because there were more people who wanted to buy homes than there were homes available. But now things are becoming more balanced for buyers and sellers.”
According to Elfering, home prices in Boise aren’t going up as quickly as they used to. Instead, they’re starting to stabilize.
Using information from the U.S. News Housing Market Index, we’ve compiled the data you need for a better understanding of the current state of the market. Here’s what you should know about how the Boise housing market has changed over the past year and looking ahead at 2024.
[2024-2028 Housing Market Predictions: A Gradual Thaw With Added Challenges]
How the Boise Housing Market Changed in 2023
Construction permits for both single-family detached homes and multifamily buildings with two or more units increased in 2023, based on data from the U.S. Census Bureau.
As of September 2023, 464 single-family home permits were approved in Boise — a more than 26% increase year-over-year. Permit approvals peaked in August 2023 with 741 approvals, down from a five-year peak of 928 in March 2021. Between August and September, permit approvals dropped by 37%.
Last year saw fewer multifamily housing permits compared with 2022; however, permit approval rates were more stable throughout the year. There were about 290 construction permits for multifamily housing in January 2023, down from a five-year high of 520 approvals in July 2022. As of September, there were 358 approvals, a 9% decrease year over year.
Boise Housing Supply and Demand
The Boise housing supply decreased in 2023, but it’s currently on an upward trajectory. Housing supply refers to the number of months it would take to sell the homes currently on the market at the current listing price. Six months is typically considered a balanced market where supply and demand are about the same.
There were 2.26 months of housing supply as of September 2023, down from 3.4 months the prior year, based on Redfin data. The U.S. national average is slightly above Boise, with approximately 2.52 months of housing supply during the same period, up from 2.4 months year over year.
Elfering noted that Boise could see some improvements in the housing supply. “More new houses are being built in Boise, and this helps because there aren’t enough homes for everyone who wants one,” he says. But prepare to pay more. “Building these new houses costs more money now because the materials to make houses and the people who build them are more expensive.”
The rental market is faring better in Boise. “The part of the market where people rent homes is still doing really well, and this shows that a lot of people still need places to live in our city,” Elfering says.
As of Jan. 24, the Mortgage Bankers Association’s seasonally adjusted Purchase Index increased by 8% compared with the prior week. On an unadjusted basis, the Index increased by 3% compared with the previous week and was 18% lower year over year. The recent drop in mortgage interest rates led to an increase in mortgage purchase applications, the MBA pointed out. Refinance activity is low, as there’s still little incentive for homeowners to refinance with rates at the current levels, according to the MBA.
Consumer sentiment in the U.S. was 67.9 out of 100 in September, according to the Survey of Consumers from the University of Michigan. This is a 9.3-point increase since the same time the year before. This suggests higher consumer confidence as mortgage rates drop, giving prospective buyers some relief.
Median Home Price in Boise
Buyers can breathe a sigh of relief as the median home price for single-family homes in Boise dropped to $473,000 in September, a 3.3% decrease year over year, based on Redfin data. However, Boise’s median home prices were well above the national median of $412,000.
Boise rental prices decreased by 3.4% in September over the last year, standing at $1,771 per month, according to Zillow Observed Rent Index data. Rent prices peaked in July, and have only come down slightly since then. Boise rent prices are lower than the national average of $2,047 in September 2023, a 1.4% increase year over year.
“In 2023, we saw the use of a variety of mortgage interest rate incentives by homebuilders in our market to help buy down mortgage interest rates that topped around 8%,” says Cody Hunter, strategic construction advisor at Real Estate Bees and a construction professional who specializes in the Boise area real estate market. “These incentives, along with lower housing inventory, and a continued demand and migration to the Treasure Valley, have buoyed home values leading into 2024.”
Boise is the most populous city in Idaho and saw growth as a pandemic boomtown. The Boise metropolitan statistical area was the sixth fastest-growing region in the country as of the 2020 Census. However, the Census Bureau’s annual American Community Survey found 237,000 households in the Boise region as of December 2022, a nearly 20% drop from 2021.
“For the Boise market, people don’t necessarily move here for the best home prices, they move here because of the way of life: family values, safety, adventure and freedoms are a few of the reasons people have migrated and will continue to come to the Treasure Valley,” Hunter says.
Nationally, construction costs in September were 1.1% higher than in 2022, according to the U.S. Census Bureau’s Construction Cost Index. This index accounts for builders’ costs when building new single-family homes. Construction costs peaked in November 2022 and came down in 2023. Since June 2023, construction costs have risen again, but not as sharply as 2022.
Interest rates were also up 0.72% over the last year, sitting at 7.62% for a 30-year fixed-rate mortgage in October. Since then, Freddie Mac’s Primary Mortgage Market Survey decreased to 6.64% for the same mortgage as of Feb. 8, 2024.
[READ: The Most Undervalued Housing Markets in the U.S.]
Unemployment Trends in Boise
More than 401,000 Boise residents were employed as of September 2023, an increase of about 19,700 over the previous year, according to data from the U.S. Bureau of Labor Statistics.
The unemployment rate was 2.9%, a 0.4% decrease during the same time period. Boise’s unemployment rate is lower than the national average of 3.8%.
Construction jobs are also up slightly, up to 8,000 in September 2023 from 6,700 the previous year. Over the last five years, 2,000 jobs were added in the Boise area.
The low unemployment rate has also contributed to a low number of delinquencies and foreclosures. Data from Black Knight shows that foreclosure activity increased slightly by 0.1% year over year to 0.2% as of September 2023, and delinquency increased by 0.4% to 1.9% in the same month. The delinquency rate describes loans 30 or more days past due but not in foreclosure. Foreclosure is the legal process that begins when a homeowner fails to keep up with mortgage payments.
Builder Confidence in Boise Improves
The National Home Builders Association and Wells Fargo Housing Market Index reported homebuilder sentiment in the Boise area was rated 35 out of 100 in October 2023, a 10-point increase over last year, when builder sentiment was 25 out of 100. Builder sentiment peaked in July at 54, but has since come down.
The Architecture Billings Index, an economic indicator for nonresidential construction activity, was rated 49.6 in July, down by 2.1 points over the last year. A score below 50 indicates a decline in firm billings from the previous month. While the current rating is lower, it’s still in line with normal fluctuations in the local market.
Boise Real Estate Market: Predictions
Elfering and Hunter both believe that Boise could see a more balanced market in 2024.
Elfering predicts a moderate increase in home prices driven by a balance in supply and demand, as well as a strong influx of new residents due to the city’s growing economy. Hunter says interest rates have begun to stabilize, and there’s a possibility that the Federal Reserve will lower interest rates in 2024, which will likely affect mortgage interest rates and generate an increased demand for housing.
“In light of an economic soft landing, interest rate stabilization and anticipated market demand, many builders in the Boise metro have already increased their new home construction starts and new community development, and we’ll likely see that trend continue throughout 2024, especially as sales/absorption occurs,” Hunter says.
In February 2024, the U.S. News Housing Market Index predicts that Boise will see just over 489 single-family homes and under 325 multifamily housing units approved for production. Over the last year, single-family and multifamily housing predictions have been relatively in line with reported numbers.
More from U.S. News
The Most Overvalued Housing Markets in the U.S.
What Kind of House Can You Buy for $2,500 a Month?
A Checklist for Moving to Your New Home
Boise Housing Market Forecast originally appeared on usnews.com
Update 02/09/24: This story was previously published at an earlier date and has been updated with new information.
