Why Idaho Home Prices Continue to Rise Despite Interest Rate Hike!
Home prices in our area, like gas prices, are rising to historical rates. Median home prices in Ada County reached $595,000 last month, according to a release from the Boise Regional Realtors. Home prices increased by almost 24% from April 2021. Home prices have been a contentious issue due to the lack of affordable housing in our state. Despite the efforts by a variety of officials, home values continue to rise.
As we see more and more new construction throughout the state, those projects were a significant factor in the increased home prices. Those that can afford brand new homes made up a third of all sales last month, rocketing median prices to $645,000, a rise of 36.7% from last April.
What About Existing Home Sales?
Existing homes gained an additional value of almost 17% percent from last year, rising to a median price of $570,000. Low inventory seems to have once again been the cause for the increase in value in Idaho homes. Some realtors have told us that inventory is shrinking. The big question is will this summer's real estate market match last year's despite rising interest rates?
Mortgage rates have climbed back from the record lows we saw two years ago. A 5% rate to finance a home is now a good deal, where two years ago it was ridiculously high. Mortgage experts believe the rates will go higher, so why haven't we seen a price drop in the Boise region?
It's all about timing
“It’s important to remember that homes that closed in April likely went under contract in February and March, so we may not see the immediate impact of rates on prices for a few months,” explained Becky Enrico Crum, 2022 President of Boise Regional REALTORS®. “Pending sales, or those with an accepted offer that are expected to close in the next 30-60 days, may provide a better indication of how rates are affecting our market at this time.”
What's Next for our housing market?
That is the million-dollar question. The experts we've talked to believe cash buyers will continue to buy homes in our area. If interest rates continue to rise, home prices could decline due to a lack of demand.
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