Revealed: Boise’s Real Housing Crisis That No One is Covering
Historically Spring is the start of the house selling and house buying season. Gone are the low-interest record rates that fueled Boise to the country's most overvalued and hottest housing market. Yesterday's two percent interest rates have been replaced by today's five percent interest rates for a thirty-year home mortgage.
Bloomberg has created a stir locally with an opinion piece that says the Boise housing market is beginning to wobble. We've heard those stories before, and if you talk to local real estate agents, which we have, they tell us that the problem is not a lack of demand for homes in our area but a lack of inventory to sell to prospective homeowners.
The housing market in our area reflects the law of supply and demand: the less supply, the more need for homes or anything of value. Median home prices in Ada County are moving closer to the $600,000 range, followed by Canyon County homes nearing $500,000.
Do you know a first-time home buyer who can afford a home worth over half a million dollars? Idaho is a state that ranks 43rd in median wages. As reported here, law enforcement cannot hire new officers because wages cannot keep up with home prices.
It is nearly impossible for wages to keep pace with rising home prices. Last year, Idaho's home valuations rose over thirty percent. When's the last time anyone received a year-to-year pay raise close to thirty percent?
The wage vs. home valuations is not unique to Idaho law enforcement. A young mother shared her frustrations with us here, concerned that her children and grandchildren will not be able to afford to live in Idaho.
A Slowdown or A Shutdown?
The Motley Fool, under the headline, 'How Likely is a Real Estate Market Crash,' compares today's housing boom to the last one that led to the biggest real estate crash in history. The Fool accurately details the increased regulations that resulted from the housing crash. If you've bought a home since the crash, you most likely have noticed more red tape, and more documentation of income are now needed before getting that loan approval.
The crisis was so bad that the entire market stopped building homes. Time magazine ran a cover store asking 'Is Home Ownership Obsolete?' The key for Boise maintaining its market value will be determined if the flow of Californians continue to arrive with all cash offers on homes.
Unfortunately the rising interest rates will continue to keep working class Idahoans out of the homes of their dreams or even an affordable alternative.
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