The following analysis of select counties of the Idaho real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
Regional Economic Overview
Year over year, Idaho added 24,900 jobs, representing a solid growth rate of 3%. All of Idaho’s metropolitan areas saw year-over-year nonfarm job gains. Pocatello experienced the greatest increase at 5.5%, followed by Boise (3.7%), Idaho Falls (3.1%), Coeur d’Alene (2.9%), Twin Falls (.4%), and Lewiston (.3%). The state unemployment rate was 2.6%, matching the rate of the first quarter of 2022. The Boise metro area matched the state’s jobless rate of 2.6% and equaled the rate during the same period in 2022. This is rather impressive given that the labor force has grown by over 9,800 persons, or 2.4%. Clearly new jobs are being created at a very solid pace. My current forecast is that employment will rise by 17,000 jobs, which would represent a growth rate of 2 percent.
Idaho Home Sales
❱ In the first quarter of 2023, 4,205 homes sold, which was down 19.5% from the first quarter of 2022 and 2.3% lower than in the fourth quarter of last year.
❱ Although listing activity was significantly higher than the first quarter of 2022, it was down 27% from the fourth quarter of 2022. All counties had fewer homes on the market.
❱ Compared to the same period in 2022, sales fell in all but two markets covered by this report. Compared to the fourth quarter of last year, sales fell in all the Northern Idaho markets, but rose in Canyon, Ada, and Blaine counties in the southern part of the state.
❱ Even with fewer listings, pending sales in the quarter were up 36.9% from the fourth quarter of 2022, suggesting that sales growth may improve in the second quarter of this year.
Idaho Home Prices
❱ The average home price in the region fell 6% year over year to $576,130. Prices were 5.4% lower than in the fourth quarter of 2022.
❱ Compared to the fourth quarter of 2022, prices only increased in Shoshone County. In the southern part of the state, prices rose in Valley, Payette, Gem, Boise, and Blaine counties.
❱ Both the northern and southern market areas saw counties split, with prices rising in around half while contracting in the other half. Year over year, prices fell 6.4% in the south and 4% in the north.
❱ Median listing prices in the first quarter were up by only .9% over the fourth quarter of last year. Interestingly, listing prices were up more than 10% in the populous Ada County, which many believed would see significant downward price pressure after the rapid growth over the past few years.
Rates in the first quarter of 2023 were far less volatile than last year, even with the brief but significant impact of early March’s banking crisis. It appears that buyers are jumping in when rates dip, which was the case in mid-January and again in early February.
Even with the March Consumer Price Index report showing inflation slowing, I still expect the Federal Reserve to raise short-term rates one more time following their May meeting before pausing rate increases. This should be the catalyst that allows mortgage rates to start trending lower at a more consistent pace than we have seen so far this year. My current forecast is that rates will continue to move lower with occasional spikes, and that they will hold below 6% in the second half of this year.
This video shows Windermere Chief Economist Matthew Gardner’s Top 10 Predictions for 2023. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Matthew Gardner’s Top 10 Predictions for 2023
1. There Is No Housing Bubble
Mortgage rates rose steeply in 2022 which, when coupled with the massive run-up in home prices, has some suggesting that we are recreating the housing bubble of 2007. But that could not be further from the truth.
Over the past couple of years, home prices got ahead of themselves due to a perfect storm of massive pandemic-induced demand and historically low mortgage rates. While I expect year-over-year price declines in 2023, I don’t believe there will be a systemic drop in home values. Furthermore, as financing costs start to pull back in 2023, I expect that will allow prices to resume their long-term average pace of growth.
2. Mortgage Rates Will Drop
Mortgage rates started to skyrocket at the start of 2022 as the Federal Reserve announced their intent to address inflation. While the Fed doesn’t control mortgage rates, they can influence them, which we saw with the 30-year rate rising from 3.2% in early 2022 to over 7% by October.
Their efforts so far have yet to significantly reduce inflation, but they have increased the likelihood of a recession in 2023. Therefore, early in the year I expect the Fed to start pulling back from their aggressive policy stance, and this will allow rates to begin slowly stabilizing. Rates will remain above 6% until the fall of 2023 when they should dip into the high 5% range. While this is higher than we have become used to, it’s still more than 2% lower than the historic average.
3. Don’t Expect Inventory to Grow Significantly
Although inventory levels rose in 2022, they are still well below their long-term average. In 2023 I don’t expect a significant increase in the number of homes for sale, continue reading