Q1 2023 Idaho Real Estate Market Update

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.

Mortgage Rates

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.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

The housing market has certainly slowed as it adjusts to higher mortgage rates and significantly lower affordability. Over the past few months, I have heard suggestions that the Idaho market was sure to crash after the rapid increase of prices through the pandemic period, especially as financing costs are more than double what they were in 2021. Although prices are adjusting in many markets, I do not expect to see any systemic declines for one simple reason: supply levels are still remarkably low and are not likely to rise to a level where any market is oversupplied. This will provide a floor for prices and stop them from falling much further than where they are today.

Slower sales activity, lower prices, and longer days on market favor home buyers. However, lower inventory levels, higher pending sales, higher absorption rates, and higher listing prices favor home sellers. As such, I am leaving the needle close to the midpoint of neutral territory. Although buyers are still able to find deals, sellers of well-positioned, appropriately priced homes will still see competition for them, given how few homes are available.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.