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Do you think their is still a housing bubble in Boise?
It is hard for me to tell as a newcomer. I just get the impression from this particular board that lots of people from California are coming here to buy real estate and are looking for civil service type jobs. Can the boise economy really long term support these housing prices with wages based on so many non-producing jobs? Or am I misunderstanding and it is really about pushing more boiseans into two income households, a long term change that will sustain price levels but make everyone sad and poor?
I'm shopping for a house and this is what's going on in my mind..
As soon as the equity rich from other states fully recover, they will look to invest here in droves. This will drive the price of real estate up quick and fast. The local economy won't increase wages that fast. You'll see another crash, though nowhere near what we had in 2008.
The funny thing is... if you have some time to kill, you should go back and read the posts in this forum about the housing market BEFORE the recession. Dig up posts between 2005-2007. Read how naive most of the posters were about how the market crash wasn't going to hit here. It makes for some funny reading.
There are some interesting things going on with housing in Boise. There are a lot of building projects going on. Not as much as there was in the early 2000s, but there is still a fair amount of building going on. It all seems to be apartment complexes of various sizes, business buildings and super swanky houses. There has been a 10-20% jump in the cost of rent in Boise. In June of 2014 a 3 bedroom house with a yard and driveway could be had for $800-$1200 per month. now $1200 is the going rate for a house that has one bathroom and maybe a garage or out-building.
I don't really know what's behind it, but housing is going through a shift of upward prices. I think that you may be onto something questioning the sustainability of housing in Boise. Because the going rate of pay is becoming less and less compatible with the going price of housing. I suspect that the rent increases are related to tax season; while people have some cash to work with they are looking to make big moves and supply and demand pretty much explains it from there. Tax season aside though, it seems as though every day you spend a little more and get a little less for everything in Boise.
There are some interesting things going on with housing in Boise. There are a lot of building projects going on. Not as much as there was in the early 2000s, but there is still a fair amount of building going on. It all seems to be apartment complexes of various sizes, business buildings and super swanky houses. There has been a 10-20% jump in the cost of rent in Boise. In June of 2014 a 3 bedroom house with a yard and driveway could be had for $800-$1200 per month. now $1200 is the going rate for a house that has one bathroom and maybe a garage or out-building.
I don't really know what's behind it, but housing is going through a shift of upward prices. I think that you may be onto something questioning the sustainability of housing in Boise. Because the going rate of pay is becoming less and less compatible with the going price of housing. I suspect that the rent increases are related to tax season; while people have some cash to work with they are looking to make big moves and supply and demand pretty much explains it from there. Tax season aside though, it seems as though every day you spend a little more and get a little less for everything in Boise.
I haven't seen any hard numbers but it seems rent is rising at a faster pace than home prices. This is probably because home prices for locals are out of reach, they have damaged credit, and/or no down payment. There is some shift in the American dream as a whole as well. Many don't want to buy because of past experiences or they just aren't comfortable or interested in owning a home.
As far as home prices, I'm by no means an area expert but it seems like this housing boom is more on a neighborhood level and less across the board. The Boise Area really has an infinite amount of land in relative terms with little regulation so to expect widespread housing gains isn't realistic. Today people are more neighborhood-centric. I mean, look at Harris Ranch where a townhome costs $300k plus. You could go almost anywhere else in the Valley and get a huge home with land for less. When things got hot in California in the last few years it was the exact same scenario, specific areas saw price gains and others stayed the same or even continued to lose value.
Long story short...I don't think a catastrophic crash like the great recession will happen again. I would just urge any buyers to consider their home a long term investment, not a cash cow or an ATM.
This forum before the recession was festering with lecherous realtors. The professionals we have left on the forum that are active today are much more balanced and realistic. I can't believe some of the stuff people were saying and doing here in Boise pre-recession. You're completely right; this place was HILARIOUS then.
Honestly, as a real estate agent, I can attest most (not all) agents really believed that nonsense as many found themselves in the same situation as their clients. At least down here. I honestly had a hard time selling when I started back in 2006. I knew what was going on was messed up.
I don't know if we will see the sort of housing bubble and bust we say in 2007/2008. Thank God for that!
As a lender, I can tell you that all the exotic loan programs that allowed speculators to buy homes with no verification of income, assets or employment don't exist today. The ability for anyone to buy a home an not have to verify anything contributed to demand and the upward prices of the time. I believe at one point, more than 25% of home purchases in the treasure valley were to investors.
I think it always comes down to only buy what you can afford and not worrying about being left behind or keeping up with the neighbors. At some point, the prices rise to a point where enough people way no and they reach an equilibrium point.
You don't think we'll reach that level of investor purchases again?
I disagree. It's a bit like global economics. Investors will seek out places with relatively cheap housing prices (like ours) and relatively high housing demand (like we do), and they'll swarm in like locusts until the housing prices have reached beyond affordable.
I'm not sure Boise was hit as hard by subprime lending as it was poor investment timing / flipping. The latter activity is already coming back here.
I haven't seen any hard numbers but it seems rent is rising at a faster pace than home prices. This is probably because home prices for locals are out of reach, they have damaged credit, and/or no down payment. There is some shift in the American dream as a whole as well. Many don't want to buy because of past experiences or they just aren't comfortable or interested in owning a home.
This is happening all across the country (I am retired from the real estate industry and keep tabs on the trends). Rents are rising faster than equivalent house prices and mortgage payments as the economy slowly improves and more households are formed (as the boomerang kids start moving out of their parents' basements, for instance).
The American dream has shifted; I rent and don't care if I ever own another house. And one other factor: the housing stock in most markets has been stagnant, in terms of new builds, for years. The economics, of course, made sense after the crash, but as the economy improves, the housing stock (rentals and new construction) is under pressure, and that is part of the price rises you are now witnessing.
Interest rates have been in a sideways move for a couple of years now, but you better believe that in a few years, rates will be going up, and rather significantly - the Fed has guaranteed that. That will make for a strong headwind in home prices, so whether we are in the early stages of another bubble in housing or not, there are obstacles on the 3 to 5 year horizon to unfettered enthusiasm like pre 2006 that should keep house prices in check.
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