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In the housing market, inflation usually means there are more houses for sale than there are buyers.
Inflation was the term that was used to describe the home construction bubble that popped and started the Great Recession of 2008.
That recession created the over-valued shortage of homes that exists today.
If the inflation had never happened, now home building would have continued in Boise uninterrupted but slowed naturally to buyer demand, so there wouldn't be a housing shortage now.
Inflation and over-value are two entirely different things.
As long as there are more buyers than there are houses, housing will be over-valued. If inflation sets in, there will be more homes on the market than there are buyers for them.
Right now, there is no inflation at all. But there's exceptionally high demand at a time when there are so many materials shortages I wouldn't count on home prices to drop for at least 10 years in the future.
An if the southwest continues to heat up and drought out, the housing demand may never drop in Idaho for the rest of my life. Or yours, either.
RE how study authors determine "overvalued" -- this is quoted from the Fortune study (paywall):
Quote:
But Bordia illustrates how the payments buyers must make each month based on the home’s price, their incomes, and the rates on their 30-year mortgages have shifted considerably in recent years, as all three of those factors have changed. When the payments get too high relative to the family’s income, housing is deemed overpriced; when they take a smaller share of mom and dad’s paychecks than in most periods, the market swings to undervalued.
So a $500k home in the San Francisco Bay Area is "affordable" due to high local wages, whereas the same home price in Boise is "unaffordable" because local wages are lower. This analysis may have made sense a few years ago, but not sure now. Is there really a local wage with remote work?
Don't get me wrong, this is a terrible thing for locals that cannot compete with remote workers, it's nothing to celebrate. And I would actually prefer to see prices stagnate or even drop for a while. However that's not really happening yet. As of today there are essentially zero homes for sale in Boise's North End, West End, and Warm Springs neighborhoods. There are a few more further out such as West Boise, some of which have been on the market for a relatively long time (> 2 months). IMO, these were homeowners that saw dollar signs and overpriced and are now having to drop their price.
Perhaps things will cool off after all the remote workers that want to be here move here, at which point local wages will dominate as new supply is built. One can hope. However, I remember when parts of coastal California were deemed "overpriced" in the early 2000s... prices are now about 3x higher.
Boise's RE market is supposed to be one of the top markets again in 2022 with increasing values.
It looks like our neighbors in Salt Lake and Spokane are projected to be right along with Boise.
Of interest is that the RE market in the SLC area is also considered overvalued. It is probably fair to say that any smaller city in the West that is growing into a large city is considered overvalued at some point in time.
RE how study authors determine "overvalued" -- this is quoted from the Fortune study (paywall):
So a $500k home in the San Francisco Bay Area is "affordable" due to high local wages, whereas the same home price in Boise is "unaffordable" because local wages are lower. This analysis may have made sense a few years ago, but not sure now. Is there really a local wage with remote work?
Don't get me wrong, this is a terrible thing for locals that cannot compete with remote workers, it's nothing to celebrate. And I would actually prefer to see prices stagnate or even drop for a while. However that's not really happening yet. As of today there are essentially zero homes for sale in Boise's North End, West End, and Warm Springs neighborhoods. There are a few more further out such as West Boise, some of which have been on the market for a relatively long time (> 2 months). IMO, these were homeowners that saw dollar signs and overpriced and are now having to drop their price.
Perhaps things will cool off after all the remote workers that want to be here move here, at which point local wages will dominate as new supply is built. One can hope. However, I remember when parts of coastal California were deemed "overpriced" in the early 2000s... prices are now about 3x higher.
I tend to think the sales may slow down in 2022, but only because of the lack of available houses to sell.
The prices won't drop. If anything, I expect them to keep rising throughout 2022.
I tend to think the sales may slow down in 2022, but only because of the lack of available houses to sell.
The prices won't drop. If anything, I expect them to keep rising throughout 2022.
Lack of supply is part of the reason for the current housing market. There are homes all over this valley under construction but the supply hasn't kept up with the demand. But, there is hope because some national home builders have entered Idaho, the Boise market for the first time and have thousands of homes planned to construct.
I don't see sales slowing down in Boise next year, maybe other towns in Idaho, but not Boise and the Metro Area.
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