Idaho home prices, demand take big leap in first quarter

This article was updated on April 27 to correct a date.

As demand continued to outstrip the anemic and shrinking inventory of homes for sale, home prices in the Treasure Valley and many other locations in Idaho skyrocketed over the last year.

Treasure Valley 

According to Boise Regional Realtors, the average median home price in Ada County in March, 2020 was $352,250; in March 2021, it was $475,500, an increase of $123,250 or 35% on a year-over-year. Bidding wars are increasingly common throughout the region. In March, existing homes in Ada Co. sold for approximately $18,000 over list price.

The average number of days between listing and receiving an offer in Ada was 22, which is 50% faster than March 2020. For just the existing home segment of the market, this figure was 14 days, 24% faster than a year ago. Since the beginning of 2021, inventory of homes for sale has hovered just under 150, compared to over 700 in March 2020.

Idaho home prices

Price increases in Idaho were worst in resort areas, according to statistics from Realtor.com. In Driggs on the backside of the Tetons, the median home prices was $234,900 in March 2020 but $390,000 in March 2021, an eye-popping 66% increase. In Ketchum, the median home price was $1,150,000 in March 2020 and $1,722,000 a year later, an increase of 48.7%. Median home price in Coeur d’Alene was $350,000 in March 2020 and $474,900 in March 2021, up 35.7%. In nearby Sandpoint, the median price jumped to $499,000 in March 2021 from $329,900 a year before, an increase of 51.3%.

Outside of resort communities, price increases were worst in the Treasure Valley and in Twin Falls when compared with other parts of Idaho, though Idaho Falls and Moscow came close.  In the Treasure Valley, the highest increase year-over-year was in Garden City with 56%, from a median price in March 2020 of $315,000 to $491,410 a year later.

For Twin Falls, median price was $230,000 in March 2020 and $311,000 in March 2021, up 35.2%. Median home prices in Idaho Falls were $225,000 in March 2020 and $290,000 in March 2021, an increase of 28.9%. In Moscow, median price in March 2020 was $275,000 which jumped to $336,000 a year later, up 22.2%.

In Rexburg, the March 2020 to 2021 median price jump was from $195,000 to $230,000, up 17.9%. For Blackfoot, those numbers were $212,500 to $255,450, up 20.2%; for Pocatello, $197,500 to $225,000, up 13.9%; for Soda Springs, $164,450 to $186,500, up 13.4%; for Burley, $196,500 to $235,000, up 19.6%; for Jerome, $212,900 to $239,950, up 12.7%; for Lewiston, $259,000 to $274,500, up just 6%; and finally, for Salmon, $179,000 to $212,375, up 18.6%.

Mortgage applications

The second quarter of 2020 saw a stunning but unsurprising drop in mortgage applications to purchase and an increasing in refinancing application as rates dropped, according to statistics from the Mortgage Bankers Association. By the third quarter, purchase applications climbed higher than their average volume in 2019 and stayed high until rates climbed back up to above 3%. Refinance application volumes also stayed high for the same time period.

Overall application volumes for both purchase and refinance have dropped since the first of the new year, though purchase applications did show a one-week anomalous increase during the last week of January and a much smaller upward blip in the last week of February. Since then, application volumes have fallen for six consecutive weeks through April 10.

While mortgage rates are still at decadal lows between 3% and 3.2%, they took an almost stepwise increase in the last weeks at February and beginning of March, reflecting the return of mortgage rates to tracking 10-year Treasury rates.

Mortgage behavior normalizes

In general, the 30-year fixed mortgage rate tracks the 10-year Treasury constant maturity rate over time with a spread that usually stays within a range of 1.4% to 2.1%. During the two-year period before the economic downturn staring March 2020, this normal and expected continued: the spread averaged 1.76% while 10-year Treasuries declined at a mostly steady rate from 2.8% to 1.8% and 30-year mortgages followed, dropping from 4.5% to 3.5%.

Starting in March 2020, 10-year Treasuries made an unprecedented drop below 1% for the first time in over six decades, signaling a market where institutional investors fled equities for the security of the U.S. Treasury bond, considered the most stable investment in the world. The 10-year Treasuries bottomed at a record of 0.54% in July 2020 and slowly began rise. The rate finally climbed above 1% in January 2021.

Mortgage rates were slow to follow the drastic drop in the 10-year Treasuries rate. The 30-year fixed rate declined steadily from 3.5% in March 2020 to a low of 2.65% in the first week of January 2021. The spread expanded to 2.7% in April 2020 and did not drop below 2% until November 2020. Mortgage rates did not return to a pattern of tracking 10-year Treasuries until late January 2021, signaling that finally the economy is returning to normal behavior.