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Addressing Idaho’s housing affordability problem

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Johnny Hanna

The Idaho housing market is hotter than hot. Boise home prices are $144,000 higher than they were last year, on average. That’s a 39% year-over-year increase. There is a shortage of available inventory, with 69% fewer listings on the market than last year. Many homes are getting multiple offers — well over asking price- — within hours of listing. Some homes sell before they even hit the market. Some people are getting desperate and are knocking doors of unlisted homes to ask homeowners if they would consider selling. In one instance, a family in Boise put a sign in front of the house they’re renting that said, “We need help finding a home!” What is going on?

Unfortunately, housing affordability is on the decline in Idaho, and many other places in the country. It’s easy to blame Californians for the increase in home values, but in reality, the affordability problem is mostly homegrown. A recent study found that most people moving to Boise are from other parts of Idaho. The pandemic definitely prompted out-of-state move-ins, but California move-ins to Boise are only 15% of the number from other parts of Idaho. Housing appreciation has been higher than the national average in Idaho for six years, and quarterly appreciation has more than doubled the national average for the last three years. So, the problem isn’t exactly new. It’s just getting worse.

Idaho wages have not kept pace with the appreciation of home prices. Idaho household growth is outpacing homebuilding as well. With fewer available houses on the market than ever before, affordability starts to take a nosedive. It’s simple supply and demand.

So Idaho has an affordability problem on its hands. What can we do about it?

Of course, there are no easy answers. It will take a joint effort from the public and private sectors to truly make housing more affordable and accessible for everybody. But if we don’t start dreaming and lifting, we’ll never get there. Here are a few market solutions that we think will help homebuyers in this market.

Getting a fair deal

The traditional real estate model doesn’t work for many consumers. In a recent national Harris Poll, three in five Americans (61%) said that the COVID-19 pandemic has put more financial strain on the home buying process. Seven out of ten people aged 35-44 had this concern. A quarter of respondents (25%) said they paid a commission fee that felt too high. With financial strain becoming the norm, and technology making real estate transactions more efficient, we believe there’s a way to reduce costs and pass the savings to the consumers. In fact, we believe that the only real estate companies that will be successful in the future will embrace this philosophy. There are many models that seek to fix the affordability problem, such as flat fee services and reduced commissions. Time will tell which model works most effectively.

Getting educated

According to the aforementioned Harris poll, 49% of Americans are intimidated by the process of buying or selling a home. Most of them (44%) said they wouldn’t even know where to begin. These problems are more prevalent in younger demographics. Among people aged 18-44, 60% reported they are intimidated by the process and 56% didn’t know where to begin. Clearly, a large portion of people don’t feel confident in their real estate knowledge. Gaining education on the entire real estate transaction, from listing to close, could certainly help people understand what they need in order to afford a house. An educated consumer is an empowered consumer.

Getting help

According to the National Foundation for Credit Counseling, the top two barriers faced by potential homeowners are rising home prices and lack of funding for the down payment or closing costs. Because housing prices are largely subject to market forces, focusing on the funding barrier will make more of an impact. Education on how to save for a down payment and how to repair or improve credit can certainly help, but some people will still need additional resources to make homeownership a reality. That’s where down payment assistance programs come in. There are many assistance programs out there, and they vary widely by geographic location. However, many people don’t know much about what resources are available to them, if they qualify for assistance and how to gain access to it. If we can find ways to better connect people who need financial help to available resources, we can make housing affordable and a real possibility for people again.

Owning a home and a patch of land is central to the American Dream, and we should keep that dream alive. Too many Idahoans and Americans are seeing that dream become a nightmare. These market solutions can really make an impact, but we need sound housing policy from the public sector as well. With the public and private organizations working together, we can make homeownership attainable for more Idahoans.. For everyone involved, there’s work to do.

Johnny Hanna is CEO and co-founder of Homie, whose mission is to simplify home buying and selling with a one-stop-shop experience with Homie Real Estate, Homie Loans, Homie Title and Homie Insurance.

About Johnny Hanna

One comment

  1. I can see why someone unfamiliar with real estate transactions would feel that they were paying too much in fees. The thing is, when you make a mistake in real estate, you don’t get a mulligan, you just learn the hard way what NOT to do next time. And these mistakes aren’t small potatoes. For example, you buy a house thinking that the fence is the property line because, who wouldn’t? Right? But later when your neighbor sells their home, that buyer’s Realtor recommends they have the property corners marked by a surveyor. Next thing you know, your new neighbors are demolishing your fence, your garage is halfway on their property, and your back yard is actually half the size you thought because the back portion is actually a platted unopened alley right of way and your other neighbor has decided they want to access their property from the alley and have been granted a license to do so. It doesn’t matter that on the ground it looked like yours and it doesn’t matter what you assumed/thought/were told. Goodbye garage, goodbye fence, goodbye backyard. Those Realtor fees don’t seem so bad at that point.