The following analysis of select counties of the Idaho real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

Employment in Idaho continues to grow, but the pace has started to taper. The addition of 22,400 jobs over the past 12 months represents a growth rate of 2.8%. Idaho’s third-quarter unemployment rate was 2.7%, down from 3.5% a year ago. This is higher than the all-time low in May and June of this year, but very impressive all the same. Although jobs are being added at a slower pace, I am not concerned given the current unemployment rate and the growing labor force.

Idaho Home Sales

In the third quarter of 2022, 5,243 homes sold, which was 28.7% lower than a year ago and 18.1% lower than in the second quarter of the year.

Listing activity was up 53% compared to a year ago. The average number of homes on the market was 9.1% higher than in the second quarter of 2022.

Compared to the same period a year ago, sales fell in the northern part of the state and were lower in all areas of Southern Idaho except Valley County. Compared to the second quarter, sales also fell across Northern Idaho, but rose in Valley, Payette, and Boise counties in the southern part of the state.

Pending sales were 19% lower than in the second quarter of this year. With more listings and fewer sales, the market is certainly slowing, much of which can be attributed to rising mortgage rates, which hit a level we have not seen since 2008.

Idaho Home Prices

The average home price in the region rose 4.3% year over year to $625,275 but was down 2.9% compared to the second quarter of the year.

Compared to the second quarter of 2022, prices rose in all Northern Idaho counties except Kootenai, where they were down 1.7%. In the southern part of the state, prices fell across the board.

Prices rose by double digits in Bonner and Boundary counties, while the balance of Northern Idaho counties saw single-digit growth. In the southern part of the state, prices rose in four of the counties, but fell in Boise, Valley, and Blaine counties.

Median listing prices in the second quarter were lower in all southern markets, but higher in all but Bonner County in the northern part of the state.

A map showing the real estate home prices percentage changes for various counties in Idaho. Different colors correspond to different tiers of percentage change. In the southern area of the state, Blaine, Boise, and Valley County have a percentage change in the -16% to -0.1% range. Ada is in the 0% to 5.9% change range, and Payette, Gem, and Canyon are in the 6% to 11.9% range. In the north, Kootenai is in the 0% to 5.9% range, while Shoshone is in the 6% to 11.9% rage and Bonner and Boundary are in the 18%+ range.

A bar graph showing the annual change in home sale prices for various counties in North and South Idaho from Q3 2021 to Q3 2022. In the north, Bonner County tops the list at 29.1%, followed by Boundary at 20.7%, Shoshone at 6.1%, and Kootenai at 1.1%. In the South, Payette leads off at 8.6%, followed by Gem at 7.8%, Canyon at 7.5%, Ada 5.5%, Boise -3.2%, Valley -12.4%, and Blaine at -15.3%.

Mortgage Rates

This remains an uncertain period for mortgage rates. When the Federal Reserve slowed bond purchases in 2013, investors were accused of having a “taper tantrum,” and we are seeing a similar reaction today. The Fed appears to be content to watch the housing market go through a period of pain as they throw all their tools at reducing inflation.

As a result, mortgage rates are out of sync with treasury yields, which not only continues to push rates much higher, but also creates violent swings in both directions. My current forecast calls for rates to peak in the fourth quarter of this year before starting to slowly pull back. That said, they will remain in the 6% range until the end of 2023.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q4 2023. After the 5.62% figure in Q3 2022, he forecasts mortgage rates continuing to climb to 6.7% in Q4 2022, 6.55% in Q1 2023, 6.35% in Q2 2023, 6.15% in Q3 2023, and 5.60% in Q4 2023.

Idaho Days on Market

The average number of days it took to sell a home in the region rose five days compared to the same quarter of 2021 but fell six days compared to the second quarter of 2022.

In Northern Idaho, days on market rose in all counties other than Kootenai compared to a year ago. Market time rose in every county other than Blaine in Southern Idaho.

It took an average of 74 days to sell a home in Northern Idaho, and 37 days in the southern part of the state.

Homes sold the fastest in Ada County in the southern part of the state and in Shoshone County in Northern Idaho.

A bar graph showing the average days on market for homes in various counties in North and South Idaho for Q3 2022. In North Idaho, Shoshone County has the lowest DOM at 63, followed by Kootenai at 73, Bonner at 77, and Boundary at 81. In the South, Ada County has the lowest DOM at 30, then Gem at 31, Payette 33, Boise and Canyon 34, Valley 39, and Blaine at 59.

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 third quarter appears to have been an inflection point: the impact of higher mortgage rates and lower affordability have now started to negatively affect home sales and prices. With mortgage rates likely to remain very high compared to recent years, the massive run-up in home values is at an end. Although the market will continue to be negatively impacted as we move through the winter and into the spring, I don’t see it falling in a manner similar to the Great Recession. Owners are sitting on significant equity. Even if prices fall in 2023, which I expect, the decline will be relatively modest.

A speedometer graph indicating a slight seller's market in Idaho in Q3 2022.

With a contracting market, I expect that many homeowners who were thinking about selling will decide to stay put and ride out the slowdown. This will mean the number of homes for sale is unlikely to grow significantly from current levels. Given all the data discussed here, I am moving the needle more toward balance, but we are still not in a typical buyer’s market at the present time.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

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.





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