What out-of-state buyers have done to the Boise housing market
Boise, Idaho wasn’t on anyone’s mind when they looked at the housing markets in the first quarter of last year. It was as it has almost always been, a quiet, picturesque town nestled in the Rocky Mountains. A paradise for some, but not enough economic power to generate its own very competitive housing market.
What a difference a year makes.
Driven by teleworking and a new geographical freedom, buyers from across the country flocked to Boise, buy homes for tens of thousands above asking price. While mortgage rates have remained low, these price hikes don’t necessarily translate into a full-blown affordability crisis, the entire mortgage and real estate industry in Boise is concerned about what could happen if rates rise further, and the trend of telecommuting continues to attract cash-rich buyers from California and Washington to the market.
“If someone sells their house in California, which has grown in value tremendously over the past few years, and then retires, they may not experience a major shock, putting in $ 50,000, $ 100,000 or more. $ 150,000 above the estimated value of a home he really loves Boise, ”said Joseph Pattee (pictured), branch manager of Guild Mortgage in Boise. “When they come in with money or a large down payment, it makes it very difficult for someone who doesn’t have a large down payment and is relying on a loan to cover a large part of their purchase price. .
“What we’re seeing in the market right now is a lot of out-of-state buyers who are willing to pay a lot more than appraised value because they know they’re buying a home that’s even less. expensive than the one they sell. state and they don’t mind paying the appraisal value because it’s a better home for them and they have the money to do it.
Even though low rates mean locals can still afford to buy a home, Pattee fears the affordability picture will worsen further in the Treasure Valley. According to him, the city needs strong wage growth so that residents can compete with out-of-state buyers. People earning Boise wages now have to face buyers earning wages in San Francisco or Seattle, and until their incomes improve, they will remain at a severe disadvantage.
Yet mortgage professionals can play a key role in helping clients facing an affordability crisis. Pattee emphasized that when he begins the process, it is essential to put his clients in the right frame of mind. It tells them when to decide, how the offers will come in, and prepares them for the fact that they are not likely to win on their first offer. While he mentally prepares clients, he works out the details with their real estate agent. Pattee and the agent work to coordinate each offering, making a preliminary subscription to a specific address before people are under contract. Review waivers are also essential, and Pattee finds that he can use these tools to make an offer more attractive.
While he is happy to make the seller and his agent more comfortable in this market, Pattee also advocates programs such as FHA and VA loans that make selling agents nervous. He always explains directly to them that an VA program, for example, does not mean more costs for the seller. Rather, he explains why the program works better for his client. As markets across the country begin to behave a bit more like Boise, he believes mortgage professionals can go a long way in addressing the crunch in affordability by de-stigmatizing these programs, which can provide access to housing. to so many Americans.