North Idaho Real Estate Market Update 2023
NORTH IDAHO REAL ESTATE MARKET UPDATE 2023
Market Update March 2023
Navigating a Complex Housing Market: The Real Estate Agent You Choose Matters!
The current housing market has continued to adjust to a more normal, more balanced market. These adjustments have been shaped by higher interest rates, resulting in lower demand and a gap between seller and buyer expectations. This is why, more than ever before, having a knowledgeable real estate professional on your side is paramount to getting the most out of this mixed housing market.
In February, the FED gave no indication that they were going to stop raising the FED fund rate, which negatively impacted the bond market, translating to further mortgage rate hikes. However, mortgage rates are down about ½% since the end of February due to inflation easing and in reaction to fears of a banking crisis. This has resulted in some frustration for buyers who are payment sensitive. However, by choosing the right professional who is experienced with negotiating price adjustments and employing strategies like Interest Rate Buydowns, most buyers will still find it a fine time to buy.
Sellers have also needed to take into account these market conditions. The latest Coeur d’Alene housing market stats came out at the end of February that saw median home prices drop below $500,000 for the first time since it broke that threshold in June of 2021 (median home price currently $479,500). Units sold were also down 24%. That’s still 25% better than January’s year-over-year sales numbers. With the average days on market increasing, a true professional will help guide sellers and market their home to maximize sale price.
For sellers, choosing a real estate professional that will provide top quality service with high quality photography, strategic negotiation skills and the ability to reel in buyers is integral to a listing’s success. KW Coeur d’Alene is leading the charge representing more resale clients than any other brokerage in the area. If you are curious what your home is worth in the current market conditions or want to learn more about how buying down your interest rate can make your home purchase more affordable, reach out to one of our experienced agents. We’d love to help you!
Housing Market Update February 2023
Market Continues To Stabilize: Great Opportunity For Buyers. Sellers Still Making Significant Profits.
North Idaho home prices continue to stabilize as inventory, days on market and months of sales have settled into a more normal seasonal rhythm. These current market conditions are creating opportunities for buyers we haven’t seen in years, while still being quite profitable for sellers.
Buyers Have Negotiating Power
High demand, low interest rates and low inventory created a frenzy of activity in the last 3 years, causing median home prices to increase approx. 75% during that time. At the beginning to middle of last year, if a buyer had interest in securing a property, they needed to be ready and willing to make their strongest offer first, at or above asking, and still be prepared to be out bid by a competing offer.
Median home prices peaked in May and slid for 4 months straight (approx. -10% in that time), before hitting and stabilizing in the $515,000 – $530,000 range for the last four months. (currently $525k). Interest rate hikes were the catalyst that pushed affordability past the threshold that buyers were willing to go, severely affecting demand and with it the number of sales.
With the straight line price appreciation experienced in the last three years clearly in the rear view mirror, and inventory (1,510 active listings), Days on Market (110 days), and months of sales (2.77 mo.) all hovering around normal seasonal averages, sellers realize they will have to provide buyers some concessions to get their home sold. Buyers currently have a window of opportunity, with negotiating power they haven’t had for years.
However, we’ll still be paying close attention to the FED’s reaction to inflation, Consumer Price Index, & Unemployment data in the next few months. If the FED lowers rates in a significant way (see January update), this window may close.
A Typical Deal: Buyers & Sellers Both Win
We have seen many of our buyers negotiating with the seller to “buy down” their interest rate to make their mortgage payment more affordable. In the example to the right the buyer’s agent negotiated both a $34,000 reduction in price and $13,000 to permanently buy down their interest rate on their loan from 5.99% to 3.99% in their first year and 4.99% for the remainder of their loan on a $455,000 home. Paying down the interest rate in this way will affect a buyer’s affordability by nearly three fold when compared to a price concession.
Sellers Still Have Plenty of Equity
With buyers having some room to negotiate and home prices normalizing what is in it for sellers? Despite median home prices being down approx. 10% from the peak, many sellers have experienced a 75% increase in their homes equity. That’s an approx. 75% increase in 36 months! This means most homeowners still have at least $200,000 in equity in homes purchased prior to April of 2020.
If you are curious what your home is worth in the current market conditions or want to learn more about how buying down your interest rate can make your home purchase more affordable, reach out to one of our experienced agents. We’d love to help you!
Interested in more local market information?
Visit our contact page and get help finding more information on current market conditions in North Idaho.
Market Update January 2023
North Idaho Real Estate Market Set-up For A Strong Year
North Idaho median home prices seem to have settled in at approx. $515,000 after fluctuating between $500k and $550k in the last 5 months, further solidifying the North Idaho housing market’s shift to be more balanced. This is on the tail end of a period with almost a straight line increase in home prices that started prior to the pandemic (home prices have increased approx. 75% since October 2019). Though prices have dropped about 10% in the previous seven months, December median home prices are still up 3.0% year over year.
The number of homes sold is taking its seasonal downward trend, and is down approx. 50% from this time last year (267 sold in December). Sales are also down by about 130 units from pre-pandemic levels.
Although inventory levels have shot up 75% from last year, and we’ve seen a huge decrease in the number of sales, inventory remains just below pre-pandemic levels (1,647 active listings as of October 31st) and looks to be making the normal seasonal decrease.
Months of inventory have followed the decrease in active listings down to approx. 3.18 months of inventory. This is an approx. 150% YoY (year over year) increase, and is slightly higher than pre-pandemic (Dec. 2019) levels. This points to the North Idaho real estate market shifting to be more balanced, while still in favor of sellers.
How Interest Rates Are Affecting The Market:
It seems the FED’s rate hikes have produced their desired effect to cool the market. However, interest rates have dropped in the past several weeks and settled around 6.25% (no points) and 5.99% for FHA & VA loans (no points).
The theme of the current market is closing cost concessions. We are seeing sellers happy to pay closing costs for buyers which will affect a buyer’s affordability by nearly three fold when compared to a price concession.
The sentiment industry wide for the direction of rates seems to conclude that we could see rates drop significantly in the first half of 2023. Fannie Mae published a recent housing report indicating rates could fall below 5% in 2023, while mortgage applications increased by over 27% in the last week.
All of this data points to a market here in North Idaho that is actively shifting to be more balanced. If inventory remains at, or close to historic norms, we can expect to see home prices continue to stabilize. We’ll be watching this closely along with the FED’s reaction to inflation, Consumer Price Index, & Unemployment data in the next few months.
KW Coeur d’Alene agents closed 40% more resale business in 2021 than any other brokerage in the market, and have consistently been able to structure deals that are still favorable to our sellers, while helping to offset the rate increases for our buyers making it a win/win for both parties.
Contact the KW agent you have been working with for more information about how we are able to meet our clients’ real estate goals in the current market.
Interested in more local market information?
Visit our contact page and get help finding more information on current market conditions in North Idaho.
North Idaho Real Estate Market is Settling Into Balance – November 2022
North Idaho median home prices rebounded from a four month and approx. $50k decline that started in June (currently $530,000). This jump helps solidify the North Idaho housing market’s shift to be more balanced and ends a period of almost a straight line increase in home prices that started prior to the pandemic (home prices have increased approx. 75% since October 2019). Though prices have dropped about 8% in the previous four months, October median home prices are still up 3.9% year over year.
The number of homes sold has dipped 35.5% from this time last year (410 sold in October) and are down about the same number of sales to pre-pandemic levels.
Though inventory levels have shot up 43.5% from last year, and we’ve seen a huge decrease in the number of sales, inventory remains just below pre-pandemic levels (2,314 active listings as of October 31st) and looks to be making the normal seasonal decrease.
The absorption rate [See explanation of Absorption Rate in the graphic to the left] has settled and has remained around 4 [months] for four straight months. This is an approx. 100% YoY increase, but points to the North Idaho real estate market shifting to be more balanced, though still slightly in the favor of sellers.
FED Rate Hikes
It seems the FED’s rate hikes have produced their desired effect to cool the market. Interest rates have dropped in the past several weeks and settled around 6.625% from the recent rate increase earlier this fall. The sentiment industry wide seems to be, we could see rates drop significantly in the first half of 2023. Fannie Mae published a recent housing report indicating rates could fall below 5% in 2023.
All of this data points to a market here in North Idaho that is actively shifting to be more balanced. If inventory remains at, or close to historic norms, we can expect to see home prices continue to stabilize. We’ll be watching this closely along with the FED’s decision on interest rates in the spring and its actual effect on buyers.
KW Coeur d’Alene agents had over $14 million in sales over the last two months and have been able to structure deals that are still favorable to our sellers, while helping to offset the rate increases for our buyers making it a win/win for both parties.
Contact the KW agent you have been working with for more information about how we are still able to meet our clients’ real estate goals in the current market.
Interested in more local market information?
Visit our contact page and get help finding more information on current market conditions in North Idaho.