We’ve wrapped up the first quarter of 2023, and as always, our top priority at the Mike Brown Group is making sure you are attuned to the ever-shifting real estate market.
Before we take a closer look at the numbers for the first few months of the year, let’s recap the market statistics and trends of 2022.
2022
With the spike in inflation, the fed’s took action by increasing the federal funds rate by almost 5%, which resulted in the average 30-year fixed rate mortgage jumping from 3.22% in January to a high of 7.08% at the end of October.
The increase in interest rates put the finger on the reset button for the housing market, making 2022 a transitional year. With the mortgage rates peaking in the fall, the second half of the year lessened the demand for housing, resulting in a downward shift in home sales, a decrease in home prices, and an increase in days on market.
In January 2022, the median sales price for existing homes in Ada County was $540,000, an increase of 20.0% compared to January 2021. We saw an increase of 18 days on market, bringing the average to 33 days.
By the end of the second quarter, a jump in inventory brought June to a close with 2,135 available homes bringing the supply of inventory to 2.4 months – the highest inventory since September 2016.
Although there was an increased supply of inventory and an uptick in interest rates, the median sales price in Ada County for June was $592,000. The median sales price in Canyon County was $424,900
As interest rates continued to climb, settling in at 6.6% by December, the market shifted quickly, and by the end of the year, the median sales price in Ada County dropped to $515,000.
While sellers had to price their homes competitively, adjustments were inevitable, considering Idaho experienced some of the highest appreciation in the country. But even with a decrease in appreciation, the equity position of the majority of homeowners should hold strong as the Federal Reserve continues to fight inflation with rate hikes.
2023
We started the year with the median sales price in Ada County at $487,495 – down 9.7% compared to January 2022. This is the first time the overall median sales price has been under $500,000 since July 2021. Inventory also decreased by a few hundred homes, and days on market increased to 71. Canyon County’s median sales price was $395,445 – down 6.4% compared to January 2022.
The numbers presented reflect the real estate market trends for Ada and Canyon County. However, according to the National Association of Realtors, overall home sales in the U.S. declined by 17.8% in 2022.
As we made our way into March, home prices were, and still are, adjusting. “Mortgage rates ended the month over 30 basis points lower than where they started, and more buyers returned to the market”- Forbes. Days on Market showed signs of easing up on existing and new construction– 58 days for existing homes and 75 days for new construction. In week 12 of the first quarter, the median sales price in Ada County was $480,000, and the number of available new construction homes landed at 490, an increase of 85.6% from March 2022.
First Quarter Lending Trends
Applying for a home loan can be scary during an uncertain time, but the Mike Brown Group’s preferred lender, Movement Mortgage has you covered!
Lock and Shop
Lock and shop lending is a type of mortgage lending program where you can lock in a specific interest rate for a mortgage loan while shopping for your home. This program can protect you against interest rate fluctuations during the home search process.
The lock and shop has a 90-day lock period. Allowing 45 days to secure a contract and another 45 days from application to closing. If you have not found a property within 45 days, you can do a one-time 30-day lock extension to allow more time.
The interest rate is guaranteed not to change during this time, regardless of market fluctuations. Discuss this program with your lender to carefully consider whether it is the right option for your situation.
Single Close Construction Loan
Single close to permanent financing is a construction loan that provides financing for the construction of a new home and the long-term financing needed to pay off the construction loan. This type of lending allows you to avoid the additional costs and time associated with obtaining separate construction and permanent loans.
Under a single close-to-permanent financing loan, you will apply simultaneously for construction and permanent loans. The construction loan is used to finance construction; once the building is complete, the loan is converted into a permanent loan.
The interest rate for a single close-to-permanent financing loan may be fixed or adjustable, depending on the loan terms. Your lender will help explain the details of this program and help determine if it’s an option for you!
Federal Adjustments
Every dollar in your pocket counts, and the Federal Housing Financing Agency’s decision to eliminate fees for certain FHFA Loan Level Price Adjustments came at the right time. Your lender will help you determine if you qualify.
FHFA is eliminating upfront fees:
- First-time homebuyers at or below 100 percent of area median income (AMI) in most of the United States and below 120 percent of AMI in high-cost areas;
- HomeReady and Home Possible loans (Fannie Mae and Freddie Mac’s flagship affordable mortgage programs);
- HFA Advantage and HFA Preferred loans; and
- Single-family loans supporting the Duty to Serve program.
The seasons have changed in Idaho, and we have transitioned from winter to spring. Although inventory and interest rates impact the real estate market across the U.S., in Idaho specifically, the weather is an additional variable that influences the ebb and flow of our local market. As the weather warms up, we expect to see the real estate market warming up with it.