A group that follows trends in the housing price market recently made a stark comment. “Boise, Idaho, long considered a distant outpost far from big-city job centers, leads the nation in overpriced housing, with more people discovering the area while working remotely during the pandemic,” according to the Florida Atlantic University School of Business.
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By the measure of its study, the housing market in Boise is priced 70.76% above where it should be. The analysis was based on Zillow data on the top 100 markets. Beyond this data, the researchers used complex modeling. Likely, other housing experts might do the calculations differently.
Home price increases in the United States have started to level off in some areas, after a rise of 20% nationwide last year, according to the S&P Case Shiller home price index. One primary reason is that mortgage rates for 30-year fixed loans have moved from under 3% to over 5% and may rise further. This undercuts a period of “housing affordability.” Presumably, the markets where home prices rose most quickly and to the highest levels should be the most vulnerable now.
Why have home prices risen so quickly in Boise? The largest factor is probably that the areas around the city have posted higher population growth than any in America, according to the Census Bureau. If that influx slows, even slightly, home prices are threatened. Ironically, high home prices may be the reason people relocate elsewhere.
Most people do not buy homes as investments. They buy them to live in. For people who intend to keep homes for years, price increases may not be a reason to buy a home. Home flippers, on the other hand, view home prices as the key reason to be buyers. Boise probably will not be one of their targets anymore.
24/7 Wall St.Home prices in the United States will flatten or even fall in some areas. Home prices in cities where they have skyrocketed are likely the most vulnerable, which puts Boise near the top of that list.
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