Is the Housing Market Deceiving? Boise Returns to Correction Mode After Experiencing a Modest Spring Price Surge

**Boise’s Housing Market: From Boom to Correction**

**Boise’s Rise as a “Zoomtown”**

Boise’s housing market experienced an astonishing rise during the pandemic, earning the city the title of a “Zoomtown.” Remote workers, no longer tied to traditional office spaces, flocked to Boise due to its relative affordability compared to tech hubs like Seattle and San Francisco. From March 2020 to May 2022, local home prices skyrocketed by 63%.

**Mortgage Rate Hike Leads to Correction**

However, the euphoria in Boise’s housing market was dampened by a rapid increase in mortgage rates last year. This resulted in a correction, causing home prices to drop by 12.8% between May 2022 and January 2023, according to Freddie Mac.

**Debate Over Recovery or Seasonal Head Fake**

While Boise experienced a 1.9% uptick in house prices from January to May 2023, there is a debate regarding whether this is a sign of genuine recovery or simply a seasonal head fake. The seasonality of housing markets, which tend to be strongest in the first half of the year, can lead to temporary price jumps even in markets undergoing corrections.

**June Reading Indicates Potential Head Fake**

The recently published June reading for the Freddie Mac House Price Index suggests that Boise’s spring rebound in existing home prices might indeed be a head fake. The index showed a 0.2% decline in Boise home prices in June after a meager 0.1% rise in May.

**Boise Among Markets with Price Declines**

Among the 100 largest housing markets in the nation, only three saw month-over-month price declines in June: Austin, Texas (-0.1%); Boise (0.2%); and Honolulu (-0.3%).

**Historical Analysis and Potential Further Declines**

A deeper analysis of the data reveals that when regional housing markets experience a decline in June, it often sets the stage for further declines in the second half of the year. Boise’s home prices have declined in June just six times over the past three decades, and in each of those years, prices went on to decline in the second half.

**Boise’s Vulnerability to Further Declines**

Boise is at risk of further house price declines due to factors related to fundamentals. Experts, such as Moody’s Analytics, have expressed concerns that Boise’s housing affordability has deviated significantly from local economic fundamentals, even accounting for income gains. The influx of remote workers has disrupted the market’s equilibrium, and the sharp escalation of mortgage rates has further intensified the affordability challenge.

Moody’s Analytics reported that Boise’s housing market was overvalued by 54% at the end of Q1 2023, although this is a decrease from the peak of 71% in Q2 2022. While an overvalued market does not necessarily mean that home prices will decline, such markets often see price declines when they are overvalued by a large margin.

**Inventory Levels and Price Softening**

Another reason Boise, along with markets like Austin, is at higher risk of further declines is the presence of some inventory. While active listings on nationwide were down 47% in June 2023 compared to June 2019, Boise only experienced a 13% decrease during the same period. The relative abundance of existing inventory suggests that these markets are more prone to experiencing price softening as the transition occurs from the seasonally robust first half of the year to the seasonally milder second half.

**Current Market Status**

As of the end of June, Boise’s existing home prices were down 11.2% from their peak in May 2022, but still up 44.6% since March 2020.


Boise’s housing market, which experienced a remarkable boom during the pandemic, has now entered a correction phase. The recent uptick in prices during the spring may be a temporary phenomenon, and the market could be at risk of further declines due to factors like overvaluation and inventory levels. Monitoring these trends will be crucial for homeowners, buyers, and industry experts as they navigate the future of Boise’s housing market.

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