Idaho’s housing crisis has reached a peak in the past few years with housing costs doubling and the state’s population continuing to grow. First-time homeowners face an entirely different market than what was present a decade ago. In Moscow, this means a need for more affordable housing.
Steve Peterson is a University of Idaho professor in the College of Business and Economics. Originally from Lewiston, Peterson has 10 years of experience selling real estate in Idaho.
The crisis has been particularly present in the past four years, with the average home price doubling according to Peterson.
A statewide issue, a recent survey has found Boise among the most overvalued housing markets in the nation, a trend consistent across Idaho.
“It’s not just isolated to Boise or Coeur D’Alene, it’s everywhere,” Peterson said. “It’s broad-based, it’s everyone and everywhere.”
When the recession hit around 2007-2009, the housing market crashed and home building ceased for some time after, only having recovered more recently. This, Peterson said, is one of the main contributors to the current state of the crisis.
“I don’t think people realize how badly the construction and housing industry were damaged by the greater recession,” he said.
Peterson also believes the distribution of COVID-19 relief money may play a role in the increased housing costs. When people who didn’t need the money got it, this additional disposable income could go towards housing and increase competition.
COVID-19 also had people spending more time at home, fueling desires to improve their houses and include home offices.
Interest rates are a significant portion of housing costs, and in the past few years, they have gone down. While the rates may be lowered, this also lowers the bar for who qualifies for a home. This increases the pressure on housing prices, with many being raised as a result.
“If you go back several decades, the typical home interest rate was anywhere from six to as high as 15%,” Peterson said. “More people can qualify from more home.”
As the market has changed, so have people’s interests. Peterson sees people looking for nicer, bigger houses.
“Housing many many years ago, the square footage was smaller,” Peterson said. “Children kind of have an expectation to have their own room. Way back in the day, it was a bunk bed— you could have two to three children in the same room.”
While this may be a buyer’s desire, the reality is restrained by their income.
As for what this holds in the future, Peterson said there is a possibility of prices doubling again, leading to another market collapse.
“I don’t see that,” Peterson said. “(But) I think we’re beginning to reach our potential maximum for homes, and I think it’ll level off.”
Peterson’s own home in Moscow has doubled in value over the last few years.
“There’s an attack on affordability,” he said.
Inflation has spiked at 5%, a high rate according to Peterson. While housing costs go up, the crisis is driving up rent as well.
Misty Curry, a realtor with Latah Realty, was raised in Bovill, Idaho, and has been in the industry for seven years.
Curry finds that the housing crisis is defined by the increased competition between buyers.
“Once 2020 hit, we really saw inventory lack due to the mass amount of buyers coming into Idaho,” Curry said. “We have so many new buyers moving in, we just can’t help them.”
Idaho’s population boom places pressure on the housing market, with the growth rate of some Idaho cities being top in the nation, according to the Idaho Press.
This may be good for sellers, but not for locals looking for their first home. New homeowners face a tighter budget and higher costs, often having to play it risky.
“Now, you’re looking at $350,000 to get a home,” Curry said. “You just have to be able to step outside of the box and play it a little risky.”
Most first-time homeowners that Curry encounters are in their late 20s or mid-30s, and the buyers she works with seem to be getting smarter.
“I think the market’s getting harder and harder, so they just have to be really on top of it,” Curry said.
When homes are priced right, they can be sold within just a few days. The other week, Moscow only had 19 active home listings according to Curry. The average home price among them was $417,000.
Curry finds that farmland around Moscow is being annexed and used for new developments to further expand. Three new areas are being developed on the northern, southern and eastern sides of the city.
Peterson also found inappropriate zoning as an issue. Some fear that mixed residentials would lower home values, but Peterson wasn’t convinced.
“Row after row of single-family homes…They shouldn’t exist like that,” Peterson said. “The lack of mixed-use residential is one of the biggest impediments we have for markets.”
As for purchasing a home in this difficult climate, Curry advises buyers to plan ahead, meeting with professionals that understand the industry.
“They can really guide you where you want to be,” she said. “When you’re thinking about buying a year from today, I suggest you talk to someone now.”
Moscow homeowner, Linzy Bonner, just moved into her first home in October at 25-years-old. Buying a home was something her and her partner had contemplated for over a year, but then the market got worse.
“All of a sudden, the housing market went insane,” Bonner said. “Everything in the area was going so quickly, within hours of being on the market.”
Fears of the market worsening even more partially motivated her to continue with their search. Before really diving in, Bonner expected for her ideal home to be more achievable than it actually was, with a budgeted goal of $150,000.
“Come to find out, the bare minimum of what we would settle for was starting at like $275,000, and that would be a real big fixerupper,” Bonner said.
One home she did a walkthrough of had a swelled ceiling, with a visible amount of water damage. Still, the house was out of her budget. Bonner estimates that, just a few years ago, that home would have been valued around $160,000.
Before finding her home, as a young person, Bonner did not feel hopeful.
“I never thought that I would own a house in my life, that was something I came to the conclusion of,” Bonner said.
Buying a home was only made possible when money unexpectedly came their way. Otherwise, Bonner believes she would be in a less favorable situation.
“We had to accept a certain amount of risk in buying the house,” Bonner said. “I think most people our age aren’t going to want to accept that risk, and I don’t blame them.”
Teresa Schmalz is a retiree originally from the Boise area who bought a home in Moscow last spring. While the market has put many homebuyers in a difficult spot, things worked out for Schmalz.
“I can really feel for people who are looking for a home where this is their residence, where they need to work and take their kids to school,” Schmalz said. “We feel pretty lucky that we found something in our budget that was also close to downtown.”
With the consideration of moving to Moscow full time to be near family, she finds that at her age, things are a bit easier when looking at the market.
“We’re at a different stage of life, so we can be a little more flexible,” Schmalz said.
When looking for their house, Schmalz found that many available homes would already have above price offers. Over 20 years ago, when Schmalz purchased her Boise home, things were quite different.
“It seemed like a tight market, but it’s nothing like it is now,” Schmalz said. “When I think about our kids affording a house in Boise, I think it’s going to be very hard for them.”
With an apparent lack of available houses, expanded infrastructure and affordable homes, Schmalz sees issues for new homeowners.
“I think it’s much harder,” Schmalz said.
Tim Lensing has lived in the area for a few decades, moving to Moscow in 2013 and purchasing his home in 2015, a process that lasted several months.
“We searched and searched,” Lensing said. “The one we ended up finding, the only reason we got it is because it never went on market.”
Getting outbid was a consistent struggle. With affordable homes going quick, Lensing found himself outbid at least four times. He originally planned to take a break from househunting to save for a bigger budget.
“There’s different groups that can buy out with cash,” Lensing said. “Most first time homeowners aren’t.”
Since then, housing prices have continued to rise. Lensing believes that well paying jobs in the area has increased the competition for homebuying and the local university has increased competition for affordable rentals.
“I think it’s going to get more and more challenging as time goes on,” Lensing said. “I don’t think I could buy now if I had’nt bought when I did.”
As for advice, Lensining warns those new to the market to not be set on the ‘perfect’ home.
“Everybody’s going to be trying for the perfect home,” Lensing said. “Instead, look for the home with the best bones in it.”
Something you can clean and renovate overtime is a more realistic purchase according to Lensing’s experience.
“It made it more plausible, without them asking for way more money,” Lensing said.
Haadiya Tariq can be reached at [email protected] or on Twitter @haadiyatariq