COEUR d’ALENE — The once screaming hot Idaho housing market seems to be losing its steam.
“I think we’re headed toward a more normal market,” said Chad Oakland with Northwest Realty Group.
According to Redfin, a real estate brokerage, 41% of Boise home sellers dropped their prices in April. Many sellers in Coeur d’Alene are doing the same, Oakland said, as rising mortgage interest rates to more than 5% have given buyers good reason to pause.
“It takes a lot of buying power from people,” Oakland said Friday.
And it is bringing prices down.
Rocket Homes reported that the median home price in May in Kootenai County was $521,000, down 30.8% from a month ago.
The asking price for one Dalton Gardens, five-bedroom, 2,500-square-foot home was reduced to $949,000 on Friday.
Multiple offers are no longer flying fast and furious on every new home on the market. People have stopped buying homes sight unseen, which has caught sellers by surprise.
“If it’s on the market for two weeks and there aren’t any offers, people wonder what’s going on,” Oakland said.
One contributing factor is pricing.
According to a recent analysis from Moody’s, Coeur d’Alene was seventh in a list of most overvalued markets, with prices at 56% overpriced. Boise was No. 1 at 73% over value.
“Near-record-low mortgage rates helped fuel demand for housing, especially during the pandemic, and the competition for homes pushed prices higher. But now the Federal Reserve is raising rates to curtail inflation, and already that’s cooling demand,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business.
In another study, researchers with Florida Atlantic University and Florida International University found the housing markets in Spokane and Boise were among the most overpriced.
According to Redfin, Coeur d’Alene home prices were up 40.3% in April compared to last year, selling for a median price of $675,000. On average, homes in Coeur d’Alene sell after five days on the market compared to six days last year, Redfin reported. There were 88 homes sold in April this year, down from 106 last year.
Coeur d’Alene Councilman Dan Gookin said Thursday that the battle for affordable housing in the city has been lost.
Oakland said previous mortgage interest rates in the 3% range put higher-priced homes within reach of more buyers, but inflation changes all that.
The latest rates near 5.5% have pushed a large pool of those potential buyers out of the market.
“I think we’re seeing some push back on pricing,” Oakland said.
According to the Coeur d’Alene Regional Realtors, the median home price in Kootenai County was $549,950 in April, up nearly 25% from the previous year.
Just six months ago, in December, the median price of a Kootenai County home was $480,000.
Lindsay Allen, president of the Coeur d’Alene Regional Realtors, said interest rates are having the biggest impact on the housing market.
“It cuts more people out, especially in the affordable price range,” she said.
Oakland said there is still buying power out there and there are still multiple offers on some homes. But those cases tend to be in niche markets, like downtown Coeur d’Alene or around Lake Coeur d’Alene.
And inventory is growing.
According to the Coeur d’Alene Regional Realtors, there were 160 homes on the market in Kootenai County in January. In February, it was 192. In March, 289, in April, 441. May numbers were not available on Friday.
“It is impossible to underprice a house,” Oakland said. “It’s super easy to overprice it.”
Oakland expects to see less competition for new inventory coming on the market.
He said he doe not believe there will be a major downturn in the housing market, “but maybe slight price adjustments with more choices for buyers and longer market times.”