Idahos housing landscape transformed dramatically from 2018 to 2023.
Home prices surged at one of the fastest rates in the nation, far outpacing income growth.
From 2019 onward, the state consistently ranked at or near the top for price appreciation.
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Since 2014, Idahos median home price jumped about 155%, the steepest increase of any state.
Much of that growth came in the late 2010s and the pandemic housing boom of 20202021.
Even traditionally affordable rural counties saw major price hikes.
Income vs. Home Prices
This rapid appreciation far outstripped income gains.
These figures worsened through 2023 as home values outpaced wages.
Pandemic Surge and Market Cooling
Ultra-low mortgage rates and pandemic-driven demand turbocharged Idahos market in 20202021.
The average 30-year fixed rate hit 3% or below in 202021, enabling buyers to stretch their budgets.
Combined with a flood of out-of-state buyers and limited supply, this led to intense bidding wars.
Many homes sold above asking price in a matter of days at the height of the frenzy.
By late 2022, however, the Federal Reserves rate hikes pushed mortgage rates past 67%.
This abrupt spike in financing costs dramatically cooled Idahos market.
Statewide home sales slowed and prices plateaued or dipped slightly in 20222023.
Whos Buying?
Millennials entered their prime homebuying years, yet first-time buyer participation actually fell to historic lows by 2022.
At the same time, Baby Boomers emerged as a dominant buying force.
By 20222023, Boomers actually surpassed Millennials as the largest generation of homebuyers nationwide.
In Idaho, boomers often recent retirees or empty-nesters relocating from pricier states were an influential cohort.
Many paid cash or carried substantial equity, making their offers very competitive.
Migration into Idaho
Perhaps the most defining feature of Idahos recent housing market was in-migration.
Net in-migration accounted for over 80% of Idahos population growth during this period.
The Boise metro and Coeur dAlene in North Idaho were prime magnets.
Their demand pushed prices up rapidly.
Other regions saw similar influxes.
Investor and Vacation-Home Buyers
Not all buyers were owner-occupants.
They often targeted entry-level single-family homes (the same homes first-time buyers wanted), converting them to rentals.
One analysis noted that investors gobbled up starter homes, worsening the shortage for aspiring owner-occupiers.
This investor activity was especially noted around Boise and Coeur dAlene, where rent growth was high.
Meanwhile, Idahos scenic appeal led to a spike in vacation home purchases by high-income out-of-staters e.g.
lakefront cabins, ski condos in Sun Valley, and mountain retreats.
What Are They Buying?
The Rise of Attached Housing
Attached housing gained ground, particularly in urban areas.
These included townhome subdivisions and small condo projects targeting first-time buyers.
Many local buyers gladly bought townhouses or condo flats as starter homes when priced out of detached houses.
New Construction vs.
Older Homes
Idahos building boom delivered many new homes during this period.
Statewide, developers added thousands of units per year (though still not enough to meet demand).
Nonetheless, manufactured homes sales did increase as other housing slipped out of reach.
Upsizing vs.
Downsizing
Buyers choices in home size varied by life stage.
Indeed, move-up buyers were very active in 202021; many leveraged their equity and low rates to upsize.
On the flip side, many Boomers and empty nesters downsized (or attempted to).
In Idahos booming market, FHAs role was mixed.
Early on (20182019), FHA loans were widely used by entry-level buyers across the state.
But during the 20202021 frenzy, many sellers in hot markets were hesitant to accept FHA offers.
By 20222023, as the market cooled slightly, FHA usage ticked back up.
Idahos plentiful rural areas meant the USDA Rural Development home loan program was heavily utilized.
USDA loans offer 0% down mortgages for income-qualified buyers in designated rural zones.
During 20182023, USDA-backed mortgages increased in popularity as buyers sought affordability in outlying regions.
Idaho has a significant population of veterans and active-duty military, so VA loans also played a steady role.
VA loans offer zero-down financing like USDA, but for eligible veterans/servicemembers.
They likely comprised around 510% of Idahos home purchase loans in this period.
The higher rates forced many households to lower their price range or bring more cash.
Consequently, many buyers in late 2022 either downsized expectations or paused their search.
Idaho likely saw similar or higher cash shares in hot markets.
Some Idaho buyers resorted to unconventional means e.g.
borrowing from family or retirement accounts to compete with cash.
Investor Purchases
Idahos strong population growth and rising rents made it attractive to real estate investors.
This trend cooled somewhat by late 2022 as high interest rates made leveraged investing less attractive.
Vacation and Second Homes
Idahos recreational destinations experienced a vacation-home buying boom during the pandemic.
Areas like McCall, Sandpoint, and Sun Valley saw surges in second-home sales.
Comparison to 20082017: How Have Things Changed?
Around 20082011, Idaho home prices fell or stagnated, and foreclosures were common after the national mortgage crisis.
In contrast, 20182023 saw an unprecedented price boom followed by a modest correction.
Inventory and Construction
Post-2008, Idaho had a glut of housing for a few years.
Homebuilders went bankrupt or drastically slowed building.
Thus around 20122015, inventory was relatively ample and buyers had the upper hand in many Idaho markets.
Fast-forward to 20182021: inventory hit record lows.
This volatility was unlike the relatively stable low-rate environment of the mid-2010s.
Homebuyer Behavior
In 20082012, buyers were skittish due to falling prices the mindset was cautious.
Compare that to 20202021: buyers were frantic, fearing missing out as prices rose monthly.
