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Dan Latu, Jordan Pandy, Kelsey Neubauer, Alcynna Lloyd, and Jacob Zinkula
2022-08-25T15:41:49Z
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- Redfin found that 70% of home sellers in Boise, Idaho, dropped their asking prices in July.
- Housing markets in Boise and other popular places to move to are finally starting to cool.
- Brokers in seven hot spots shared the signs of slowdowns they're seeing.
Are pandemic boomtowns finally going bust?
At the very least, they're starting to come back down to earth.
Researchers at the brokerage Redfin found that 70% of home sellers in Boise, Idaho, dropped their asking prices in July — a greater share than in the 96 other cities they analyzed. In Denver, just under 60% of homes for sale had price drops in July.
Boise and Denver are among the cities whose populations jumped during the pandemic as homebuyers flocked to areas with less expensive homes and ample outdoor space. Record-low mortgage rates made borrowing money cheap, so buyers flush with new loans fought each other in bidding wars for a small number of available homes. As a result, home prices shot up, pricing out many locals.
But now those red-hot housing markets are cooling, according to housing-market data and local real-estate agents.
Yes, sellers are cutting their asking prices. But also, there are more homes for sale. They're lingering on the market longer before being sold.
A slowdown doesn't mean that the housing marking will crash, or even that home prices will fall. It does mean, however, that buyers in these places finally have more power and can afford to be choosier — opting not to waive inspections, or just to take a few more days to mull over the biggest purchase of their lives — and still score a house.
Real-estate agents are on the front lines of cooling markets. They see the dynamics between buyers and sellers long before Redfin and other number crunchers aggregate monthly housing-market data.
Brokers in seven pandemic boomtowns — Boise; Denver; Ogden, Utah; Bozeman, Montana; Nashville, Tennessee; Austin, Texas; and Phoenix — shared their firsthand accounts of their local markets cooling.
Boise, Idaho
Last summer, Christina Ward was juggling buyers so ravenous for real estate that they'd bid on homes the moment they hit the market.
"We would throw out a piece of meat, and the dogs would attack it," she told Insider.
But the fever has broken, and buyers aren't as hungry. Homes are still selling, but they'll be on the market for 18 days, not three.
She said the power was shifting to the buyers, who feel emboldened to push back in negotiations again.
Ward said that in one recent case, buyers negotiated to buy a home for less than its $900,000 asking price on the condition that they wouldn't insist on any repairs. Then, perhaps feeling like a slowing market gave them the upper hand, the buyers went ahead and requested $22,000 worth of repairs.
The deal fell apart — but the key difference is that the buyers felt they could ask, whereas buyers had previously been ready to overbid, waive all contingencies, or make other sacrifices to get a home. Ward said she even saw one buyer offer the use of their second home to a seller as part of a bid.
Now the table feels more even. "We're back to a normal market where we're negotiating," she said.
Ogden, Utah
For the past two years there haven't been many homes for sale in Ogden, Utah, a city about 30 minutes north of Salt Lake City.
Susan Boyer, a real-estate agent in Ogden with JPAR Silverpath, said the number of homes on the region's listing service was as low as 800, well below the roughly 8,000 she said was typical before the pandemic.
"There were bidding wars constantly," she said. "You'd have 50 offers on one; when it came on, it was only on for a couple hours. It was just insane."
But she said she'd seen a major shift in the market in recent months — the number of homes for sale was nearly 9,500 in July. As transactions slow, she said, bids and sale prices are "normalizing" rather than declining.
"You're not going to be able to — like you did for two years — just go, 'Oh, the neighbor's house sold for $430,000 last week, so this week I'm going to put mine at $470,000 and expect $500,000,'" she said.
Boyle recalled working with a buyer who was scared of being outbid in the wild market. In late July, she said, she found him a townhome for $279,900 — a week after a similar house sold for $290,000. What's more, the seller agreed to pay $5,000 of his closing cost.
"If this one had come on the market even earlier this year or last year, it would've had a bidding war, and he would've had at least five to 10 offers all over asking and with crazy concessions" to the seller, she said.
Bozeman, Montana
Everdawn Charles, a real-estate agent for Keller Williams in Bozeman, said the region's boom started in 2017.
Then the pandemic arrived, and the mountainous ski city became even more popular for remote workers and people ready for a change of pace.
"We got hit like a Mack truck in September of 2021 with the influx of people," Charles said.
At $743,500, the median sale price in Bozeman in July had climbed by nearly 20% year-over-year and far exceeded the national median of $440,300, according to data from Bozeman Real Estate Group and the Federal Reserve Bank of St. Louis.
But rising interest rates have cooled the market, and listings are coming back down to earth, Charles said.
"A lot of homes that were priced a little higher than they should be are having price reductions consistently," she said. "We're having almost as many price reductions as we are homes coming to market every day."
Austin, Texas
Lindsey Fenton, a Douglas Elliman real-estate agent in Austin, said that while the city remains a seller's market, homebuyers are gaining more power as demand cools.
"Home prices are still yielding really high, but buyers are becoming more selective as they now have more time," Fenton said.
Fenton attributed buyers' newfound power to an uptick in housing inventory.
"If a home is listed on a Thursday and a homebuyer is unable to see it, they're fine waiting until the following week to go take a look," she said. "Because inventory has picked up, there's just more options out there. So they're OK potentially letting something go."
Austin's homebuilders have been busy this year. The city's housing inventory climbed by 145% in June over the previous year. In Travis County, the city's most expensive county, inventory has increased by 159% year over year. That supply has had a noticeable effect on the market, which is softening for other reasons, too, Fenton said.
"Before, you would list a home on a Thursday, and buyers were having to make decisions by Sunday or Monday," Fenton said. "Now they are able to sit and think for a bit and then submit their offers."
Nashville, Tennessee
Ben Jasek has had to lower the expectations of Nashville sellers ready to list their homes.
Many are still "bullish," he said, expecting the all-cash over-asking-price offers that became standard during the past two years. Zillow data suggests that in that time, median home values grew by 50%.
"We've been spoiled by this crazy, crazy market," Jasek said. "Everything is just statistically taking a little bit longer right now."
The market has shown signs of a shift. In June, he said, a three-bedroom, 2 1/2-bathroom home in the North Nashville neighborhood was listed for $675,000. A seven-minute drive from downtown, and outfitted with trendy white-quartz countertops, the home would've sold in about 10 days earlier this year.
But it took nearly 45 days to get under contract. The price was reduced to less than $600,000.
"We kind of missed the boat of the market just a little bit," Jasek said.
Phoenix, Arizona
Phoenix has been one of the nation's most competitive real-estate markets, but rising housing costs have weakened buyer demand in the city.
Fern Coelho, an agent with Jason Mitchell Real Estate, says the shifting market dynamics are benefiting her clients.
"The housing market is definitely slowing down," Coelho said. "A lot of the homebuyers that weren't able to submit offers or get them accepted three to four months ago are now able to get an offer accepted."
That's in part because many would-be buyers are priced out of the market. Over the last two years, Phoenix has had the fastest-growing home prices in the nation.
Now, though, people who can still afford to buy a home are seeing a lot less competition and thus have more flexibility in their purchasing decisions.
Indeed, Coelho said, sellers are losing their leverage. She added that they have to sweeten deals for buyers, with one even offering a buyer cash that the buyer needed to get a lower interest rate on their loan.
"People are willing to negotiate and make a deal happen in order to get it closed," she said, "whereas four to five months ago buyers were having to waive inspections appraisals."
Denver, Colorado
Between summer 2020 and the end of 2021, the Denver housing market was a whirlwind of activity as office workers, unchained from their desks, made the Mile High City their new home.
The median sale price of homes in the city skyrocketed to $573,000 in November 2021 from $369,000 in July 2020, according to Realtor.com — a 55% increase a year and a half.
Bonnie Hissey, a real-estate agent in Denver, said everyone seemed to jump on the homebuying bandwagon, particularly from January to May of this year.
"I just ran out of words for it," Hissey said. "It was brutal. It was absolutely brutal."
The extreme seller's market pushed prices so high that bids 20% over the asking price were not unusual and nearly every deal was decided by a bidding war. It was stressful for buyers — and for brokers.
"I can't tell you how many times I just started spontaneously crying because I was like, I'm going to be put in a hospital if I can't stop working seven days a week," she said. "I had, like, seven straight months right before May where I was on all the time."
Finally, that period of wild demand and dwindling supply is cooling — and fast. Redfin found that more than half of listings in the city had price drops in July.
At the start of summer, Hissey said, she started to see "shards" of a slowdown. One of the first indicators was more one-bedroom condos lingering on the market.
Buyers became choosier. Hissey recalled some house hunters touring properties that months earlier would have flown off the market — this time, she said, they just said, "Nope."
Hissey said she was grateful she'd recommended some sellers list their homes earlier this year. She remembered telling a client she thought they did the right thing by selling in the late spring; the client replied, "Thank God we did this."
"It's long overdue and, in my opinion, welcome," Hissey added, "just to try and get some balance back in the market."
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FAQs
What are pandemic boomtowns? ›
“Pandemic boomtowns” experienced outsized income growth and soaring home prices from 2019 to 2021 as remote work enabled high wage earners to relocate from coastal cities into smaller markets, according to new research. Median homebuyer incomes in Boise, Idaho, for example, rose by 24 percent over two years to $98,000.
What is happening with the Boise real estate market? ›Boise housing becomes a buyer's market
A range plot showing the change in the share of homes that saw price cuts between July 2021 and July 2022, in select cities. As of June 2022, Boise, Idaho, is the city with the largest share of homes with price cuts: 69.7%. In 2021, it was just 29.6%.
Will the Boise Housing Market Crash? The Boise Metro Area housing market is expected to see a home price growth of 12% from June 2022 to June 2023, according to Zillow. Boise is America's second least affordable housing market.
Is Boise a boom town? ›BOISE, Idaho—During the pandemic-fueled housing boom, Boise emerged as one of America's hottest “Zoomtowns,” communities that experienced a spike in population from an influx of remote workers. Now, the housing boom around Idaho's capital city has ground to a halt.
What caused boomtowns to go bust? ›Other boomtowns also brought about their own demise, as they were typically dependent on a single economic activity. Resource depletion created a “bust” in these places, a catastrophic price collapse that could shrink a town as fast as the “boom” grew it.
What was a major problem in boomtowns? ›Introduction to a Boomtown Gone Bust
With oil came new residents, new homes, greater wealth, and a greater strain on local resources. After the oil production dropped in 1921, the city government dissolved and the town's only school closed its doors (Miller, 2011).
It said house prices will have risen 6 per cent by the end of 2022 but that they will fall 5 per cent in 2023 and a further 5 per cent in 2024 as a result of the sudden spike in mortgage rates caused by the government's fiscal plans.
Is Boise Idaho expensive to live? ›Boise's housing expenses are 11% higher than the national average and the utility prices are 18% lower than the national average. Transportation expenses like bus fares and gas prices are 11% higher than the national average. Boise has grocery prices that are 6% lower than the national average.
Is now a good time to buy a house in Boise Idaho? ›Boise also had the biggest increase in the share of listings with price drops from a year earlier, when 25.7% of sellers cut their price.” This trend bodes well for home buyers planning to make a purchase in the Boise area during the latter part of 2022 or in 2023.
Are Idaho house prices dropping? ›“It's taken a 180 degree from where it was during the pandemic, about 70% of homes in Boise have experienced a price cut," said Redfin chief economist. MERIDIAN, Idaho — The median sales price for homes in Ada County in August was $565,000, according to Boise Regional Realtors.
Why is rent so high in Idaho? ›
Increasing property taxes and the cost of maintenance are at the root of rising rents, Swanson said. “It's a common misconception that what's happening is just greed,” Swanson said by phone. “That's really not what it is.
Why are so many people moving Boise? ›is boise idaho a good place to live. Every year, a lot of people are moving to Boise, Idaho because of many reasons like the lower cost of living, housing cost, more affordable rent price, great weather, and plenty of outdoor activities. But like other cities, there are some negative aspects too.
Are house prices dropping in Boise? ›National data shows Boise's housing market is coming off its peak of high home price growth from a year ago, in July of 2021, when home prices were up over 47% year over year, according to Orphe Divounguy, a senior economist for Zillow. “If you look at Boise ...
Is Idaho a hippie state? ›Idaho is not a state where you think of a lot of hippies, but alas we do have a hippie town - at least according to Thrillist.
What is an example of a boomtown? ›Modern-day examples of resource-generated boomtowns include Fort McMurray in Canada, as the extraction of nearby oilsands requires a vast number of workers, and Johannesburg in South Africa, based on the gold and diamond trade.
Why did people leave boomtowns? ›Many mining "booms" were followed by "busts." When the mines no longer yielded ore, people left the towns. Once prospectors moved on to more promising sites or returned home, the town was then called a "ghost town." Many of these still exist in the West today as a reminder of the glory days of the mining frontier.
What are three characteristics of a boomtown? ›While often linked to a natural resource such as coal, oil, and natural gas, they include, but are not limited to, an increase in population, an increase in community and family wealth, and enhanced community economic performance.
What are two effects of boomtowns? ›Of all social dynamics altered as a boomtown arises, alteration of mental well-being is one of the most disturbing. Constant relocation in search of employment can create strain on physical and mental health. Feelings of isolation, depression, and loneliness can cause a rig worker to take up drugs or alcohol.
What is a boomtown quizlet? ›boom town. a community that experiences sudden and rapid growth. landmark.
What were boomtowns and why were they created quizlet? ›Towns that popped up overnight near mining sites. Boomtowns were lawless. Violence was common because everyone had guns and cash. People began to mine other metals such as copper, lead and zinc.
What are boomtowns How did they form? ›
A boomtown can be simply defined as a community undergoing rapid growth due to sudden economic shock. There is a long history of U.S. boomtowns linked to natural resource development dating back to the 1849 gold rush, which sparked a massive population migration to California.
What were boomtowns in California? ›Whenever gold was discovered in a new place, miners would move in and make a mining camp. Sometimes these camps would rapidly grow into towns called boomtowns. The cities of San Francisco and Columbia are two examples of boomtowns during the gold rush.
What cities were created as boomtowns? ›Early boomtowns, such as Leeds, Liverpool, and Manchester, experienced a dramatic surge in population and economic activity during the Industrial Revolution at the turn of the 19th century.
What does it mean boom town? ›Definition of boomtown
: a town enjoying a business and population boom.
Of all social dynamics altered as a boomtown arises, alteration of mental well-being is one of the most disturbing. Constant relocation in search of employment can create strain on physical and mental health. Feelings of isolation, depression, and loneliness can cause a rig worker to take up drugs or alcohol.
Why did people leave boomtowns? ›Many mining "booms" were followed by "busts." When the mines no longer yielded ore, people left the towns. Once prospectors moved on to more promising sites or returned home, the town was then called a "ghost town." Many of these still exist in the West today as a reminder of the glory days of the mining frontier.
What were boomtowns quizlet? ›Towns that popped up overnight near mining sites. Boomtowns were lawless. Violence was common because everyone had guns and cash. People began to mine other metals such as copper, lead and zinc.
What are some characteristics of boomtowns? ›The term “boomtown” usually refers to a small, rural, isolated community that experiences rapid energy development, and the associated industrialization and population growth that come with it.
What constitutes a ghost town? ›Definition of ghost town
: a once-flourishing town wholly or nearly deserted usually as a result of the exhaustion of some natural resource.
Life in boom towns were harsh and rushed for people were constantly working and moving around to create a profit for themselves. Vigilantes could create pressure on other people living in the towns and often took matters into their own hands acting as a law enforcement group.
What are the next boom cities? ›
- Austin, Texas. Current population (city): 961,855. ...
- Raleigh-Durham, North Carolina. Current population (city): 467,665 / 174,762. ...
- Orlando, Florida. Current population (city): 307,573. ...
- Charleston-North Charleston, South Carolina. ...
- Houston, Texas. ...
- Sarasota-Bradenton, Florida. ...
- San Antonio, Texas. ...
- Dallas-Fort Worth, Texas.
The biggest boomtown of all is Kirkland, Washington. The U.S.'s fastest-growing city has seen a five-year population increase of 76.8%.
What is a synonym for BoomTown? ›A large town, usually with a large population and a significant amount of activity. city. town. megalopolis. metropolis.
What is a town girl? ›noun. a socially active, sophisticated woman who frequents fashionable nightclubs, theaters, restaurants, etc.
What is a roughneck? ›Definition of roughneck
(Entry 1 of 2) 1a : a rough or uncouth person. b : rowdy, tough. 2 : a worker of an oil-well-drilling crew other than the driller.
Definition of dog town
1 : a community of prairie dogs. 2 slang : a city commonly used for theatrical tryouts before a play receives metropolitan presentation.