from CoreLogic
Jobs, Population Growth, Including an Influx of Californians, Help Fuel Steep Price Growth
— this post authored by ANDREW LEPAGE
For almost a year Idaho has led the nation in-home price gains, standing out as the only state with double-digit annual price growth – approaching 12% at times – over the past seven months.
Idaho home prices jumped 11.6% year over year this August – more than triple the nation’s 3.6% increase and significantly higher than the next-highest appreciation rate – 8% – in neighboring Utah, according to the CoreLogic Home Price Index (HPI) (Figure 1). In Idaho’s largest region, Boise, prices shot up 12.4% in August. Statewide, annual price gains have been the largest among all states for 11 consecutive months, explaining how Idaho logged the nation’s highest average annual gain in homeowner equity – $22,000 – in the second quarter of this year[1].
Idaho, which calls itself the “Gem State” for its precious/semi-precious stones but is also known as the nation’s leading potato producer, has experienced a doubling of home prices over the last seven and a half years. It’s the steepest appreciation over that period for any state except Nevada, HPI data show.
Idaho’s price run-up has been fueled by a variety of forces, including some of the nation’s highest job and population growth. Its non-farm annual employment growth of 2.1% this August outpaced the nation’s 1.4% increase and ranked seventh among states, Bureau of Labor Statistics data show.
Idaho’s 2.1% population growth between July 2017 and July 2018 tied Nevada’s as the nation’s highest, while the U.S. growth rate over that period was 0.6%, according to U.S. Census Bureau estimates. Nearly 30% of all people moving to Idaho from another state in 2017 came from California, up from about 23% near the peak of the last housing cycle in 2005, Census Bureau data show[2]. Moreover, among people living in other states, about four in ten home loan applications to buy in Idaho were submitted by Californians between January 2018 and August 2019, according to CoreLogic loan application data. California applicants slightly outnumbered those from all of Idaho’s six neighboring states combined.
Affordability is a major draw for those moving from California, where the $495,000 median sale price this July was nearly 87% higher than Idaho’s $265,151 median. Idaho’s job growth, natural beauty, wide-open spaces, fishing and hunting, and other recreational opportunities are among the other attributes luring out-of-state buyers. While Idaho is about half the size of California in terms of land area[3], its population of around 1.8 million is less than 5% of California’s population, which is approaching 40 million, according to Census Bureau estimates.
Local and out-of-state investors and vacation-home buyers have also helped fuel the Idaho market, but at a fairly constant level over the past five years and at a lower level than during the height of the last cycle. Through August this year, about 20% of the Idaho homes sold were purchased by absentee buyers – investors and second/vacation home buyers – compared with about 22% in 2005 and 2006, just before the last downturn [4].
Idaho has led the nation in-home price growth before, near the peak of the last real estate cycle. Between June and September 2006 Idaho’s annual price growth was highest among states between 18% and 23% – three to six times as great as the nation’s price growth during that period, HPI data show. Over the following year, the housing bubble burst and prices began to decline across much of the country. By fall 2007 Idaho home prices were dropping on a year-over-year basis, too, and by spring 2009 Idaho’s annual price declines exceeded the nation’s (Figure 2).
Then foreclosure activity spiked. During the housing bust, Idaho’s overall delinquency rate [5] remained significantly lower than the nation’s but the Boise region’s rate hovered close to the national level during the early stages of the downturn (Figure 3). Idaho’s foreclosure rate [6] also remained significantly lower than the nation’s but the Boise area’s rate was close to or slightly higher than the nation’s during much of 2009 and 2010. In recent years, however, Idaho’s strong job and home price growth have kept its delinquency and foreclosure rates among the nation’s lowest. Both statewide and in the Boise region those two rates remained lower this July than a year earlier.
However, there are signs of at least a modest cooling in Idaho’s housing market:
- Idaho’s non-farm job growth has gradually ratcheted down from a 3.6% annual growth rate in July 2018 – the high point for the past three years – to 2.1% this August, the latest BLS data show.
- Total statewide home sales have declined on a year-over-year basis for nine consecutive months through this July when they dipped 5.4% [7]. A year earlier sales rose 8%.
- The Boise region’s inventory has risen, CoreLogic Multiple Listing Service data show. The months of inventory – the number of months it would take to sell all of the homes on the market at the current sales pace – has trended higher year over year in five of the last six months. However, the 2.8 months of inventory this August suggests Boise was still slightly in a seller’s market.
- Four of Idaho’s neighboring states – Oregon, Utah, Nevada, and Washington – have experienced a significant decline in home price growth over the past year. In the latter two states price growth this August had dropped by more than half compared with August 2018.
Footnotes
[1] From CoreLogic’s Home Equity Report for the second quarter of 2019. [2] U.S. Census Bureau American Community Survey 1-Year Estimates; State-to-State Migration Flows (2017 most recent year available) [3] U.S. Census Bureau reports California’s land area is 155,779 square miles and Idaho’s is 82,633 square miles. [4] CoreLogic public records data. [5] The share of all home loans 30 or more days past due. [6] The share of all home loans in some stage of the foreclosure process. [7] CoreLogic Real Estate Analytics Suite© 2019 CoreLogic, Inc. All rights reserved.
Source
https://www.corelogic.com/blog/2019/10/idaho-annual-home-price-growth-leads-the-nation.aspx
