'No-cap' offers, 21 bids per house, and sales $100,000 over ask: Realtors describe the 'feeding frenzy' of the Idaho housing market as city dwellers flock to the Gem State
- The shift to remote work that accompanied social distancing is driving many urbanites to move to less dense areas — and the mountain region is a major beneficiary.
- A report by WalletHub ranks Boise, Idaho, as the best real-estate market of 2020, based on housing-market attractiveness and economic strength.
- Business Insider spoke with top real-estate agents from all over the state — Boise, Sun Valley, and McCall — and each said they've seen a massive influx of buyers.
- A top Boise agent said the market was operating with 15 days' worth of inventory, instead of five to six months in a more balanced market.
- Visit Business Insider's homepage for more stories.
"We ended up getting the house for $125,000 over the listing price," Matt Bauscher, a real-estate agent in Boise, Idaho, said.
That was after a bidding war in which a buyer made a "no-cap" offer on a luxury property, hoping to beat every competing offer, no matter the cost. Bauscher said it was just one of many bidding wars he's seen lately as demand in Idaho skyrockets.
Another bidding war, for a single-family 1,200-square-foot home in Boise's sought-after North End, had 21 offers and "went over the listing price cash by $105,000," Bauscher said. The property had been on the market for only three days, was listed at $545,000, and sold for $650,000.
Bauscher, who leads one of the top real-estate teams in Idaho, according to Real Trends, said this was an unprecedented market, a total "feeding frenzy."
Inside the feeding frenzy
The personal-finance website WalletHub recently ranked Boise as the best place to buy a house in the US based on housing-market attractiveness and economic strength, and the city's housing market has set records every year since 2013. But Bauscher said that history didn't prepare him much for 2020.
"COVID has exceeded the demand unlike anything we've ever seen," he said. "New construction is over 35% of the market; there's no inventory at all. Treasure Valley has a total of 15 days of inventory. Usually five to six months of inventory is normal. If no one lists for 15 days, there will be no inventory at all in Treasure Valley."
Nationally, the end of June marked the second straight month that over 50% of Redfin offers faced bidding wars, and Bauscher said the low inventory has driven bidding wars to new extremes.
Something bigger appears to be going on here. An August research note by UBS said the trend of "interstate migration to lower-cost, more tax-, business-, and regulatory-friendly states" seemed "structural in nature," meaning permanent. In short, people are moving to states similar to Idaho.
Business Insider's Madison Hoff reported that of the states more people have moved into than out of during the pandemic, Idaho had the largest net gain at a whopping 194%, followed by New Mexico at 44%.
The West in general is a beneficiary of the trend, as it led the rise in the National Association of Home Builders and Wells Fargo Housing Market Index to a record high in August, matching the level previously set in 1998. The index, which gauges homebuilder confidence for six months ahead, saw Western confidence jump 15 points to 78, the highest of any region.
Bauscher said that in Boise, the median and average prices were both up 15% from record numbers in 2019. "We are up 53% from 2019 with amount of homes selling for $1 million or more" year to date in 2020, he added.
A number of properties have sold for more than $100,000 over the asking price in locations spanning Boise and its suburbs, according to Bauscher: "75% of our clients have multiple offers on properties," he said.
Boise isn't the only area in Idaho setting records.
Bidding wars are statewide, even in rural vacation enclaves
A two-hour drive from Boise, the rural vacation town McCall has the same dynamics.
"Inventory is down and demand is up," Steve Jones, a local agent, told Business Insider, adding that COVID-19 has sent the market into a whirlwind of demand, with sales volume up 20% since May 1, despite the area usually being a vacation-rental and second-home market.
Some of the area's most desirable properties are found lakeside, Jones said, where pre-pandemic prices were about $17,000 to $18,000 per "front foot" — a term used to describe lakefront property footage. He said that number was now up to $30,000 per front foot.
Jones said a recent bidding war led to a lakeside property listed at $1.7 million selling for $1.85 million.
Overwhelming demand in Idaho's resort towns
Katherine Rixon, a top Sun Valley agent, agrees that COVID has had a huge influence on the market.
"We have seen increased demand both for buyers and renters. Long-term-rental demand has increased significantly, while short term has decreased," she said, adding that her team saw a big boost in visitors who came for the entire summer, versus just a week or two. Now many are choosing to stay for the fall or even for the entire school year as remote work and schooling continues for both parents and children, she said.
"Our local schools have also been inundated with new demand," she added.
While Rixon's team closed $130 million in sales last year, a record year, it has already hit $94 million year to date, with another $60 million pending sale. "COVID has indeed impacted our business in a big way," Rixon said.
A main driver for buyers coming in from larger cities is the "elbow room and a better quality of life," Rixon said, adding that Los Angeles, San Francisco, Seattle, and Portland, Oregon, were their largest feeder markets.
"COVID has caused a boost, but it's not the only reason people are moving in," Rixon said, adding that her team was seeing large influx of buyers from California specifically.
"Who would have thought a global pandemic would send our market through the roof?" Rixon said. "Now we just have to make sure our local infrastructure can support all of the people moving in."
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