Boise, Idaho hadn’t crossed their minds while watching the real estate markets in the first quarter of last year. As always, it was a quiet, quaint town in the Rocky Mountains. A paradise for some, but not enough of an economic powerhouse to create a seriously competitive housing market of its own.
What a difference a year makes.
Inspired by teleworking and new geographical freedom, Buyers from all over the country have come to Boise Buying homes for tens of thousands above asking price. While mortgage rates have remained low, these price hikes do not necessarily lead to a full-blown affordability crisis. However, the entire Boise mortgage and real estate industry is concerned about what could happen if interest rates continue to rise, and the teleworking trend keeps bringing cash-rich shoppers from California and Washington to the market.
“If someone sells their home in California that has risen in value over the past few years and then retires, they may not have a bigger sticker shock as they have an estimated $ 50,000, 100,000 worth of a home they really love or $ 150,000 higher than Boise, ”said Joseph Pattee (pictured), branch manager at Guild Mortgage in Boise. “When they come in with cash or a large down payment, it is very difficult for someone who does not have a large down payment and is in need of a loan to cover much of their purchase price.
“What we are seeing in the market right now are many state buyers willing to pay much more than the estimated value because they know they are buying a home that is still cheaper than what they are selling and they don’t mind paying over appraisal because it’s a better home for them and they have the money for it. “
While low prices mean locals can still afford to buy a home, Pattee fears that the picture of affordability in Treasure Valley could worsen. In his opinion, the city needs serious wage growth to allow locals to compete with non-state buyers. People who earn Boise salaries now face buyers who earn salaries in San Francisco or Seattle, and until their earnings picture improves, they remain seriously disadvantaged.
Still, Mortgage professionals can play a key role in helping customers face an affordability crisis. Pattee emphasized that getting your customers into the right mindset is critical at the beginning of the process. He tells them when to decide how to get offers and prepares them for the fact that they are unlikely to win their first offer. While mentally preparing clients, he pounds out the details with their real estate agent. Pattee and the agent work to coordinate for each listing and do some preliminary underwriting at a specific address before people sign a contract. Disclaimers are also crucial, and Pattee notes that he can use these tools to make an offer more attractive.
While he’s happy to make the seller and his agent more comfortable in this market, Pattee also advocates programs like FHA and will Loans that make sales agents nervous. He always explains directly to them that a VA program, for example, no longer means fees for the seller. Rather, he explains why the program simply works better for his customer. With markets across the country acting a little more like Boise, mortgage professionals believe they can go a long way in addressing the affordability crisis by destigmatizing these programs that are giving so many Americans access to housing.