BOISE, Idaho — The Federal Reserve has raised its benchmark interest rate five times this year – as a result, mortgage rates are going up.
On the flip side, home prices in Ada County are dropping. Federal Reserve Economic Data shows the average 30-year fixed rate mortgage has jumped to almost 6.7%.
That is about 3.7% higher than the fixed rate one year ago.
“That means that [a] buyer at 3% that afforded a $500,000 house is now looking at having to look in the market of more [$345,000],” Boise Regional Realtors President, Becky Enrico-Crum said.
Enrico-Crum said because of that increased interest rate, there are more homes available to buy in Ada County. At the end of September, there were 2,420 available listings on the Intermountain MLS, a 93.8% increase from last year.
Houses are also on the market longer. Homes that closed in September were on the market for about 37 days. Compared to last year, that is double the amount of time, according to a Boise Regional Realtors press release.
Not only are there more homes on the market in Ada County, but homes are also cheaper. The median sales price was $540,000 in September, according to the press release. That is down $25,000 from August, but still almost 1% higher than last September.
Enrico-Crum said declining prices are enough for some people to bite the bullet.
“We have several of those buyers that have been, I mean, they tried over and over again for two years during, you know, all the multiple offers,” Enrico-Crum said, "and they would lose and lose, and now it’s kind of like, alright, now we can actually buy something.”
That was certainly the case for Will Cevallos, who lives in the Treasure Valley. Cevallos started looking for a house a few weeks ago. He already found one and is expecting to close on that house by the end of the month.
Cevallos said rising interest rates played a role in his decision to start seriously looking.
“I just wanted to pull the trigger,” Cevallos said. “Fortunately, [interest rates weren’t] anything that pushed me out of the market.”
However, people selling their house might feel differently; they are likely getting less money than they would just one month ago, Enrico-Crum said.
She said people who bought their houses this year need to wait about three to four years before they sell to see any substantial equity gain.
There are programs out there for people wanting to buy right now, Enrico-Crum said. One of those programs is “lock and shop” – where you can lock in an interest rate while looking for a house.
The lock lasts 90 days. If interest rates are higher at the end of the lock, then people can take the lower interest rate, Enrico-Crum said.
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