Will the Boise, Idaho Housing Market Crash in 2022?

Key highlights from this report:

  • The Boise housing market has been sizzling over the past 15 months or so.
  • Home prices have skyrocketed due to strong demand and low inventory.
  • Some people now fear that a real estate downturn or crash is coming.
  • But a Boise, Idaho housing market crash in 2022 seems highly unlikely.

What can we say about the real estate scene in Boise, Idaho that hasn’t been said already? To call it a hot housing market would be quite the understatement. Turbo-charged, sizzling and ridiculous are more appropriate descriptors.

According to the latest data, the median home value for the Boise-Nampa metro area rose by more than 40% over the past year or so. That’s about ten times the average annual increase in home prices within the U.S., over the past 40 years.

So yes, it’s a “hot” housing market.

But given this meteoric rise in home values, some are now wondering if the Boise housing market will crash in 2022. Will the real estate bubble pop next year? Or will it just keep swelling?

Will the Boise Housing Market Crash in 2022?

Let’s start with the obvious disclaimer. No one can predict future housing market or home price trends with complete accuracy. If the past 18 months have taught us anything, it’s that uncertainty is alive and well in the world.

That being said, it seems highly unlikely that the Boise real estate market will crash in 2022. After all, a housing “crash” occurs when home prices drop sharply, often due to a surplus of supply and/or a sudden drop in demand.

But those conditions are not present within the Boise housing market.

On the contrary, this metro area is still experiencing very strong demand coupled with very low supply. Historically speaking, real estate markets don’t crash under such circumstances. They tend to keep climbing, in terms of home prices.

So no, the Boise real estate market probably won’t crash in 2022.

A more likely scenario is that home prices across the Boise-Nampa metro area will rise more slowly over the coming months. But they’ll almost certainly keep climbing to some degree.

Supply-and-Demand Imbalance Continues

When real estate markets “crash” (or experience a sharp downturn in home prices and sales), it’s usually caused by a major change on either the supply or demand side. Or both sides.

For instance, when the supply of homes for sale greatly exceeds the demand from buyers, prices tend to drop. Sometimes significantly. The same thing can happen if home buyers suddenly stop buying houses, for whatever reason.

But when you look at current conditions within the Boise, Idaho real estate market, you’ll see the exact opposite. You’ll see a housing market where the demand for homes greatly exceeds the available supply.

That’s the number-one reason why we probably won’t see a Boise real estate crash or bubble burst in 2022. The current imbalance between supply and demand will put upward pressure on prices, at least for the foreseeable future.

As of July 2021, the Boise metro area had about a one-month supply of homes for sale. That’s a much lower level of supply than most other major cities across the U.S., and miles below what’s considered to be a “balanced” market.

With such tight supply conditions, home buyers in the area have to compete fiercely for one another. This competition has boosted home prices to unprecedented levels (see below).

On the demand side, the Boise metro area has seen explosive population growth in recent years. Meridian, Idaho was recently ranked as one of the fastest growing cities in the country. This growth trend actually predates the pandemic, but COVID-19 gave it a big push.

The bottom line here is that a seriously lopsided supply-and-demand situation will help shield Boise from a housing market crash in 2022.

A Positive Home-Price Forecast for Boise Area

This month, Zillow predicted that home prices across the Boise, Idaho metro area would rise by double digits over the next 12 months. But their long-range forecast pales in comparison to the unprecedented price gains of the previous 12 months.

According to a September 2021 statement on the company’s website:

“Boise City Metro home values have gone up 44.1% over the past year and Zillow predicts they will rise 18.4% in the next year.”

That 44% figure above has caught the eye of housing analysts and economists. It also landed Boise on a list of the nation’s most overvalued real estate markets.

Researchers from Florida Atlantic University recently published the results of a study that compared current home price trends to historical pricing trends. The goal was to determine which metropolitan-level real estate markets are overvalued, and which ones are undervalued.

To quote the FAU report:

“The nation’s most overvalued market is Boise, Idaho, where homes are selling for 80.64 percent more than they should, based on a history of past pricing. Work-from-home consumers priced out of other markets during the pandemic appear to be leaving those expensive cities and driving up values in Boise.”

This is one reason why some home buyers and homeowners in the area worry that the Boise housing market will crash in 2022. They fear the local real estate scene is currently in a bubble phase, and that the bubble will pop in 2022 or beyond.

Those are valid concerns, given the ludicrous rise in home values over the past year. But, as we’ve already stated, a Boise real estate crash in 2022 seems very unlikely at this stage. The dearth of inventory and steady demand from buyers will probably keep prices climbing — to some degree.

A Real Estate Market ‘Correction’ Is More Likely

So, a major market downturn or crash probably won’t hit the Boise area any time soon. A more likely scenario is that prices will begin to rise more slowly over the coming months. Economists often refer to this as a “correction.”

Without nitpicking over specific numbers, the Zillow forecast mentioned above seems realistic. It’s hard to imagine that home values in the Boise area could continue rising at their current pace. A market correction in 2022 could bring slower price growth, compared to what we’ve seen over the past 12 months.

Disclaimer: This article contains forecasts and forward-looking statements relating to the real estate market, home prices, etc. Such statements are the equivalent of an educated guess and should be treated as such.

About the author: Brandon Cornett is a full-time real estate blogger and creator of the Home Buying Institute. He provides blogging services for mortgage and real estate professionals across the U.S.