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Are Ada and Canyon County homeowners underwater again? Why it's not time to panic

Recent data from around the U.S. has some concerned about another crash. If you weren't around in 2008, this is what happened then.

BOISE, Idaho — In 2008, the market crashed, home values plummeted, and everything stopped. That’s because no one could afford to buy or sell their homes, since they owed more on their mortgages than their homes were worth. 

They were “underwater” on their mortgages, and I can tell you this: Things were not better where it was wetter.

So, why is there a big concern now that we're headed in the same direction? Certain numbers don't inspire hope. A recent survey from Insurify reveals that 69 percent of homeowners have some concern about being underwater on their mortgages. There's good reason for that, because that same survey showed 25 percent of new homeowners said they are already underwater on their mortgages. That's nationwide.

How are things looking locally? Just looking at values, the median home prices in Ada and Canyon Counties are down almost 11 percent compared to last year. That's according to the Intermountain MLS.

So, I guess it's time to panic? As fun as that would be, no. Debbi Myers, President of Boise Regional Realtors said, first of all, the market here in Southern Idaho and Eastern Oregon is unique. And it's important to focus on local, rather than national numbers. Those local numbers still don't look great, but Myers said they shouldn't. It was time for them to come back down.

“I think we're getting into what I would refer to as a more normal market. If you look at growth patterns, and you take out the COVID years, we're back on track with that normal type of growth," Myers said. "The COVID years were just so ridiculous, for a lot of reasons." 

"One, we were undervalued going into COVID. And that COVID made that even more attractive for people who were coming out of big cities because they could work remotely now and they could have some space," Myers continued.

"That really boosted our prices. You know, we saw the things where people were coming in and offering way over asking because they could. And they had the means to do that, that settled down a lot. People still have equity in their homes," Myers reassured. "We're in great shape there. But we're not seeing that panic buying that we were seeing during COVID. And that has settled the market down to more normal rates."

Here are some other important points Myers made:

  1. First, we all got our tax assessments recently, which were mostly way down. So, some of you might be thinking, 'I'm underwater on my mortgage!' Not necessarily. Myers points out that your tax assessment is not the market value of your property. Assessors typically under-value your home, and you can get a lot more for it than what it's assessed at.
  2. Secondly, foreclosure and distressed property rates are nearly non-existent here. In fact, the rate of folks behind on their mortgage payments in Idaho is one of the lowest in the nation at just 2 percent.
  3. All that plays into Myers’ third point: The market is not crashing. So, she noted that if you're waiting to buy, you should stop waiting, if you can. The market, at least around here, is going to be fine.
  4. And that is because of Myers' final point: Housing inventory is lagging way behind, and builders can't keep up. That provides some pressure to keep those prices up.

When you take all those factors together, they provide upward pressure on home values. That’s while rising interest rates and frugal buyers are providing downward pressure. So, you get, hopefully, what we're looking at now, a more normal market and few people underwater.

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