INCREASING BALKANIZATION OF THE MARKET
Historically in the Boise area, we need 2,400 active homes listed on the market to meet demand. As fall hit, our inventory started to decline at a rate of roughly 25% per month, taking us to the end of the year with less than 1,000 active listings. However, because we need our basic supply to be 2,400 homes, we do not foresee a huge market crash here in the Treasure Valley. What is even more astonishing about our market is that our luxury market (homes over $1,000,000) has been the fastest growing sector. Looking ahead to 2023, we are expecting a flat year. Already, we see our builder community pulling back on building permits by 20%. This will cause a continued housing shortage in the Valley. LESS CONSTRUCTION, MORE LUXURY IN BOISE
NEW L.A. TAX AND TENANT LAWS
While the L.A. moratorium will sunset in 2023, tenants who used rent protections from July 1 to Dec 31, 2022, are still within the 12-month repayment period. And the rent freeze for properties covered under RSO will last until 2024. Also, Measure ULA will add a transfer tax of 4% on commercial properties that sell above $5M, plus 1.5% more on properties above $10M. Owners will likely sell prior to April 1, 2023 when the new tax takes effect to avoid the tax. I expect the increase in sales to be temporary, and after April 1, I foresee velocity slowing for properties in the $5-10M+ price range, notable exceptions being exempt properties or those sold to nonprofits.
I predict we will stay flat, barring any black swan events. I see the first signs that inflation has slowed, if not slightly reversed in some sectors. The Fed looks to be slowing their rate hikes. 2023 will be the year when the accumulated inflationary pressures settle into the market. Places that rose astronomically over the last 2 years will likely retract a bit. Places that rose more steadily may continue to rise, but gently. From there, I think we will see increasing balkanization of the market, likely by state. States will continue to test their sovereignty, and this will attract or repel thousands and possibly millions of people. It’s not uncommon now to invest by region or state, but this will become more pronounced.
WE DO NOT FORESEE A HUGE MARKET CRASH HERE IN THE TREASURE VALLEY.
STATES WILL CONTINUE TO TEST THEIR SOVEREIGNTY.
VELOCITY WILL SLOW FOR $5-$10M PROPERTIES.
Ed Pluchar Founder The Pluchar Group Connect with Ed
David Evans Senior Associate Kidder Mathews Connect with David
Elizabeth Campbell Lysi Bishop Real Estate Boise, ID Connect with Elizabeth
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