Data Points To Early Signs Of An Ada County Housing Bubble

Dec 3, 2014

According to data from Intermountain MLS, Ada County's median home price increased 16.5 percent from 2012-2013.
Credit Emilie Ritter Saunders / Boise State Public Radio

The housing-market research firm RealtyTrac finds that Ada County is showing early signs of a home-price bubble, based on affordability and an uptick in the foreclosure rate.

RealtyTrac's analysis shows Ada County is among 6 percent of U.S. counties where the foreclosure rate on home loans approved in 2014 is higher than those from 2013, and that it was less affordable to buy a home in October than over the previous 15-year average.

"To buy a median priced home in October of this year, it would require 30 percent of the median income, which the historical average to buy a home in Ada County has been 27 percent of median income," says RealtyTrac Vice President Daren Bloomquist.

Bloomquist says affordability – the measure of the cost of a home compared to income – is at the heart of what created the Great Recession's housing bubble and subsequent burst.

“We’ve seen a strong housing rebound particularly in home prices, but the rest of the economy hasn’t caught up, and needs to catch up. Particularly when it comes to incomes,” he says.

Ada County's median household income in 2013 was $52,542, meaning half the residents here earned more and half earned less. Idaho's median household income in 2013 was $46,783. Since 2005, the median household income in Ada County has grown just 2.5 percent, according to U.S. Census Bureau data.

Median home prices, however, have increased 9 percent from the third quarter of 2005 to the third quarter of 2014, according to data from Intermountain MLS.

“Nationwide, there’s been a 37 percent increase in median home prices after hitting bottom in March 2012 until now," says Bloomquist. "But at the same time incomes have been declining."

In Ada County, the median home price shot up 16.5 percent from $170,000 in 2012 to $198,000 in 2013. Meanwhile, median household income dropped 2.5 percent during that same time period.

Ada County Association of Realtors Executive Director Marc Lebowitz isn't concerned about another housing-price bubble.

“With the changes to lending that came from Dodd-Frank, the bubble that we had was the inability to sustain repayment tied to rapid price appreciation," Lebowitz says. "We’re not having the rapid price appreciation and we’re not making loans that aren’t going to be repaid. I don’t see where the bubble part comes in.”

Lebowitz says he is concerned about the access to affordable housing for first-time home buyers. Much of the current Boise-area inventory, and new homes slated to be built, are targeted for buyers with $200,000-$300,000 budgets.

"[But] I don't see a run-up in prices, and I don't see a risk to default like it was in 2006, 2007, 2008, 2009, etc.," Lebowitz says.

Find Emilie Ritter Saunders on Twitter @emiliersaunders

Copyright 2014 Boise State Public Radio