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July 29, 2022 6 mins

As interest rates are rising, companies are calling workers back to the office, and home prices expected to fall, Zoomtowns that drew in remote workers during the pandemic are showing that the housing market is cooling fast.  Boise, Idaho in particular is emblematic of this with its housing market currently overvalued by 69%.  Nicole Friedman, U.S. housing reporter at the WSJ, joins us for what to know as more houses are sitting on the market longer.

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Speaker 1 (00:00):
It's Friday, July. I'm Oscar Ramiras from the Daily Dive
podcast in Los Angeles, and this is reopening America. As
interest rates are rising, companies are calling workers back to
the office, and home prices expected to fall zoom. Towns
that drew in remote workers during the pandemic are showing
signs that the housing market is cooling fast. Boise, Idaho,

in particular, is emblematic of this, with its housing market
currently overvalued. By Nicole Friedman, us housing reporter at the
Wall Street Journal, joins us for what to know as
more houses are sitting on the market longer. Thanks for
joining us, Nicole, Thank you for having me. Well, let's
talk about Boise, Idaho and the housing market that's going

on there. It was booming in the early part of
the pandemic, and now, as we're seeing in a lot
of other markets too, it's starting to cool down really fast.
But Boise was one of these places where so many
people were really attracted to going there. You know, the
prices were a little bit lower, you know, the affordability,
the pandemic restrict actions, they had a lot less than
other places. And this kind of boom in remote work,

these towns that had all this influx that call them
zoom towns really, and it was one of the the
the on the top of the list of a lot
of places. But now that everything's cooling down, mortgage rates
are really high, everything has kind of been turned on
its head. It's kind of the opposite of what we're
seeing during the pandemic. So Nicole, tell us what's going
on there. Yeah, absolutely so. Boise, as you say, was

kind of the poster child in some ways for the
pandemic driven housing boom. A lot of people they could
work remotely and chose to leave particularly more expensive West
coast cities and moved to Idaho, take advantage of the
cheaper cost of living, the ability to work remotely, the
more outdoorsy lifestyle. And for many people, they were also

seeking fewer pandemic restrictions, maybe less mask mandates or vaccine requirements.
And now we really are seeing the reverse of that
that a lot of the people who were driven to
move by the pandemic have moved, and so that in word,
migration has really slowed down, and we're seeing some reversal
as well. People are being called back to the office

or maybe they missed their family and friends wherever they
came from. Some people I'm hearing anecdotally who moved to
Idaho or Boise in the past few years are moving back.
And then at the same time, prices in Boise have
searched so much that housing has gotten a lot less affordable,
and it's really gotten out of reach for local buyers
who are earning local incomes. Particularly as prices have searched

and mortgage rates are now higher, a lot of local
buyers have just been priced out of the market, and
so the housing market and Boise has slowed really abruptly.
We're seeing homes sitting on the market for longer, sellers
cutting their prices, and that's true of a lot of
markets around the country. That activity has really slowed down,
and Boise does seem to be one of the exemplars

of this trend. Yeah, and a lot of places where
we're seeing price cuts and you know, houses just sitting
on the market a long time. So we got Boise, Denver,
Salt Lake City to come in Washington's so it's happening
in other parts of the country as well. And devetailing
off of what you were saying right now to these
towns also had those growing pains also, so there was
an influx of people, meaning more traffic, congestion, you know,

harder to go out to a restaurant, things like that.
And the locals that were being priced out of those
markets and all that, they're also not liking that part
of it. Now. There's too many people in these areas. Absolutely.
I've definitely talked to people who say, you know, I
moved to Boise for that lower pace of life, for
that small town steel and it no longer feels that way.
It has some of the big city problems that maybe

I moved here to escape. And Boyse definitely still is
a small city. You know, the metro area is less
than a million people, but it definitely feels bigger and
more congested, more crowded than it did just a few
years ago. And a lot of locals say they think
it's only going to continue to grow that maybe in
the next few decades that will look more like a
Salt Lake city, more like a Denver or Portland or again,

what are home builders doing right now? Because the demand
was so high, and throughout the whole story of the
pandemic and the housing market, it was always this thing
of high demand very low supply. So I know a
lot of homebuilders are trying to build big luxury homes.
I know they've tried to scale that back now and
go to some smaller designs. But what are they doing
now that the market is cooling down. So in the

past few years, homebuilders have tried really hard to ramp
up activity to meet demand, to build many more houses,
and it's been difficult for them to do so because
of supply chain issues and material costs got really expensive.
There's limited labor, especially in a smaller market like the
Boise area. They're just are so many only so many
trades people to hire, and so it's been hard for

homebuilders to ramp up and meet the demand. But they
have started construction and a lot more homes in recent years,
and now they're pulling back because they're seeing the demand fall.
Traffic is slowing down. The waitlists that they maybe had
last year of interested buyers have dried up because some
of those buyers can no longer qualify for a loan
at the current interest rates. And so homebuilders say they

to you know, start fewer homes in the coming year,
and they will probably scale down to maybe smaller homes,
more affordable homes to try to get back to those
local buyers at local income and what they can afford,
as opposed to catering to the out of state buyers
who might have higher budgets. You mentioned it already that
a lot of this in migration to Boise specifically was

because of this whole ship to remote work and people
looking for bigger places. Can they had that opportunity to
still keep their jobs and do that remote work. Well,
a lot of these companies now are really starting to
call people back into the office. So in some cases,
you know, that's why they call we're calling them zoom towns, right.
But in a lot of cases now these people that
are having to go back to work are you know,

having a little bit of buyers remorse. They're having to
sell those houses back and now they're in a completely
different market even just trying to recoup some of that money.
That's true, though, people that bought in the past few
years in Boise still are benefiting from a lot of
price appreciation and equity games. So even if their homes
are sitting on the market for longer, or maybe it's
more difficult for them to sell, they can still in

the current market, expect to sell for a lot more
than they might have paid two years ago. Well, we'll
keep an eye out to see what's going on there
in Boise. As I mentioned, this is happening in other
markets across the country, and really everything's starting to cool down.
These mortgage rates are going up higher. I think the
Fed raised the interest rate again, so these could possibly
go up higher again. It's it's all changing very quickly.

Nicole Friedman, us housing reporter at the Wall Street Journal,
thank you very much for joining us. Thank you for
having me. I'm Oscar Ramirez and this has been reopening America.
Don't forget that. For today's big news stories, you can
check me on in the Daily Dive podcast every Monday
through Friday. So follow us on I Heart Radio or
wherever you get your podcast.
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