The change in attitudes about renting has been a godsend for apartment developers and landlords in the Treasure Valley.
New apartments are starting to spring up as demand rises, thanks in part to people forced out of homes they couldn’t afford or were prevented from buying by tougher mortgage-loan standards. Others are renting because they’re leery of homeownership due to insecure or mobile jobs or because of the decline in home values since 2007.
“Right now, there’s some demand,” said Kevin Amar, the owner of Biltmore Co., a Meridian construction and development company that is building 12 four-plexes near the College of Western Idaho in Nampa.
Demand is driving sales and construction of multiple-family housing across the Valley. In the first six months of 2011, 38 duplexes, four triplexes, 35 four-plexes and seven apartment buildings have been sold in Ada County. A developer is seeking a permit to build a $7 million, three-story apartment building with 53 units for senior citizens at 12th and River streets in Boise.
Apartment buildings also are springing up in Caldwell, including the new Hope Plaza Apartments with 48 apartments in two buildings for low-income families and individuals and those escaping family violence.
“Investors are starting to buy rental property again,” said P.J. Chapman, owner of Chapman Properties in Boise. “If you’ve got the money, now is the time to buy.”
A DIFFERENT MINDSET
The shakeout in the housing market has drawn millions of Americans into renting. The U.S. homeownership rate is at the lowest level in more than two decades and still falling. About 3 million Americans have become renters since the home sector crash began a few years ago, studies show.
In Idaho, where homeownership reached a 25-year high of 75.5 percent in 2009, property managers say they have little space left to rent as people lose homes to foreclosures and short sales.
“We’re seeing long-term owners settling into rentals,” Chapman said. “Homeownership is not what it used to be. A lot of people don’t look at it as the American Dream.”
Since January 2009, Idaho has been in the top 10 states with the highest foreclosures per capita. The state was No. 5 in June with 1,881 homes, or one in every 344, in some stage of default, according to RealtyTrac, a research company that tracks foreclosures nationwide. That overall number was up 34 percent from May but down 17 percent from June 2010.
A GLUT OF RENTERS
Most Treasure Valley rentals now have new tenants lined up before the occupants move out, said Tony A. Drost, owner of First Rate Property Management Inc. in Boise.
Rental vacancy rates in the first three months of the year were down to 2.5 percent for three-bedroom single family homes and 3.3 percent for two-bedroom apartments, according to an informal survey of Treasure Valley property managers by the Southwest Idaho Chapter of the National Association of Residential Property Managers.
Amar said he started his Nampa project about six months ago after some investors approached him and he looked at the rental vacancy rates.
The two-bedroom, two-bath four-plexes will sell for about $270,000 each and rent for about $695 per unit, he said. Some units will be completed by the end of the month and should be occupied by August, he said.
Randi DeBlieck, 25, a renter in Nampa, said she and her husband would love to own a home, but now isn’t the right time.
“It’s tough,” she said. “You never know with your job if you’re going to be laid off, and we just don’t want to be in a situation that could hurt our credit.
“We don’t want to get in over our heads.”
THE EFFECT ON RENTS
Jason Woodward, owner of Boise Property Management, said demand also has increased rental rates.
The property managers association’s survey shows that though average rental rates have been almost flat since 2007, they increased slightly in the first quarter of 2011 by 3.6 percent to $907 from $875 for a three-bedroom single family home and by 1.7 percent to $575 from $565 for a two-bedroom apartment.
“So far, the growth in the economy has led primarily to increased apartment leasing and increasing rental rates,” said David Brown, who heads the Dallas office of housing analyst Metrostudy Inc. “Eventually it will lead to increased home sales.”
That may take a while, said Greg Willett, vice president at MPF Research Inc.
“The renter-by-choice group does seem to be getting bigger on both ends of the spectrum,” Willett said. “Young adults are delaying purchases, and older households are coming back into rentals.”
But he doesn’t believe the shift away from homeownership will be long term.
“So many people have been delayed in their careers during the recession, and it’s going to take a long time to recover financially,” Willett said.
Sandra Forester: 377-6464
