New apartments are the rage in Treasure Valley housing. Thanks largely to low home prices, the Valley has long had fewer apartments than similar Western cities. Now that home prices are higher— a lot higher — fewer young couples and families can afford to buy, so they’re renting instead.
Which is driving rents up too, even now, as complex after complex of new apartments opens.
The average rent for a two-bedroom apartment in Boise rose 9% in the past year, according to Zumper, an online apartment search company. The average two-bedroom unit now rents for $1,090 a month.
To meet demand, developers have built 3,581 new rental units in Ada County since 2015, raising the total to nearly 19,000, according to a report from Colliers International. An additional 1,542 units are under construction.
New apartments range from top-of-the-market buildings like The Fowler in Downtown Boise to a free-rent building for the chronically homeless on Fairview Avenue. They include hundreds of apartments for older adults in Nampa and, in small numbers, apartments for working people who earn too little to rent without a government subsidy.
Mostly, though, they are new complexes that push the average rents ever upward. They’re sparkling new two-bedroom, two-bath units from $1,350 a month, with pools, fitness centers and gigabit fiber, black kitchen appliances and walk-in closets.
Apartment shortage persists
There is at least one sign that price increases could moderate soon: Rental vacancy rates are climbing, which could bring hope for a better renters’ market. The vacancy rate for the quarter ending June 30 was 3.7% in Ada County, according to the Southwest Idaho chapter of the National Association of Residential Property Managers. A year earlier, it was 2.8%.
But prospective renters shouldn’t get hopes up yet. A healthy vacancy rate is between 6% and 7%.
“As a percentage of our population, the number of apartments we have is very low, when you compare us with other cities in the Intermountain West,” Clay Anderson, a Colliers agent who has sold more than 3,000 multifamily units in the past 12 years, said in a phone interview. “That’s because we’ve always had a very affordable home price. As affordability of homes is shifting, we can expect the percentage of apartments to grow.”
Ada County is still short 8,000 units relative to its size and growth, Anderson said.
What’s more, that rising vacancy rate may be no more than a blip. Brandon Morgan, owner of Morgan Property Management and president of the property managers chapter, said he’s not sure the vacancy rate signals a trend. Second-quarter numbers come during the height of the construction season and may indicate a surge in available units but not a trend, he said.
“By the winter, when most of the leasing season is done, then you actually have an indication, long-term in my mind, of where they are,” he said by phone.
How local rents stack up
Apartment rents have risen significantly in the past few years, following the trend of single-family homes. The median price of homes sold in Ada County in August was a record $355,000, according to the Intermountain Multiple Listing Service. Five years ago, it was $213,800.
Still, Boise’s average $1,090 rent for a two-bedroom is less than the $1,380 charged in Reno, $1,440 in Salt Lake City and $1,780 in Portland, according to Zumper.
Zumper’s figure is slightly higher than figures compiled by Apartmentlist.com ($934) and the Southwest Idaho chapter of the National Association of Residential Property Managers ($1,022). These averages include older units that typically cost less than new ones.
Apartmentlist said rents are most expensive in Meridian, at $1,175 for a two-bedroom unit. A two-bedroom in Eagle averages $1,022, in Nampa $894 and in Caldwell $792, the website said.
Boise ranks 53rd in Zumper’s list of the most expensive rental markets in the nation. San Francisco has the highest rent, $4,790.
Millennials rent longer
Anderson said apartments are a big draw for millennials, generally people born between 1982 and 2004. They are less interested in owning a home, he said. They’re more concerned with their careers and are waiting later to get married and have families.
“We expect millennials to be more comfortable living in apartments longer,” he said. “They’re renting longer than prior generations.”
Next month, CBH Homes is opening a 106-unit apartment complex, The Villas at 12 Oaks, near Linder and Franklin roads in Meridian. Rents for one- and two-bedroom units will range between $1,100 and $1,300, company President Corey Barton said.
Many factors go into pricing rentals as well as homes his company builds, Barton said. Land costs, construction costs, labor, materials and profits all figure in.
“We have to be very careful on pricing,” Barton said by phone. “We can’t just assume everything goes up and keep throwing the pricing up and think somebody’s going to take it.”
He said the cost of building an apartment complex is $100 to $120 per square foot. That’s more expensive than for a house, whose cost is $75 to $100 a square foot. Houses have more space to absorb the costs of kitchens and bathrooms that require electrical fixtures, appliances and plumbing, he said.
Vacancy rates are part of a builder’s equation, he said.
“We have to be price conscious, and those vacancy rates absolutely matter,” he said.
Business Editor David Staats contributed.