Boise housing now: Rising prices benefit homeowners, lead to thousands of new apartments
The year 2020, one many people would like to forget, was positive in at least one important way: Boise-area homeowners saw the value of their houses increase dramatically.
That’s the yin alongside the Boise affordable-housing crisis yang. For many homeowners, houses are their most valuable assets.
“A silver lining to one of the hardest years ever has been the tremendous equity gain that homeowners can benefit from,” Boise real estate broker Lysi Bishop wrote in a flyer to North End homeowners. “Home values increased 17.9% in Ada County, days on market dramatically decreased, and inventory dropped to historically low levels. These metrics combine to create the ideal environment for homeowners to cash in on their real estate investments.”
The average price of an Ada County house rose to $540,846 in January. That’s up a whopping 30.4% from January 2020’s $414,802, according to the Intermountain Multiple Listing Service.
The median price was $454,000, up 25%. Medians are midpoints, and they’re usually lower than averages, because average prices are pulled up by the most expensive houses.
But even the humblest of houses can command a high price today. As the Idaho Statesman just reported, a 628-square-foot house at 809 W. Brumback St. in Boise’s North End, with one bedroom and one bathroom, had a pending sale last week for $408,000. That’s $650 per square foot.
Rents: Boise leads U.S. in rate of price increases
When house prices rise fast and people get priced out, they must rent. The Treasure Valley’s severe shortage of resale homes intensifies the problem. When houses are simply unavailable to buy except for the wealthy, renters remain renters longer.
The latest data show that Boise-area rental prices are rising at a nationally record-setting pace.
Zumper, a rental listing service, reported Thursday that Boise is now the nation’s 39th most expensive rental market. The company said one- and two-bedroom apartments rent at medians of $1,210 and $1,310, respectively.
The price of one-bedrooms has risen 17.5% since this time last year. Two-bedroom units are up 8.3%.
Zumper bases its prices on its own and some other sources’ current listings. It excludes rentals already occupied and not on the market. Some other rental services include not-on-market rentals, and that results in lower median prices.
One such service, Apartment List, just pegged the one-year increase through February a bit lower: 13.5%. But that was still high enough to mark Boise as the city with the fastest rate of increase among the nation’s 100 largest cities.
Apartment List said the median rents of all Boise-area units are $880 for one-bedrooms and $1,044 for two-bedrooms.
A local source of rental-unit data, the Southwest Idaho chapter of the National Association of Residential Property Managers, offers confirmation of the Apartment List data with similar results that include average rents charged to current tenants. The association’s Ada County average for one-bedroom units in apartment buildings in 2020’s fourth quarter was $850. For two bedrooms it was $1,105, and for three bedrooms $1,265.
For rental houses, the averages were higher: $1,196 for two bedrooms, $1,695 for three, $2,022 for four.
Boise’s overall rents are still lower than Portland’s or Seattle’s, but they rose 37% from 2015 to 2020, according to Colliers International Idaho, a commercial real estate agency. Downtown Boise rents are higher than in most other Western downtowns, Colliers reports.
What Boiseans can afford on $66,000 median incomes
The median income household income in Ada County in 2019, the latest year for which data is available, was $66,293, according to a U.S. Census Bureau estimate. If you accept the conventional guidance that housing, including utilities, should cost no more than 30% of income, that median household could afford up to $1,657 per month or $19,888 per year.
But it’s sometimes hard for Treasure Valley developers to make money by building new houses and apartments that are affordable even by households earning 100% of the median. That’s especially true in Boise, where land costs have soared.
Plus, that well-known influx of people coming to Boise from California and elsewhere is pushing demand up faster than builders of houses and apartments can keep up.
So home builders build high-end houses — or what not long ago were considered high-end but now are midmarket — knowing that they can sell the houses at larger profits to people from even costlier West Coast cities who buy here with cash, pushing local workers aside.
‘More California plates than ever’
“We’re seeing more California plates in Boise than ever right now,” said Clay Anderson, a Colliers specialist in multifamily housing, at a real estate outlook conference Oct. 27. “There are renters renting longer, and there are a lot more renters.”
More apartments are going up now in downtown Boise, and a cluster of new apartment complexes is growing fast near Ten Mile Road north of Interstate 84 in Meridian. Anderson said at least 3,400 apartments were under construction last fall in Ada and Canyon counties.
So many new apartments are being built that the Treasure Valley could soon see a flattening of rent increases and a return to some long-forgotten price concessions, such as a free month’s rent, said Shellan Rodriguez, a Boise developer of multifamily housing, at a Feb. 18 conference of the Building Owners and Managers Association in Boise.
But the flattening may be brief. Just 5.5% of the Boise metro area’s population lives in market-rate apartments, compared with 11.5% in Sacramento and 17% in Reno, Anderson said.
That plus the in-migration means the local market remains strong for more apartments — thousands more — as long as nearby residents, and the city council members who represent them, permit.
“We’re starting to see cities being resistant to apartment development,” Anderson said. “We have to be open to that kind of development. Only when apartments are added will we be able to address the need for affordable housing.”
Rodriguez said even a vastly increased supply of increasingly costly market-rent units won’t help low-income residents who cannot afford them.
“This increased supply is not going to automatically help create units at the lower incomes,” she said. “That needs to be done in a different way.”
New-house lots shrink as land prices rise
Meanwhile, rising land prices and the shrinking supply of developable land have had another, little-publicized effect: smaller lots for new Treasure Valley houses.
Eric Allen, regional director of Utah and Idaho for Zonda, provided data to the Idaho Business Review through First Interstate Bank that showed the average lot size in Ada County for an existing home is 13,000 square feet, while the average lot size today for a new home is 8,700 square feet.
In Canyon County, the average lot for an existing home is 18,000 square feet, while new-home lots average 8,800.
This story was originally published February 27, 2021 at 4:00 AM.
