Boise Rental Market & Vacancy Rates
The average rent in Boise, ID, is $1,944 per month. Boise rents have decreased by 0.92% over the past year and increased by 35.19% over the past three years. The current vacancy rate for all residential rental properties in Boise is 6.87%, up from 3.61% one year ago.
Average Rents in Boise by Property Type
In Q3 2023, the Boise rental market continued to navigate a period of adjustment, as highlighted by the latest data. For all property types, the average rent in Boise, Idaho fell to $1,944, a decrease of $18, reflecting a modest 0.92% decline from Q3 2022's $1,962. This stabilization follows a trend of easing prices after peaking at $2,085 in Q1 2022.
The average rent across all single-family properties saw a slight dip to $2,009, a 5.01% decrease from $2,115 in Q3 2022. Breaking down by property type, two-bedroom single-family homes maintained steady prices, with average rents unchanged at $1,634 compared to the same quarter last year. In contrast, three-bedroom single-family homes experienced a 2.21% decrease, dropping from $2,035 to $1,990, translating to a $45 reduction.
Four-bedroom properties saw a more significant decrease, with rents falling by 9.97% from $2,669 to $2,403, a notable $266 drop. Despite their limited sample size leading to potential volatility, five-bedroom homes set a new record high of $3,426, up by 29.38% from Q3 2022's $2,648.
The average apartment rent in Boise declined to $1,385, a 12.34% decrease from the previous year's $1,580.
The average rent per unit for multifamily properties reflected a mixed picture, with one-bedroom apartments dropping sharply by 16.89% from $1,350 to $1,122. Two-bedroom apartment rents also declined, falling 6.76% to $1,379 from $1,479. Three-bedroom multifamily units decreased by 13.45% from $1,911 to $1,654.
Boise Rental Vacancy Rates
Vacancy rates for Q3 2023 have shown a marked increase. Single-family vacancies have reached a more than ten-year high, climbing to 5.50% from 5.13% in Q3 2022. Similarly, multifamily vacancies have soared to 7.97%, a significant jump from the 2.58% recorded in the previous year. This trend has resulted in the average vacancy rate for all property types escalating to 6.87%, which surpasses the healthy market range of 5-6%.
This increase in vacancy rates reflects a notable rise from the 3.61% seen a year ago. Contributing factors include significant rent hikes over the past few years and the rising cost of living, which are tempering the demand for rentals. Additionally, the increase in single-family vacancies has been influenced by rising interest rates, prompting many homeowners to retain their low mortgage rates by renting out their properties instead of selling.
Despite these trends, the housing market still faces shortages in numerous areas. However, the recent influx of new apartments is beginning to satisfy some of the demand for multifamily units, indicating a slow but positive response to these shortages.
Residential Investment Property Summary and Outlook
Posted by Lisa Kohl on Tuesday, August 16th, 2023 at 1:33pm
In the second quarter of 2023, Boise, Idaho's rental market reported an average rent of $1,977, reflecting a 1.34% decline from the previous year. Despite this decrease, the market has seen a notable growth of 30.75% over the past three years. When breaking down by property type, single-family homes have seen a decrease, with average rents landing at $2,093, which is a 0.9% drop from Q2 2022. In contrast, five-bedroom properties defied this trend, recording a substantial 10.6% increase. The multifamily sector wasn't exempt from this downward trend; rents slid by 8.7% compared to Q2 2022, averaging $1,483.
Vacancy rates witnessed a sharp rise, reaching 4.40%—a significant jump from 1.67% in Q2 2022. Single-family properties reported a 4.6% vacancy rate, while multifamily units stood at 4.21%. Several factors contribute to this uptick, including the rising cost of living and, for single-family rentals, increasing interest rates. Homeowners who secured mortgages at interest rates below current levels are now more inclined to rent out their properties rather than sell. Additionally, the recent introduction of new apartment complexes has begun to meet some of the ongoing demand.
The chronic housing supply shortage in the Boise metro area suggests a long-term trend of escalating rental prices. Since the end of the 2009 recession, the burgeoning metro population has consistently outpaced the number of residential properties built annually. This significant surge in prices, paired with limited availability in the purchase market, has nudged many prospective homebuyers towards the rental sector. As purchasing becomes increasingly out of reach for many, the demand for rental properties is only expected to intensify.
With Boise's population swelling by approximately 2,000 individuals every month, the demand for housing is not diminishing, further straining the already limited supply. Historical data suggests that even in a recessionary environment, the rental market tends to fare better than other sectors—highlighting the enduring truth that "the rent eats first." Although mounting cost pressures might temper rental price hikes for the remainder of 2023, long-term forecasts suggest that barring unforeseen economic disruptions, rental rates will likely continue their upward trajectory into the latter half of 2024 and beyond.
Sales Prices by Property Type
In the third quarter of 2023, the median home price in Boise, ID (metropolitan area) stood at $533,500 for single-family properties. The median sales price per unit for duplexes in the same quarter was $288,500, while the median sales price for fourplexes was $236,000. For apartment buildings, which are defined as having five or more units, the median sales price per unit was $261,100.
Income and Rental Affordability
In the Idaho rental market, verifiable monthly income is a key factor in determining tenant affordability and eligibility. Property management companies often require the tenant's monthly income to be at least two and a half to three times the rental amount. The federal government considers rents affordable when they amount to 30% or less of a household's income. According to U.S. Census data, the median household income in Ada County is $75,115, translating to a monthly rent of $1,878 at the 30% affordability threshold.
Boise Multifamily Market Report - Supply
While there are no signs of a drop in demand for multifamily units from potential renters, we continue to see a steady stream of new supply, albeit at higher monthly rents.
Estimated Apartment Projects Under Construction in 2023
- Boise = 1,328 units
- Meridian = 1,444 units
- Eagle = 0 units
- Garden City = 296 units
- Nampa = 844 units
- Kuna = 0 units
- Star = 220 units
- Caldwell = 399 units
- Middleton = 0 units
Building Permits Issued for Multifamily Units by County
Boise Rental Units by Structure Type
Keep in mind that the Boise area still has fewer apartment buildings than a typical metro area this size. Single-unit properties, primarily houses, make up more than half of the Boise rental market.
Boise Residential Income Property Capitalization Rates
Capitalization Rate, also known as "Cap Rate," is a good starting point to compare Boise investment opportunities quickly. Many more factors need to be considered, such as the growth or decline of the potential income and the increase (appreciation) in the value of the property.
Capitalization Rate = Yearly Net Income/Total Value
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*This We Know Boise Rental Market Report is based on a survey of 7,077 rental units. It refers to the city of Boise and the surrounding areas of Meridian, Eagle, Kuna, Star, and Garden City. Select data obtained from the Intermountain MLS, Community Planning Association of Southwest Idaho, and the 2023 SW Idaho Vacancy Report Q3 from the Southwest Idaho Chapter of the National Association of Residential Property Managers.