Boise Rental Market & Vacancy Rates

Overview

The average rent in Boise, ID is $1,438 per month. Boise rents have increased by 1.13% over the past year and 26.14% over the past three years. The vacancy rate for all rental properties in Boise is 4.68%, up from 1.53% one year ago.

Average Rents in Boise

In Boise, the average rental price for all property types in the third quarter of 2020 is $1,438. Rents rose $26, or 1.13 percent from the year prior and are now below the record highs the Boise area set in the first half of this year.

On a per month basis, the average house rent in Boise is $1,496. That is a decrease of $24 (1.58 percent) over the previous year. Single-family rents declined $207 (12.16 percent) from the record high of $1,703 we saw last quarter.

Two, four, and five-bedroom house rents declined by $28, $103, and $27 respectively from last year. Rents for three-bedroom properties rose $60 from the year prior.

Both three and four-bedroom house rents are down from the record-setting prices set last quarter. In fact, five-bedroom houses were the only properties to show a quarter over quarter increase.

The average apartment rent in Boise is $1,108, an increase of $68 (6.54 percent) from the prior year.

Multifamily rents rose to a new record high this quarter and are now just above $1,106, the previous record set only last quarter.

Boise one-bedroom multifamily units increased in price by $193 (23.54 percent) per month, hitting a new record high.

Two-bedroom rentals rose $3 (0.29 percent) but are still slightly below the record highs set in the first quarter of this year. Apartment units with three bedrooms rose in price by $10 from 2019 levels but are down $123 from the previous quarter's all-time record.

Boise Rental Vacancy Rates

After falling sharply to five-year lows in the second half of 2019, vacancy rates have risen throughout 2020.

The average Boise rental market vacancy rate for all property types rose to 4.68 percent from 1.53 percent twelve months ago—the highest level since 2010.

Single-family vacancies rose to 3.94 percent from 2.22 percent the year prior. However, vacancies have declined from last quarters 4.08 percent.

Multifamily investment property vacancies rose to 5.04 percent from 1.22 percent, also up substantially from the near all-time lows we saw at the end of last year, and up from 4.27 percent in the second quarter.

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Residential Investment Property Summary and Outlook

While below the records set in the first part of the year, rental rates have remained steady in the single-family rental market. Renters continue to favor the perceived safety and security of "smaller-unit" sized properties.

The Coronavirus pandemic continues to create uncertainty in the rental market for some.

We are seeing less property to property movement among renters than we have seen in the recent past. Those that have made a choice to move tend to favor larger and more private properties–larger apartment units, but also houses and single-family properties with four or fewer units.

In the first half of the year, we were seeing a move to affordability (smaller units). The second half was all about space and size.

Despite the average rent increasing 26 percent over the past three years, strong house price appreciation in the purchase market continues to keep renting, at least somewhat, affordable by comparison.

At the same time, recent price records for rents may be more of a reflection of demand than aggressive price increases by landlords. Additionally, property owners have been reticent to raise rental rates, particularly compared to the last few years. Which helps partially explain flat rents over the past twelve months.

For 2019 as a whole, single-family vacancies declined to 2.95 percent, down from 3.04 percent the year prior. Multifamily vacancies declined to 2.32 percent from 2.38 percent in 2018.

While 2020 vacancy rates rose above 4 percent in the second quarter, it appears more a reflection of renter's reluctance to move during a pandemic as opposed to an inherent weakness in the rental market.

Even so, a conservative approach to rent increases may be the best approach in the near term, especially as we move into the seasonally slower second half of the year.

While we may continue to see an uptick in vacancies, rates are still near or below the long-term averages. Historical market vacancy rates average 5 to 6 percent for both single and multifamily rentals.

Prices

The median home price in Boise, ID metro area (Ada County) is $406,000. In the third quarter of 2020, the median sales price for duplexes was $430,000, $678,000 for fourplexes, and $1,589,777 for apartment buildings (defined as five or more units).

Affordability

Rents at 30 percent or below household income are typically considered affordable. In fact, many property management companies require an income of at least two and a half to three times the asking rent. Based on U.S. Census data, the median household income in Ada County is $63,137, equating to rents of $1,578 per month.

Apartment Projects Under Construction in 2018

• Boise = 705 units
• Meridian = 902 units
• Eagle = 446 units
• Garden City = 32 units
• Nampa = 280 units
• Kuna = 136 units
• Caldwell = 128 units
• Total = 2,629

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 price points. In Boise, last year we saw the completion of the Arboretum (162 units), Havenwood (48 units), Kensington (323 units), The Fowler (159 units), The Watercooler (37 units), Tree Valley (32 units). Note: these are not included in the totals below.

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, mostly houses, make up more than half of the Boise rental market.

Building Permits Issued for Apartment Units

* Preliminary
** 5 units or more

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 looked at, 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 7,643 rental units and 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, Valbridge/Mountain States Appraisal, and the 2020 SW Idaho Vacancy Report Q3 from the Southwest Idaho Chapter of the National Association of Residential Property Managers.