Boise Rental Market & Vacancy Rates

Overview

The average rent in Boise, ID is $1,512 per month. Boise rents have increased 4.28% over the past year and 30.57% over the past three years. The vacancy rate for all rental properties in Boise is 4.27%, up from 3.74% one year ago.

Average Rents in Boise

In Boise, the average rental price for all property types in the second quarter of 2020 is $1,512. Rents rose $62, or 4.28 percent from the year prior and are now just below the record highs the Boise area set only last quarter.

On a per month basis, the average house rent in Boise is $1,703. That is an increase of $209 (13.99 percent) over the previous year. Single-family rents rose $94 (5.84 percent) from last quarter.

Three and four-bedroom house rents jumped to record-setting prices this quarter. Properties with three bedrooms rose $184 (12.43 percent) to $1,664 per month, while four-bedroom house rents increased $253 (13.41 percent) to $2,139 per month. Properties with two bedrooms finished the quarter just below the previous high of $1,363 set last quarter.

The average apartment rent in Boise is $1,106, an increase of $27 (2.50 percent) from the prior year.

Multifamily rents rose to a new record high this quarter and are now just above the previous record set in the second half of last year. Multifamily rents increased by $51 (4.53 percent) from the prior quarter.

Boise three-bedroom multifamily units increased in price by $21 (1.52 percent) per month, hitting a new record high.

Two-bedroom rentals rose $59 (5.78 percent) but are still slightly below the record highs set last quarter. Apartments units with one bedroom declined in price to 2019 levels, down $60 (6.71 percent) since the previous quarter's all-time record.

Boise Rental Vacancy Rates

After falling sharply to five-year lows in the second half of 2019, Boise rental market vacancy rates rose in the first half of 2020.

The average vacancy rate for all property types rose to 4.27 percent from 3.74 percent twelve months ago—the highest level since the fourth quarter of 2016.

Single-family vacancies declined slightly to 4.08 percent from 4.44 percent the year prior. Vacancies rose from 2.83 percent last quarter.

Multifamily investment property vacancies rose to 4.37 percent from 3.48 percent, also up substantially from the near all-time lows we saw at the end of last year, up from 2.77 percent in the first quarter.

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Residential Investment Property Summary and Outlook

Demand for rentals throughout the Boise area continues to remain healthy. None of the property managers we have spoken with are reporting any issues filling vacancies.

As predicted, rental rates have remained steady in the single-family rental market as current renters 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 have been 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.

Earlier in the year, we were seeing a move to affordability (smaller units). The second quarter was all about space and size.

Monthly rents for all property types are at or near all-time highs. Despite the average rent increasing 30 percent over the past three years, the strong house price appreciation in the purchase market continues to keep renting, at least somewhat, affordable by comparison.

At the same time, record 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.

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 have risen 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 a slight uptick in vacancies, rates are still 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 $390,000. In the second quarter of 2020, the median sales price for duplexes was $395,000, $581,500 for fourplexes, and $578,000 for apartment buildings (5+ 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, meaning rents of $1,578.

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 7,686 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 Q2 from the Southwest Idaho Chapter of the National Association of Residential Property Managers.