Boise Rental Market & Vacancy Rates

Overview

The average rent in Boise, ID, is $1,953 per month. Boise rents have decreased by 6.33% over the past year and increased by 24.79% over the past three years. The current vacancy rate for all rental properties in Boise is 2.85%, up from 2.20% one year ago.

Average Rents in Boise by Property Type

After experiencing record highs last year, Boise's rental market has entered a cooling period, with average rents for various property types witnessing an overall decline in the first quarter of 2023. A comprehensive analysis reveals that the average rent in Boise, Idaho now stands at $1,953, falling by 6.3% or $132 from the peak observed in the same period of 2022.

Taking a closer look at the single-family rental market, the average house rent in Boise is $2,160, marking a 4% or $91 decrease from the previous year. However, two-bedroom single-family rentals bucked the trend, rising to a new high of $1,906, up by 0.5% from 12 months ago. Meanwhile, three-bedroom house rents dropped 5.2% to $2,125. Although down from the record-breaking levels of 2022, it remains the second-highest rental rate on record.

Larger four- and five-bedroom single-family rentals also experienced year-over-year declines of 6.3% and 5.1%, reaching $2,448 and $2,893, respectively. It is important to note that the limited sample size of five-bedroom properties can introduce volatility to the data.

The multifamily property market saw similar declines. The average apartment rent in Boise hit $1,433, a 10.3% or $191 drop from the record highs of Q1 2022. Dissecting the data by apartment size, one-bedroom units saw a 14.3% decrease to $1,163. Additionally, two- and three-bedroom apartments experienced reductions of 1.4% and 14.4%, settling at $1,458 and $1,677, respectively.

As rental rates often display seasonal fluctuations, as we saw in Q4 2022, year-over-year comparisons remain the most reliable method for gauging rental market trends. While the Boise rental market is currently witnessing a downturn, the long-term outlook is yet to be determined as the market continues to adapt and evolve.

Boise Rental Vacancy Rates

Boise, Idaho's rental property vacancy rate rose to 2.85% in the first quarter of 2023, up from 2.20% in the same period last year. However, this trend conceals a notable divergence between single-family houses and multifamily apartments.

In a significant shift, single-family investment properties have experienced a decrease in vacancies, with rates falling to 1.80% year-over-year, down from 3.46% in Q1 2022. This marks a substantial drop from the multiyear high witnessed in the third quarter of 2022. As the housing purchase market slowed in the latter part of last year, many homeowners opted to rent out their properties rather than sell them.

More recently, factors such as rising interest rates and a slowdown in demand for home purchases have encouraged potential homebuyers to explore renting as a more viable option. This shift has spurred robust demand for single-family rentals.

Conversely, multifamily apartment vacancy rates have climbed to 4.06% in Q1 2023, up from the 1.52% rate observed in the same quarter last year, reaching the highest level since Q3 2020. Although shortages persist in many areas, an influx of new apartments has helped address some of the demand in recent years. Record-high rents in 2022 also dampened renter demand for apartments.

A healthy rental market typically features vacancy rates of 5-6%. Despite the year-over-year increase, Boise's current average vacancy rate of 2.85% underscores the supply shortage renters face, driven by high demand and a rapidly growing population.

Search All Boise Multifamily Investment Properties for Sale

Residential Investment Property Summary and Outlook

Posted by Lisa Kohl on Wednesday, January 25th, 2023 at 4:39pm

The meteoric rise in rents that landlords have enjoyed for years is beginning to slow as renters feel the pinch of rising costs.

In the fourth quarter of 2022, monthly rents dipped, and vacancies increased from the previous year, indicating a moderation in the Boise rental market.

After hitting a record high in the first quarter of 2022, the Boise metro area saw a decline of 4.41% in average rent to $1,797, marking the third consecutive quarter of falling rents.

While rental rates typically drop during the fall and winter months, both single-family homes and apartment units have witnessed a decline in average rents on a year-over-year basis.

Rents of three, four, and five-bedroom houses are below year-ago levels, while two-bedroom monthly house rents have risen by 5.6%. The rents for one and two-bedroom apartment units have declined from the previous year. In contrast, the rents for three-bedroom apartments have increased slightly.

Although, it's essential to keep in mind that in the fourth quarter of 2021, rents had surged nearly 15% from the third quarter, making for a tough year-over-year comparison with the fourth quarter of 2022.

It's also important to note that rising incomes and falling rental rates have made renting more affordable over the past twelve months.

Vacancies for all rental units rose to 2.94% in the fourth quarter of 2022, a notable increase from the previous year. Nevertheless, vacancies remain below their long-term averages of 5-6%. In comparison, the national apartment vacancy rate rose to 5.5% in the third quarter of 2022, according to property data firm CoStar.

The Boise metro area is experiencing a chronic housing supply shortage that is expected to drive rental prices higher over the long term.

Boise's growing population continues to stretch a severe lack of available housing. The metro population has outgrown the number of residential properties built every year since the end of the recession in 2009.

Significant price increases combined with a limited supply in the purchase market have driven many potential homebuyers to the comparatively more affordable rental market. As the purchase market prices out more and more buyers, we believe demand for rental properties will continue to swell.

Despite an initial decline in rental demand during the Covid-19 pandemic, the number of new household formations increased after the initial lockdowns as renters sought out more personal space. This was vividly clear at the start of 2021—the first quarter saw Boise rental market vacancies reach an all-time low of 0.75%.

Record-high housing prices also played a role, pricing out many people who otherwise would have bought starter homes.

Despite recent declines in property prices and mortgage rates, home and condo prices have risen much faster than rent prices over the last three years, keeping residential vacancy rates well below their long-term average.

Additionally, local job and wage growth remain incredibly strong.

Ada County's unemployment rate declined to 2.0% in December, down from 2.3% a year ago. Across the state, Idaho's unemployment rate fell to 2.9% in December, finishing the year 70 basis points below the national unemployment rate.

As Boise's population continues to grow by 2,000 people per month, demand for housing is not lessening but exacerbating the supply shortage.

Even in the event of a recession, history suggests that the rental market performs better than other parts of the economy, where consumers are more likely to cut back their spending. As the adage goes, "the rent eats first."

While growing cost pressures may keep rental price increases in check for most of 2023, long-term trends hint that rental rates will continue to rise in 2024 and beyond, barring a substantial economic downturn.

Sales Prices by Property Type

In the first quarter of 2023, the median home price in Boise, ID (metropolitan area) stood at $489,990 for single-family properties. The median sales price per unit for duplexes in the same quarter was $262,000, while the median sales price for fourplexes was $248,750. For apartment buildings, which are defined as having five or more units, the median sales price per unit was $138,107.

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.

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 2022

• Boise = 1,436 units
• Meridian = 1,004 units
• Eagle = 47 units
• Garden City = 583 units
• Nampa = 159 units
• Kuna = 64 units
• Star = 148 units
• Caldwell = 123 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 5,207 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 Q1 from the Southwest Idaho Chapter of the National Association of Residential Property Managers.