RENTAL RATES As of March 2021, the average three-bedroom, sin- gle-family rental home in the Boise MSA is $1,540/mo, an increase of nearly 10 percent from last year. Real estate investors in the Boise market have had 5-year SFR rent price appreciation of 44 percent overall, the 6th highest increase among the top 100 metros. Low supply of rentals and the increase in demand from inward migration have driven rents upward quickly over the past year. Additionally, many families are forced to rent while buying options become available. Market-wide affordability for tenants remains moderate compared to other metros. Boise’s rent-to-income ratio for 3bd SFR homes is 28.5 percent, which is below the national average of 31.2 percent. However, affordability for lower income areas around Boise city, Nampa, and Cald - well are nearing 35 percent R/I. The gross rental yield average for 3bd single-fami- ly properties is a low 5-7 percent for the metro, as rapid price appreciation has outpaced rent increases. Boise MSA Rent Price Forecast through 2021: +5% to +8% BOTTOMLINE The large increase in people moving to Boise and sur - rounding cities is causing an extreme shortage of homes for sale and for rent. This low supply is leading to bidding wars and sales averaging near $20,000 above list price, making it tough for investors (or any buyer) to find deals. Home prices and rents will continue to escalate due to the supply/demand imbalance through 2021.
Compared to other major metros, Boise is getting expensive for buyers and renters. Real estate investors will have a difficult time finding cash flow opportunities in the Boise market. However, if a deal becomes available, the economics in the metro point to a solid long-term buy and hold rental opportunity. The biggest potential factors, which could slow or reverse prices in the Boise market, are an increase in mortgage interest rates, large increase in inventory or sudden drop in demand. 1 Mortgage rates have been slowly increasing, but the FED has committed to keep rates low for the fore - seeable future. If interest rates begin to rise then affordability could become a major impediment to buyers. 2 Given the numerous challenges in the homebuilding space and existing owners sitting on record amounts of equity - it is unlikely to see inventory catch up any- time soon. 3 This mid-tier market is still attractive to out-of-state newcomers, which will prolong the demand-driven growing pains. Boise’s economic and population growth momentum is one of the brightest in the country, and the local real estate market will continue to benefit from these trends. •
Fred Heigold III is the senior data analyst at Altisource® / RentRange®, an industry leader in market data and analytics for the single-family rental housing industry.
Sky fillerD with hot air balloons over Boise Idaho.
74 | think realty magazine :: june 2021
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