| Boise, ID |
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DeedQuest ReviewMarket Snapshot In recent years, Boise has basked in the glow of national recognition for its fine climate, steady job growth, and manageable cost of living. The accolades continue to pour in from every direction. Here’s just a few: - Best places for business and careers: # 3 (Forbes Magazine, 2007) Indeed, Boise’s population has grown steadily in recent years due in large part to its strong economy and state tax incentives. Businesses are moving into the area at record rates. Retirees, also attracted by favorable tax rates, favorable climate, and small-town feel, have added to a city whose population is expected to double in the next ten years. Housing MarketBoise home prices shot up during the years preceding the area's 2006 peak, rising at least 73% in the period. Builders both followed and spurred the growth, building entire new communities on Boise's outskirts.
So far, prices have held their own in an otherwise dismal national housing market. Prices for Boise proper have been down negligibly, but prices for Ada County are up as much 7%, a discrepancy that speaks more to urban flight trends than any market weakness (2). Experts predict, however, that Boise prices should stabilize and recover slightly in 2007, and post appreciation numbers back in a typical range of 5 to 15 %, still very attractive figures. In fact, as of this writing, prices for August and early September 2007 show a slight up tick in prices. Jubilant local agents are ready to declare the slump over, and are urging investors to take advantage of this temporary "blip" in prices to scoop up some deals. Perhaps they are right, but your DeedQuest reviewers would like to see how the Boise market fares through the end of 2007.
Rental MarketThe Boise economy historically supports a high volume of renters. In recent years, renters were been buying homes in record numbers thanks to the easy credit we saw in past years. This was offset by the influx of new residents (and renters), and relative lack of affordable housing. Vacancy rates remain around a low 4%.
But rents are on the rise, and both investors and builders are taking notice. Investors are showing increased interest areas such as West Boise and Northwest Boise, where purchase prices are negotiable and single-family rentals are in high demand. Builders are also taking interest. The decline in new single-family home construction is being offset by a new building boom in multi-family housing that started in 2004, and recently took off. As of January 2007, multi-family housing permits were up 950% over January 2006. With continued population growth, low multi-family vacancy rates around 4%, and a likely increase in renters due to tightening credit standards, multi-family units should continue to be in demand. Indeed, cap rates were holding steady well into 2007 despite the growth in this sector. Investors should, as always, be watchful. Certainly, the multifamily construction boom seems overdue given local demand, but if unchecked, this boom could flood the market with rentals, thereby depressing rents.
Local EconomyBoise placed 1st in 2005 and 3rd in 2007 on Forbes Magazine's list of Best Places for Business and Careers. Inc Magazine ranked it the 9th hottest city for entrepreneurs. Boise's economic growth has ranked 3rd in the nation during the past decade, and unemployment remains at a record low of 3.3%. Impressive, no?
The growth is fueled by new jobs created by semi-conductor and high-tech firms and regional medical facilities that cater to an ever-growing retiree population. As the only major urban center within 350-mile radius, Boise is one of four economic centers of the Pacific Northwest. Boise is home to a major division of Hewlett Packard, JR Simplot Company, Albertsons, and is the world headquarters of Micron Technology. Boise State University is the state's largest university with an enrollment of over 19,000 students. The area's cost of living is among the lowest in the West, and yet its workers earn salaries that are on par with more expensive places such as Seattle and Portland. With a median household income in the neighborhood of $47,000 (sources vary widely), household wealth has been growing at its fastest pace in history. A possible interpretation of these numbers that is relevant to real estate investing: the Boise economy and population can support higher home and rent prices. If true, then indeed, the Boise market could be poised for continued, long-term growth.
PeopleBoise's smallish population of 200,000 contributes to the city's small-town, Western-outpost feel. But that is expected to change dramatically. The population of the Boise metro area is expected to double in the next ten years.
Boise residents enjoy a high standard of living, thanks to high employment rates and higher-than-average household incomes. The new businesses and higher-quality jobs coming the area are attracting better educated and higher wage-earning workers, thereby raising the overall figures for education and income for the area. A striking characteristic of Boise is the lack of ethnic and racial diversity. Its population is overwhelmingly white. The Hispanic population is growing, but still small relative to other areas. Boise was described in the Wall Street Journal as being and oasis for retirees, and multiple publications have recognized the fine quality of life that Boise offers the over-65 set. We should expect to see the population of retirees grow. For those investors interested in retirement communities, Boise should be of interest.
Research NotesPicture of Boise by Trent Cutler.2030 population growth: CommunitiesInMotion.org Prices and DOM figures: IntermountainMLS.com    Additional ResourcesCity Website: County Website: State Website: Local Chamber of Commerce: Local News Sources: Wikipedia Entry: Need more? Member ReviewsMember ReviewsLearn from market insiders and other investors who are familiar with this real estate market, but remember: the opinions below are just that. Always do your own research and due diligence before investing in a market. The average member ratings are shown above. If you are familiar with this market, please share your knowledge! Charts & TrendsMarket Charts & Trends
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Market ActionThe Market Action Index (MAI) illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory. An MAI value greater than 30 typically indicates a "Seller's Market" (a.k.a. "Hot Market") because demand is high enough to quickly gobble up available supply. A hot market will typically cause prices to rise. MAI values below 30 indicate a "Buyer's Market" (a.k.a. "Cold Market") where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A cold market will typically cause prices to fall.  Median PriceThe median home price is the threshold which divides the real estate market into two equal halves, in reference to pricing. One half of all homes in the market were sold at a price above the median home price, while the other half were sold below that price. The median price of 101 sold homes would be that price which is lower than 50 of the prices and also higher than 50 of them. The median home price is one of the most common measurements used to compare real estate prices in different markets, areas, and periods. It is said to be less biased than the average since it is not as heavily influenced by the top 2% of homes sold, which may artificially skew prices higher.  Average List PriceThe average home price, or mean price , is the sum of prices of all homes sold in a certain area in a certain period, divided by the number of properties sold in the same area in that period. Average prices can be quite variable than median prices because they are disproportionately skewed by very high and very low prices. For this reason, median prices are favored by the real estate industry. Indeed, the average price can be quite different than the median price for the same sample group. For instance, if you are doing a sold properties report and the homes are very evenly distributed, the median and average might be very similar. However, if the homes sold were weighted more to one end or the other of the price spectrum, then the median and average could be quite different.  InventoryPut simply, the number of residential properties for sale in a given market. Rising inventory is usually interpreted as a sign a slowing market as complementation among listed properties puts downward pressure on prices. In fast growing areas where there is an abundance of new building, however, rising inventory may be temporary. Cross referencing the inventory chart with the median price chart can provide an illuminating picture of an area's housing market.  DOM (Days On Market)The days-on-market figure is a measure of how long it takes to sell the average home in a market. Together with other factors, DOM is used as a barometer of market health and an inidicator of housing demand. Areas with very short DOM figures are often experiencing very brick markets, much as the San Francisco Bay Area did in recent years when DOMs approached the single digits in areas. Very long DOM figures are seen as indicators of a slowing market, as properties languish on the market without buyers.  MapMap |
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