The Boise area is well-regarded, but that’s not reason enough to invest in an area. Boise real estate is also some of the most expensive in Idaho, although Boise home values don’t compare to the most expensive real estate in the U.S. We’ll focus on practical reasons you’d want to buy investment properties in Boise and give you the hard facts to justify those recommendations.
Here are the 10 reasons to invest in the Boise real estate in 2019:
1. The Student Market
The Boise metro area is the largest population center in Idaho and home to the state capital, so it is the largest student market in the state. In fact, Boise State University is located here. So are satellite campuses of the University of Idaho ad Idaho State University. Boise Bible College is also located in Boise. This provides significant opportunity for those who want to invest in the Boise real estate market and cater to college students.
2. The Lure of Jobs
One factor propelling the Boise real estate market is the availability of jobs. In Boise, population and job growth triple the national average. Boise is home to far more than lumber and food processors, though it is home to the headquarters of Idaho Pacific Lumber Company. The area’s largest private employer is Micron Technology, though Hewlett Packard and Simplot employ thousands here. There are a number of manufacturing facilities here providing more stable and better paying work than you could find in the seasonal tourism and irregular agribusiness sector. The university and state government are major employers. Boise has low unemployment overall, currently hovering around 3%. That is two points below the national average.
3. The Surprisingly Strong Rental Market
The average wage in Boise is a dollar an hour higher than the state average, so moving there gives you a pay hike. However, Boise has generally low wages compared to other metro areas. The average pay rate is about $40,000 per person. While housing is cheaper than in states like California and Oregon, pay is lower, too. This means many people must rent. A healthy vacancy rate is around 5%.
In Boise, it is around 2%, and in the cheapest units, 1%.This has led to a flood of new apartment construction in the Boise housing market, but higher than average construction costs in Idaho slow down relative to demand. It certainly didn’t help local renters when there was no apartment construction at all in 2008 while new construction lagged in the last years of the Great Recession that really only ended in 2016. That is why rental rates went up 7% between 2017 and 2018.
4. Highly Regarded Schools
Boise has the top ranked school district in the state. And you get these high quality schools along with cheap housing, high quality of life and short commutes. If you’re one of the many people fleeing the high crime, unemployment and regulatory burden of California, that’s an ideal combination.
5. An Excellent Overall Quality of Life
Any town can say they have a great atmosphere or quality of life, but Boise makes national publication’s lists of best places to live – repeatedly. In 2008, they were listed second in Forbes on the best places for business and careers. In 2014, Time Magazine listed Boise as the best city “getting it right”. In 2018, Boise ranked 46th in Money magazine’s best places to live list. Boise’s ranking was unusual in that it was a large city and state capital, while most cities that made this list were the suburbs of big cities or college towns. US News and World Report listed Boise as the 23rd best place to live and 66th to retire in the 125 biggest metro areas United States.
6. The Outdoor Recreational Opportunities
This is such a hallmark of Boise that it can’t be considered just one more aspect of the quality of life. Boise’s location puts you in easy reach of the surrounding wilderness, while the local climate means people bike and raft in the summer and ski in the winter. Rock climbing, kayaking, hunting, golfing, horseback riding and myriad other activities attract people as tourists (providing significant local employment) and keep residents from considering every leaving.
7. Demographic Momentum
The Boise housing market is driven more by internal migration than international migration. The high price of real estate in Utah has driven a steady stream of Mormons into the Boise real estate market. Their average family consists of three children, 50% larger than the U.S. average. The state is attracting refugee families from the West Coast’s high taxes and housing costs, as well, as they seek a better place to start and raise families. That’s why many in Boise openly mock Californians, though it won’t keep them from buying in the Boise housing market. This means that the Boise market will see continual growth from demographic momentum for years to come.
8. Low Taxes
Boise has very low taxes, especially compared to the West Coast. The progressive income tax tops out at 7.4%, while the sales tax is about 6%. You pay less for utilities and car insurance, too. For investors, the average 1% property tax rate is a bargain, especially when you factor in the low cost of housing. The average property tax bill is around $2300. The national average is 1.2% of the home’s assessed value and an annual property tax bill of $3000, though in places like New Jersey and New York, it could surpass $10,000.
9. Affordable Real Estate for Buyers
One of the attractions of the Boise real estate market is the sheer number of affordable large single family homes. You could find a four bedroom home for around $200,000, roughly $100,000 below the national average, several years ago. With increasing demand, homes are still a deal at around $250,000.
10. Decent Return on Investment
The median rent in Ada County where Boise is located is around $800; you get a two bedroom apartment for that. You could of course charge much more for a large single family home, while affordable properties and low taxes give you a decent ROI on the investment. Slow and steady demand also ensures that your investment will grow in value; the Boise housing market has seen appreciation of around 10% year over year. We already mentioned how the high demand for rentals relative to supply is keeping rental rates elevated, and the slow rate of construction means that rental rates and property rates aren’t going to fall in the foreseeable future.
*This article was written by Marco Santarelli