|Housing Market Profiles|
| Boise City, Idaho
A weaker local economy has not slowed housing sales in the Boise metropolitan area. As a result of affordable prices, low interest rates, and quality of life first-time homebuyers, move-up buyers, and retirees from out of state are purchasing homes at a rapid pace. In contrast the rental market is entering its second year of soft market conditions with high vacancy rates and flat rents because of competition from the sales market, continued apartment construction, and a weak labor market.
Labor market conditions in the Boise metropolitan area have been soft since 2001, slowing population growth substantially during the past 2 years compared with the high growth rates registered during the 1990s. According to the Idaho Department of Employment nonfarm employment in the Boise metropolitan area totaled 227,600 workers in the 12-month period ending June 2003, down 1.4 percent from a year ago. Led by firm closures and layoffs in the computer and electronic manufacturing industry groups, employment in the goods-producing sector fell by 1,500 jobs compared with a year ago, while service-producing employment showed almost no change over the past year. Significant hiring activity by healthcare providers and firms offering administrative services was offset by job losses in hospitality services and retail trade. The unemployment rate was 5.5 percent for the 12-month period ending June 2003, up a full percentage point from a year earlier.
Strong demand for homes is pushing sales figures toward record levels. New and existing home sales in the Boise metropolitan area totaled 10,468 during the 12-month period ending June 2003, up 10 percent from the previous period, according to data from Intermountain MLS. The median price of homes sold rose 4 percent during the period to $127,000. Sales of new homes, which comprise approximately 40 percent of total activity, increased 14 percent during this 12-month period. The median price of a new home in the Boise area was $129,000, up 2 percent compared with a year earlier. Local Realtors report that affordable new homes are enticing many first-time buyers to move from Boise and closer suburbs to the outlying smaller cities of Kuna, Nampa, and Caldwell. With lower costs for lots in these areas builders are able to offer larger homes at very competitive prices. Prices for new homes in these communities are typically in the $70,000 to $120,000 price range. Sales of new homes in this price range represent nearly half of all new homes sold in the Boise metropolitan area. It is estimated that the current inventory of available new and existing homes on the market in June 2003 was equal to a 4-month supply, down 1 month compared with June 2002.
Single-family permit activity for the 12 months ending May 2003 totaled 5,600 units, 6 percent above the previous period. This year is expected to be a very strong one for single-family construction, one of the bright spots in Boises economy, especially when compared with activity in commercial construction.
Rental market conditions remain very competitive in the Boise area. According to Ada Real Estates April report the vacancy rate for the nearly 13,000 units surveyed was 12 percent compared with 9 percent a year earlier. Overall rents have been flat during the past 12 months, averaging $660 for a two-bedroom apartment. Developments with two- and three-bedroom rental units are facing intense competition from newly built entry-level homes selling between $85,000 and $100,000. Rents for two-bedroom apartments in recently completed developments average $700, slightly more than the typical monthly mortgage payment for a $90,000 starter home. As a result homebuilders have been aggressively marketing entry-level homes to renters through leaflet campaigns at apartment complexes and through radio and television advertising. In response to rising vacancy rates apartment managers were offering large rental discounts and waiving move-in costs.
Multifamily building permit activity for the 12- month period ending May 2003 totaled 981 units, three-fourths of which is in the city of Boise; it includes a 250-unit apartment complex targeting the mid- to upper-end of the rental market and a 150-unit, moderate-income project to be built over the Ada County Courthouse. Boise State University has two buildings under construction on its campus that will provide housing for approximately 500 students starting school in fall 2004.
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