While projected rising employment numbers should help chip away at high apartment vacancy levels in the Boise area in the coming year, the vacancy rate will still be high enough that rental prices will keep falling, according to research from Marcus & Millichap.
The firm’s first quarter market update predicts employers will add 4,500 jobs to payrolls after erasing 27,000 local positions since the start of the recession.
“With no new construction projected to come online this year, the job market recovery should start to release pent-up demand from residents who doubled up in recent years, gradually improving the marketwide vacancy rate,” the report states.
But the decrease will be from 9.1 percent currently to 8.9 percent later this year, according to the report, still significantly higher than the Boise area’s historical average of 6.2 percent. Asking rents will drop from an average of $691 per month to an average of $688 per month, and concessions will increase.
The report predicts low home prices could lure some renters into homeownership.
In the last 12 months, the sales velocity for apartment properties has decreased by nearly 40 percent. Cash buyers are choosing to wait for the market to bottom, and everyone else is having trouble getting financing.
Over the last year, the median price paid for a property in Boise was $56,400 per unit, about 14 percent lower than the preceding year. Cap rates have increased in the last 12 months, landing at about 7 percent. That rate may increase further as more troubled assets enter the market, drawing down the value of properties.
No rental units are being constructed in Boise currently, though 50 are planned in the metro area.