Boise’s escalating rents bargain compared with other cities

Two new rent studies using different datasets and different methodologies came up with Boise apartment rental statistics that are remarkably similar.

The first study was conducted by apartmentlist.com, a national apartment broker. Because the firm’s own rentals tend to the luxury side of the market, Apartment List used the median rental statistics gathered for September 2020 instead of in-house data. It then applied the same type of Case-Shiller normalization that the Fed uses for housing prices to calculate the median, not average, rent for a two-bedroom apartment in the nation’s largest cities.

The second study was by Advisor Smith, an online insurance broker firm. Advisor Smith used data from Zillow, from various national apartment listings and from Apartment List, the same folks as the first study. The firm then did a sophisticated weighted averaging of all rents for one to four bedroom apartments. The weighting used U.S. Census data for each city to proportion the averaged rents by the number of different-sized apartments in each location.

Because the majority apartment style is two-bedroom, the proportion-weighted average apartment rent shouldn’t be very different from prices for just two-bedroom apartments; and indeed, that is the case, with Apartment List calculating a $1,021 per month median for a two-bedroom unit in Boise and Advisor Smith calculating $1,094 for their weighted average rent.

Having numbers, what do they tell us? Both studies compared their rents for September 2019 vs. September 2020. Apartment List calculated an annual increase of 5.5% while Advisor Smith calculated 8.6%. Basically, the numbers tell us that rents went up. This is not a surprise.

The Apartment List rent growth for the nation was only 1.4% for two-bedroom units, so prices are going up here a lot faster than elsewhere.

Compared to median rent for the whole country of $1,106, Boise’s median two-bedroom rent of $1,021 is both good and bad. It’s good that the cost is living is lower here in Boise. It’s bad because all those people whose states have riots, smoke instead of air, and no jobs want to move here and drive rents up even further.

The Advisor Smith study was focused on looking at rent growth and decline. It did not report a national average rent. Its calculated rent growth rates were more extreme than those calculated by Apartment List but this is not too surprising because both studies used different datasets and methodologies. While Apartment List did not rank most expensive rents or growth rates, Advisor Smith did rank by rent growth rate. Boise made the top-twenty list for fastest growing rents, in the no. 17 slot.

Using the traditional formula of allocating 30% of gross income to housing cost, and assuming total tax burden of 9.3% from Forbes, then a median two-bedroom Boise apartment would require an annual salary of $45,000.