Absentee and out-of-state corporate investors are exacerbating our housing crisis

The housing crisis has been growing relentlessly in recent years. The rent of an average two-bedroom apartment in Boise has increased by 20% since 2017. The demand for homes is staggeringly higher than the number of homes being constructed. Meanwhile, Idaho’s minimum wage remains at $7.25 per hour while the estimated necessary wage to afford rent in Boise has skyrocketed to more than $15 per hour. Unfortunately, this problem has been perpetuated by outside investors buying up homes, as well as individuals willing to pay higher-than-market value for residences.

Bloomberg recently published an article on this very subject. Wall Street Investors have started to dominate the market in Phoenix, Arizona. Residential landlords struggle to compete with commercial giants, credible renters fear being evicted at any moment, and homebuyers cannot find reasonable prices even for low-quality homes. Southern Idaho also has a lot to offer for Wall Street Investors: low regulation, low utility rates, few measures that encourage energy efficiency or conservation. It’s likely land will continue to be gobbled up at high rates. Many of these groups have the capital to invest in needed infrastructure like community wells or sewage treatment plants, so they are being welcomed with open arms by planning officials.

As born and raised Idahoans and small business owners, we have front-row seats to what is unfolding in our home state, particularly around Treasure Valley. If this trend continues, our community’s low- and middle-income residents, especially those without any family wealth, will be unable to afford to buy homes. Population growth from pricier coastal states coupled with a lack of housing stock in Treasure Valley has inflated home prices. These factors have increased demand and make it nearly impossible for the average person to purchase a home.

Our first-time homebuyer clients tend to be millennials who make six figures a year and have help from their parents in order to compete with a cash offer. I had one client recently who works hard and has a great job. She’d saved up 20% down, but still couldn’t buy a home without her parents’ help. This is not an equitable environment, particularly when you consider the racial gap when it comes to inheriting wealth and how that has contributed to the racial homeownership gap.

We value private property rights, but there also needs to be an affordable pathway to homeownership. Many of these investors don’t have a genuine interest in Treasure Valley communities. Rentals are left vacant or homes are rented for unrealistic prices given the wages in our communities. For example, within just four blocks of Sarah’s Boise Bench home, there are five vacant homes, some of which have been vacant for a year or longer. Yet, at the same time, through Sarah’s real estate business, she sees many credit-worthy people who are searching for homes and want to be part of this community’s sustained prosperity.

When investors from out of state come in with cold hard cash, offering above the asking price, sellers simply cannot refuse, particularly when there are few options for them to buy a new home in Idaho right now. Even homes that are in poor condition are listed above affordability because you have to waive inspections to have a competitive offer. This makes housing less accessible to locals, and it also puts homebuyers at risk of purchasing unsafe homes and agreeing to less-than-ideal terms because they may not have another option.

Many locals, particularly those with service industry jobs, have resorted to moving further and further away from Boise due to the unaffordability. Those that move away but choose to continue to work in Boise face increased gas and car maintenance costs since we continue to be one of the only states that don’t invest in meaningful, usable public transit. These individuals often take their skills elsewhere, and who can blame them. Our talent pool is moving further away, decreasing efficiency and the local feel that we all know and love.

We hope our local elected officials will consider policies that would incentivize investors to contribute to affordable land trusts and build permanent affordability into their projects, such as deed restrictions. We all have a role to play in ensuring this market for local buyers to have a fair shot at buying a home, including advocating for built-in affordability for all neighborhoods, not just those areas of town that lack HOAs. Another potential policy solution would be to require rentals or non-owner occupied homes to be occupied within six months of purchase.

On a larger scale, the construction of affordable and low-income-friendly rental apartments could be incentivized by local governments. Affordable housing developers often will build in 10% market-rate units, but what if we flipped the metric and incentivized market-rate developers to build in 10% of affordable housing? We all know Treasure Valley’s “workforce housing” is the toughest to build, particularly the “missing middle” because at 80-120% of area median income, folks who work as our teachers, firefighters and nurses are being pushed out, with no resources to help them. Local governments and nonprofit partners should partner with developers to solve these issues, not alienate them.

— Sarah Cunningham founded Ethos Design+Build | Remodel in 2010 after building her career as a design consultant and project manager. She became a Real Estate Agent in 2014.  

— Erin Sorensen is the vice president of engineering and construction at Ethos Design+Build | Remodel. She has extensive experience in designing, permitting and installing factory-built modular residential and commercial structures.