A developer broke ground Wednesday on a new upscale apartment building in downtown Boise. If it feels like you’ve seen a lot of these lately, you’re not imagining things. Ada County is in the middle of an unprecedented apartment building boom.
Consider a spot in southwest Boise where workers are putting siding on one of several buildings in a new apartment complex called the Asheville. They’re bundled up because the temperature is hovering right at freezing. But it’s blessedly warm inside one of the units that’s already finished.
Andy Propst, president of Park Place Property Management shows it off.
“These are great two bedroom, two bathroom layouts,” Propst says. “They come with granite counter tops, hardwood floors. ”
He goes on for a while about this apartment: high end appliances including washer and dryer, two-tone paint in shades of light gray, which he says is the "in" thing right now.
And he should know. Propst’s company began managing four brand new complexes last year.
“I would definitely characterize it as a boom or a massive leap in growth,” he says.
In 2015 in Ada County 1,153 permits were issued to build apartment units in projects large and small.
There are a bunch of possible explanations for this boom. The Treasure Valley is growing, Probst says most of those renting his new apartments are moving in from out of state. Some experts say people are more leery of home ownership than before the recession. And the Boise area has way fewer apartments to begin with than most cities its size.
So far demand is keeping up with the building boom. Vacancy rates remain at all-time lows. Probst says his company will manage even more new complexes in 2016. And he’s confident he’ll have renters to fill them.
“If you would have asked me last year, if we would be in the same situation we’re in this year I’d say, ‘I would assume it would slow down.’ But it’s not,” Propst says. “Literally we have zero availability in our company right now.”
The lack of available apartments means rent continues to climb. Apartments at the Ashville, for instance, will go for $895 a month.
Kathryn Hartman lives in Meridian with a couple of roommates. But she’s entering her mid-twenties and wants her own place. As she flips through listings for new apartments on her lunch break, she dismisses the Asheville.
“To pay $895 and have granite countertops seems fine and great if that’s what you want but I could have, at this price, purchased a home and probably had my own granite countertops.”
Hartman does want to own a home someday but she’s not ready yet. She looks at an artist’s rendering of a new complex in Meridian that has one-bedroom apartments. It shows a pool and flowering trees.
“That looks very beautiful,” she says. “But this says rent, $795 to $1,100. I mean I could pay that but then I’d have to eat ramen noodles forever.”
Or give up some of her hobbies like skiing she says, and that’s a lifestyle change she doesn’t want to make. Hartman isn’t considered low income – she has a good job in agricultural insurance. But the sticker shock of rent prices is holding her back.
“But I have noticed that there are some apartment complexes being built,” Hartman says. “And so I’m hopeful that that will create more supply and that rent prices will go down.”
Moe Therrien with Valbridge Property Advisors Mountain States Appraisal and Consulting doesn’t think rents will go down but he’s predicting those in the middle of the price spectrum will stabilize soon. Therrien researches the Boise area rental market. Some of his data is just for clients. Some data he makes public, and cities, government agencies and non-profits rely on it. He thinks the highest rents are going to continue to go up. Same for the other end.
“At the lowest end of the rental spectrum, I think those rents will continue to increase,” Therrian says. “Because that demand is so high by that lowest tier – the low and moderate income tenant.”
A recent study commissioned by the City of Boise says there’s plenty of housing for Kathryn Hartman if she spends a third of her income on it. That’s the maximum recommended amount. Any more than that experts say, and people become too financially burdened.
But the study says there’s a huge housing deficit for people who make 50 percent or less of the median household income. That’s one in five Boise residents. So if you’re single and make $21,000 a year or your family of four makes $30,000 and you’re looking for a place to live, you may have trouble.
Therrian says next to nothing is being built or even planned right now for those who need it most. Here’s what he says is being built in Ada County.
“Garden style apartments in the suburbs with a compliment of swimming pool and clubhouse, forced air heat and central air and covered parking,” he says. “There is a moderate amount of new apartment construction on the fringe of the downtown core in Boise seeking the highest rents in the market.”
Plus, he says there is a lot of new apartment buildings near Boise State University aimed at students.
Julie Marple, vice president for development with Northwest Real Estate Capital says it’s just too hard to make a profit building for low or moderate income tenants.
“In order to make a project pencil and get whoever is investing in it the return they seek, you need to have rents high enough to allow that,” Marple says. “And that’s one of the reasons we don’t see as many affordable projects built. They don’t pencil well. You need something like tax credits to get it done.”
Marple’s company is a nonprofit. It was involved in one of the only recent low-income developments in this area, the Trailwinds in Garden City. She says it wouldn’t have happened if not for federal tax credits, money from the city and a charitable contribution.
The number one recommendation from that housing study Boise paid for is to increase use of tax credit. But that’s not easy.
Northwest operates in eight states. Marple doesn’t want to say it’s more difficult to build for low-income people in Idaho, but she notes other places they build have state tax credits or building grant programs that Idaho doesn’t have.
“If I had the funding today we would be out there building everything that’s needed,” Marple says. “I just don’t have the funding. Where does the capital come from?”
In the meantime 2016 is shaping up to be another good year for Ada County property managers, apartment developers and investors. Moe Therrien thinks they can maintain the current rate of apartment building for a couple more years without oversupplying the market and causing a big dip in rents.
Property manager Andy Propst is excited for 2016 but he is concerned about the lack of low and moderate-income housing. However, he doesn’t know what should be done about it.
“If people are willing to pay $900 a month for [higher end] property, capitalists that we are, we have to provide the supply at the rate of the demand,” Propst says.
As for apartment seeker Kathryn Hartman, if she can’t find anything at a price she’s willing to pay in Meridian, she’ll look to Nampa or Caldwell. Maybe Parma - it’s a bit of a commute she says, but that’s where her family is and she likes it.
Find Adam Cotterell on Twitter @cotterelladam
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