July Market Update: Challenges, Competitive Pricing, Recovery

Competitive Rental Market

1. High Competition: The Boise rental market is experiencing significant competition, especially for smaller and more affordable units. Properties that are competitively priced and well-maintained are quickly attracting tenants, while those that are priced too high tend to remain vacant​ (WeKnowBoise).
2. Fast Renting Properties: Smaller and lower-priced properties, such as studio apartments, are renting at a remarkable pace. For instance, a studio apartment priced at $695 was rented within a day​ (Welcome to Boise and Beyond). These properties are highly sought after due to their affordability and the ongoing demand from renters looking for cost-effective housing solutions.
3. Challenges for Larger Rentals: In contrast, larger and more expensive rentals are taking longer to rent. A 1,600-square-foot, three-bedroom, two-bath home priced at $2,195 remained on the market for over a month before finding a tenant​ (Welcome to Boise and Beyond). This trend highlights the price sensitivity among renters, who are increasingly cautious about higher rental rates.

Market Adjustments and Trends

1. Decrease in Applications: Compared to last year, there has been a noticeable decline in the number of rental applications. Previously, landlords received four applications out of every ten showings; now, they are seeing the same number of applications but out of twenty showings​ (WeKnowBoise). This decline underscores the heightened competition and the need for landlords to adjust their strategies.
2. Importance of Competitive Pricing: To attract more applications and compete with new apartments and homes, property owners must ensure their price points are competitive. Additionally, the appearance and condition of the properties play a crucial role. Properties that have undergone improvements during vacancies are renting approximately 35% faster than those that have not (Welcome to Boise and Beyond).
3. New Construction Impact: The market is also influenced by the ongoing construction of new apartment projects. There are an estimated 1,676 new apartment units under construction in Boise and 275 in Nampa​. This influx of new housing options is increasing the pressure on existing rentals to maintain competitive pricing and appeal.

Economic and Market Outlook

1. Short-Term Price Adjustments: The Treasure Valley area is projected to see slight declines in home prices from July to September 2024. This suggests that current prices may have outpaced buyer demand, leading to a necessary cooling period​ (Welcome to Boise and Beyond). While these short-term declines might seem concerning, they are generally seen as natural corrections rather than signs of a market crash.
2. Long-Term Recovery: By mid-2025, the market is expected to recover, with Boise anticipating a 1.4% increase in home prices​ (Welcome to Boise and Beyond). This forecast indicates a period of adjustment followed by growth, driven by sustained demand and favorable economic conditions.
3. Strategic Opportunities for Buyers and Investors: Prospective buyers and investors should approach the market strategically, taking into account localized dynamics and trends. Despite temporary declines, the overall trajectory remains positive, presenting opportunities for those who can navigate the current adjustments​ (Welcome to Boise and Beyond).

In Conclusion

Johnson Property Management, LLC