All Saved Up with Nothing to Buy:
Below is an article from the Idaho Business Review that sums up the Boise area investment market fairly well. Interest rates, low vacancy, higher rents, and low inventory has boosted consumer confidence. However, there is little on the market, because those who currently own must consider what or where they invest when they sell. So if you have been considering selling with little on the market and high demand, now would probably be a very good time.
All saved up and nothing to buy: Treasure Valley rental market a tough nut to crack
by Cady McGovern
Published: June 6th, 2013
Treasure Valley rental properties are an appealing option for investors, but it's tough to find a property to buy, industry experts say.
"It's all a pretty active market right now, from single family right on up to the really big apartments," said Mike Swope, of Swope Investment Properties in Boise. "Investor confidence is back up...
They've got funds sitting there."
"In most places, multifamily is doing fine or even better than fine," said Jack Harty, of Harty Capital in Boise. "We're at virtually historic occupancy."
Apartment vacancy in the Treasure Valley has declined over the past few years, according to a housing market analysis from the U.S. Department of Housing and Urban Development. The report quotes REIS Inc. data indicating vacancy dropped from 6.4 percent in the first quarter of 2011 to 4.6 percent in the first quarter of 2012. REIS data for the first quarter of 2013 shows vacancy at 3.8 percent.
"The real issue is there aren't a lot of sellers out there," Harty said. He said people who own rental properties don't have a lot of options for investing the money they would earn if they sold the property. Low interest rates are producing modest returns in treasury bonds and certificates of deposit, and buying a new rental property is expensive. The high occupancy that is drawing in new investors prompts property owners to hang on to their investments.
Swope compiles monthly reports detailing duplex and fourplex listings and sales in Ada and Canyon counties. His most recent data, from April, show there were 54 such properties actively listed, down 27 percent from the number of properties available in April of 2013.
"Fourplex inventory is particularly low both in Ada and Canyon counties," Swope said. There were 13 active listings for fourplexes in those counties in April, down 69 percent from 42 active listings in April 2012.
Smaller rental properties such as duplexes and fourplexes are appealing to new investors, Swope said, because they require a smaller initial investment than a large apartment complex.
"More people have 75,000 (dollars) than 500,000," he said. New construction is not likely to fill the inventory void any time soon, Swope said. "There's one or two builders that are building fourplexes right now," he said. "New construction is tending to be. more expensive than what the market has been... The cap rate isn't as good as what an investor can get on an existing project."
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