Boise, a Belle-of-the-Ball in the Pandemic, Sees Its Status Slip

Becoming one of the most popular destinations for strong growth during the pandemic, Boise City, Idaho, about 335 miles from Reno, Nev., is now seeing residents leave, rents being cut and vacancies rise. The Western city tied with Southern Crestview-Fort Walton Beach-Destin, Fla., as having two of the nation’s weakest performances among 150 markets tracked by RealPage. 

With roughly 811,000 residents, the city, which is its county seat and state’s capitol, has about 31,500 existing apartment units and has usually operated at a healthier pace than the national average. During COVID-19, it experienced significant growth. 

In fact, over the last decade, its existing inventory has more than doubled and added about 11,500 units, growing an average of 5.7% annually. In the second quarter of this year, the market added 1,6500 units, growing its existing stock 5.2% while the U.S. market grew only 2% and the West as a region grew even less or 1.6%. The only other West region to top Boise City’s recent inventory pace was Provo-Orem, Utah, which saw numbers climb 7.1%. 

And in Boise City, more units are coming as 2,696 are planned for completion in the year-ending second quarter of next year. Altogether. The additions will expand the market’s existing stock by 8.6%, giving it the 11th fastest-growth pace among the country’s top 150 markets.

But now the city is feeling the gyrations that other markets have experienced, during the pandemic and afterward by having too much supply and softening demand. That has led to lower occupancies and falling rents. Specifically, in the year-ended second quarter of this year, the market recorded demand for 770 units, one of the city’s weakest annual showings since 2016 and half of the five-year annual average of about 1,300 units.

With demand falling, occupancy is down, too. As of last month, it dropped to a historic low of 94% and 280 basis points below the city’s five-year normal number. In contrast, in the pandemic, occupancy rose to 98.1% in April and May of 2021. Prior to the pandemic, between 2015 and 2019, its average wasn’t quite as strong but still a fuller 97.1%.  Then in July of this year, the city’s occupancy ranking dropped to 109th place. With that drop and migration exodus, rents began to come down in April, cut 6% year-over-year. Before these cuts, the city had not experienced such rent reductions for 11 years.  

But just as they have gone up, then down, apartment occupancy and rents are expected to rise again due to the city’s overall healthy long-term prospects for multiple reasons. One driver is its status as the most populated area in the state and among the fastest growth areas nationally, with a rate of more than 11% between 2010 and ’22, which is above the national average. It also offers good job growth. And it has a vibrant young resident cohort between the ages of 20 and 34, who find its thriving downtown, rich arts scene and outdoor options, including many trails, all a magnet.