BOISE, Idaho — This week on Growing Idaho, we’re talking about the apartment boom. A woman wrote in to ask why so many apartments are popping up around the area, who's making money off them, and if anyone is saving money.
Let's start with the question “Is anyone saving money on these things?” These are numbers from the Boise Metro, which is much more than just Boise. It extends through Canyon County. According to Realtyhop, using the median household income, the median list price, and the estimated average $3,234.63 in monthly mortgage payment and taxes, 48.8% of the average family's income is going to homeownership.
Meanwhile, Apartment List said the average 2-bedroom apartment rents for $1,290, which would only be 19% of the median family's income going to rent. A lot of the apartments in our research were closer to $1,400 and there are some averages and estimates in these numbers, so your experience will vary. But the takeaway is that apartments are generally a much more affordable choice. However, you're not building equity with every rental payment. That's going to the apartment's owner.
Which answers the next question of, “Who's making money off all these?” According to IBIS World, over the past five years, the total revenue for apartment rentals was more than $282 billion. That's up 2.1%. That's also why we see more people getting into the apartment business. That number grew by 2.3%. This, again, is being pushed by rising property values, pushing people out of homeownership and into renting apartments. Also, some people don't want to own a house.
Finally, contractors just can't build apartments fast enough to keep up with the demand.
Nicki Hellenkamp, the Director of Housing and Homelessness in the Boise Mayor's Office agreed that supply and demand is a huge reason for the growth of apartments, but that's not all.
"Apartments are often a more efficient use of space and infrastructure than a single-family home would be. You can have 40 families or 100 families live on the same piece of land that maybe one family or two families would. It allows for greater affordability. It means that more people can live in that area. It also means that we have more people living inside the city instead of building more and more and more subdivisions out into farmland and open space."
That's the final big reason for the growth in apartments. We have room for them. On the same spot where we'd see a dozen homes built, you'll now see an apartment building with 100 units. That means you don't have to build as much new infrastructure out to new houses. The water, power, and sewer lines are already right there. And as Hellenkamp said, it preserves more farmland and open space.
And we need to stress, it's not like new neighborhoods aren't being built out past city limits.
That's still an option for folks who want to live in a traditional house and can pay for it. It's just that now, for those who cannot afford, or don't want a house, apartments are more of an option.