The Lights Are On, But Nobody's Home

Local houses sell faster than realtors can rent them


As everyone knows, the Boise housing market is hot, hot, hot, but some Boiseans are still feeling the pinch as their dream home units are gobbled up by out-of-state investors who offer thousands above the selling prices. Developers are building to meet the demand, but between the old, the new and the developing properties, who is going to make these houses their homes? In the short term, no one.

Don McFarland, the designated broker of Re/Max West, told BW he and some of his colleagues are getting concerned. "A healthy market has a 5 to 10 percent vacancy rate for single-family residences, but Boise's rate has grown to at least the mid-twenties in the past three to five months," he said. "This is not good for the investment buyers, because it declines what they can ask for rent."

McFarland warned that investors with limited capital had better make sure they can afford to pay a full mortgage if an "investment" stays vacant for a while. For an example, he told how an unnamed realtor recently traveled to California and quickly closed $6 million in home sales on his laptop. But when the realtor returned, he found trouble finding a property manager willing to take on that portfolio.

"They said it was unrealistic," he said.

Regardless, McFarland said big-time investors can apathetically sit on empty houses and still turn profits due to the high appreciation rate, estimated around 10 percent. "That's better than CDs, stocks or bonds," he said.

Tony Drost, president of First Rate Property Management, said his office receives about 400 calls a day from prospective sellers. He will only take new clients by referral. "Right now, it's just chaotic," he said. "Single-family homes probably have the fastest growing vacancy rate."

Drost said his research suggests the vacancy rate in Meridian has multiplied by about fivefold since March, from 36 houses then advertised for rent to around 200 in early August. He admitted there is no current way to officially tally the local rates, but said creating such a database is one of his goals as president of the National Association of Residential Property Managers' Idaho chapter. Drost said he keeps a close eye on the Meridian housing market because it has more of the new homes that investors are asking for. Despite the Idaho Housing's recent declaration that Boise has the top home ownership rate in the West (75.4 percent), Drost said investors are making a significant amount of the current housing purchases.

When asked whether it's a myth that many Californians are choosing Boise housing as an investment, he scoffed. "I guarantee you, about 85 to 90 percent of my calls are coming in from California," he said.