Few states have experienced more of a significant change in their housing sectors throughout the pandemic than the Idaho real estate market. For the better part of two years, the entire state of Idaho has been the beneficiary of an influx of homebuyers. Since the first quarter of 2020, Idaho's relatively affordable housing and wide-open spaces have become a commodity in the wake of COVID-19. No longer bound to living within close proximity to work because of remote trends, homeowners across the entire country have routinely traded the expensive, restrictive confines of primary cities for a more affordable market with much less congestion.
However, it should be noted that the added attention real estate in Idaho is receiving is simultaneously increasing prices and restricting already low inventory levels. Not unlike everywhere else, Idaho is now becoming prohibitively expensive, which begs the question: Is Idaho suitable for an investment property? The answer is unequivocally yes, but the means to the end has shifted in favor of long-term rental properties. Whereas rehabs have been the preferred exit strategy for years, today's landscape seems to favor investors with long-term interests.
The Top Idaho Real Estate Markets
While the best real estate market in Idaho is up for debate, here’s a list of the cities investors may want to pay special considerations to:
Unemployment Rate: 2.9% (latest estimate by the Bureau Of Labor Statistics)
Population: 1,787,065 (latest estimate by the U.S. Census Bureau)
Median Household Income: $55,785 (latest estimate by the U.S. Census Bureau)
Total Foreclosure Filings (Q3): 98 (+107.4% year over year)
Idaho Median Home Prices
According to Zillow’s latest Home Value Index, the median home value in the Idaho real estate market is $436,922. Idaho homes are now valued higher than they have ever been; every price increase represents a new record in 2021. Real estate in Idaho had to overcome plenty of obstacles to get to where it is today. Over the course of a decade, Idaho has seen dramatic price variances.
Not unlike the rest of the country, Idaho was hit hard by the housing bubble. Median home values bottomed out at around $141,000 in the first month of 2012. Since then, Idaho real estate prices have increased by 209.8%. To put things into perspective, median home values across the United States managed a much more modest 89.0% increase over the same time.
The incredible momentum witnessed in the Idaho real estate market is directly correlated to the same factors increasing prices across the country: growing optimism in the real estate sector, a strengthening economy, and a distinct lack of available housing. If for nothing else, more buyers can actively participate in the market thanks to improving working conditions, opportunities, and wages. Nonetheless, there aren’t enough homes to meet the growing demands of today’s buyers. Homeowners have been able to increase asking prices in the face of competition.
The most significant changes, however, have taken place over the pandemic. Again, the Idaho housing market became one of the most popular markets in the country. With most people able to work remotely, many people flocked to Idaho searching for more spacious living arrangements, lower home values, and more outdoor activities. The added attention increased home values by as much as 45.1% since COVID-19 was officially declared a global emergency.
It is also safe to assume prices will continue to increase. The added attention has dramatically cut into the state's already low inventory levels. Competition is higher than ever, and homeowners can increase their asking prices accordingly. Prices will most likely rise until more inventory can be brought to market, which still appears to be a ways out.
Idaho Median Rent Prices
Real estate home values in Idaho have increased so much that rental properties are now growing in a similar manner. Landlords have been able to ask for more money just about every month throughout the pandemic. Higher home values and a lack of listings prevent many prospective buyers from participating in the market. As a result, a large contingent of people want to buy but can’t, which inevitably leads to more rental demand and higher rents.
Since more people are priced out of the buying market, we see more renters than average competing over fewer available properties. Landlords have found themselves in a position of power in Idaho, and their asking prices reflect as much.
According to the latest data released by Apartment List, the median rent in Idaho has increased 21.8% in the last year and now sits around $1,164. The latest increase in rents is trailing home value appreciation, but not for long. As long as inventory remains low, more renters and demand will continue to drive up asking rents. Here's a better idea of what renters can expect to pay in the Idaho real estate market:
Comparatively, the national average rent price is about $1,219, or 4.7% more than Idaho's. The difference is negligible, and Idaho real estate market trends suggest Idaho rents will surpass their national counterparts sooner rather than later. Therefore, now looks as good of a time as any for the Idaho real estate investing community to consider long-term investing strategies.
Idaho Foreclosure Trends & Statistics
According to ATTOM Data Solutions' Q3 2021 U.S. Foreclosure Market Report, "there were a total of 45,517 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — up 34 percent from the previous quarter and 68 percent from a year ago."
Foreclosures are on the rise across the country, but not for the reason many would initially assume. The latest increase is due largely to the expiration of government assistance and foreclosure moratoriums that prevented lenders from foreclosing on defaulting homeowners throughout the pandemic. All things considered, foreclosures are still relatively low.
“Despite the increased level of foreclosure activity in September, we’re still far below historically normal numbers,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “September foreclosure actions were almost 70 percent lower than they were before the COVID-19 pandemic in September of 2019, and Q3 foreclosure activity was 60 percent lower than the same quarter that year. Even with similar increases in foreclosures over the next few months, we’ll end the year significantly below what we’d see in a normal housing market.”
The Idaho real estate market contributed to the overall increase, but only modestly. In the third quarter, a mere 98 properties entered into the foreclosure process; only eight states saw fewer filings.
While the Idaho real estate market is expected to retain one of the lowest foreclosure rates in the country, it's safe to assume the number of distressed homeowners will increase soon. It is too early to tell just how many distressed homeowners will file for foreclosure once government aid expires, but investors should prepare for an influx. Real estate investors in Idaho should position themselves well now to aid distressed homeowners soon; doing so may simultaneously help those at risk of foreclosure and help investors land their next deal.
Tax Lien Investing
Tax Lien or Deed: Tax Deed State
Interest Rate: N/A
Redemption Period: 3 Years (Then county takes property and sells it at auction.)
Idaho Online Tax Deed Auction
Below you will find a list of online auctions in the state of Idaho. Click on the link of the county you would like to research:
The Coronavirus has created a disconnect between supply and demand in the Idaho real estate market. Today, the local housing market is overwhelmingly in favor of sellers. As a result, real estate investors in Idaho have had to change the way they invest; profit margins on flips aren't what they used to be. Few places, for that matter, have seen home prices increase more than in Idaho.
There's no doubt that home prices are becoming more prohibitive to rehabbers with each passing month. That's why, in addition to rehabbing, many investors in Idaho are looking for long-term investments like rental properties.
Thanks to historically low interest rates, investors may help offset today's high acquisition costs. As recently as October, the average commitment rate on a 30-year fixed-rate loan was 3.07%. While up slightly year to date, today's rate is historically low and represents an excellent opportunity for Idaho investors to increase cash flow and offset higher acquisition prices simultaneously. At the very least, the less money rental property owners have to pay towards their mortgage each month, the more they can pocket from incoming rent.
In addition to lower borrowing costs, Idaho's price-to-rent ratio is sky-high. At 31.28, it's more affordable to rent in Idaho than to own real estate. The state's price-to-rent ratio will drive more people to become renters; houses are too expensive for many to even consider buying. The lack of affordability driving people to rent will increase demand, and landlords will increase asking rates and mitigate the risk of vacancy.
Profit margins remain for real estate investors in Idaho, but they are growing harder to find. Instead, most investors are turning to long-term strategies to use the current tailwinds that are being offered.
Idaho Housing Market Predictions
Predicting any housing market — even one as “predictable” as Idaho — is a fool’s errand. There isn’t a single investor who can predict what will happen in a given market without at least some inherent margin of error. Nonetheless, it has become good practice to try and anticipate the market. Investors with their fingers on the pulse of their local real estate market will have the upper hand. So long as they realize nothing is ever guaranteed, making educated guesses about what is most likely to happen can award savvy investors with a significant advantage over reactionary competitors.
If, however, you aren’t comfortable making some predictions of your own, here’s a small list of the events most likely to unfold in the Idaho real estate market over the next year:
Demand will continue to drive prices higher: The Idaho real estate market draws buyers from across the country. That said, there aren’t enough listings on the market, which creates an excessive amount of demand. The same demand that facilitates activity will continue to drive up prices until more inventory is brought to the market.
Secondary cities will increase in popularity: Primary cities like Boise are too expensive for many first-time buyers. As a result, it's safe to assume more people will turn to secondary cities like Nampa or Idaho Falls in search of more affordable living situations (especially with work-from-home trends remaining intact.
Idaho will do its best to alleviate the inventory crisis: Idaho has fallen victim to a distinct inventory shortage, which is predominantly to blame for historically high prices. However, the state has already started to address the issue. Construction activity is growing, and large-scale housing projects are in the works to increase housing inventory. That said, it will take some time until the projects are finished. As a result, prices will continue to rise until the assets are bought to market.
Few markets across the country can compete with the potential of the Idaho real estate market. Not only has real estate in Idaho outpaced national appreciation rates for the better part of a decade, but it also looks like it will continue to do so for at least another year. As the primary beneficiary of positive net migration, a vastly improved economy, affordable home prices, and positive housing market sentiment, the Idaho real estate market is strong and getting stronger. With several large-scale building projects in the works, it appears as if the state will fix its inventory shortage sooner rather than later; when it does, things will only get better for everyone in the market.
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