The real estate market in Idaho Falls has shifted dramatically in recent years. As individuals seek a more tranquil lifestyle —one that promotes outdoor engagement and a work-life balance—they have been moving from more urban communities to cities like Idaho Falls. As a result, investor activity in the Idaho Falls market has seen an uptick, increasing property values in both residential and commercial real estate.
Six trends have directly impacted this shift in the Idaho Falls market.
1.
Idaho Falls is experiencing positive job growth.
The more job opportunities introduced to a market, the greater the demand for housing – among both renters and buyers—a trend that Idaho Falls has recently experienced.
2.
While Idaho Falls is experiencing increased demand for homeownership, home prices are also increasing, making affordable housing less accessible.
Home prices in Idaho Falls have risen exponentially, increasing in value more than 300% since 2000. Unfortunately, the annual average income has risen only 25% during that same time. As a result, homeownership rates have declined due to the challenges of meeting market demand, and locals have been driven toward the rental market instead.
3.
Average rents in Idaho Falls are increasing.
As demand increases, prices increase. Average rent in Idaho Falls has increased 9% year-over-year, outpacing all other major cities in Idaho. In the last three years, 1-, 2-, and 3-bedroom rental prices have increased, on average, 27.95%.
4.
Idaho Falls is experiencing positive population growth.
The population of Idaho Falls has increased by 13.74% since the 2010 census and is currently growing at a rate of 1.28% annually. With increased population comes increased demand for housing units.
5.
Rental units are in high demand as Idaho Falls faces a supply shortage.
As the population grows, demand grows. However, the influx in demand has not been met by developer activity, creating an opportunity for rental unit prices to increase. Even with the ongoing spike in rental rates, vacancy rates remain low – below 3%. Units in 2018 often required a minimum of 30+ days on-market to identify a tenant, while today the same units are being rented in fewer than 14 days – often sight unseen.
6.
New development and increased investor activity continue to compress multifamily cap rates. All of these trends have had a direct impact on investor activity and multifamily cap rates within Idaho Falls. Between 2017 and 2020, cap rates have compressed, on average, 3% for multifamily units.
Where is the Idaho Falls Market today?
To better understand the investment required to capitalize on the positive changes in the Idaho Falls market, investors need an in-depth understanding of current property values and rental rates within the city. In January 2020, the average home cost $268,723. This is lower than the state’s average but higher than the national average. This continues to drive upwards in 2021.
Rental rates in 2020 varied drastically, depending on the number of bedrooms and the type of building. For conventional apartment buildings, 1-bedroom units averaged $560 per month, 2-bedroom units averaged $797 per month, and 3-bedroom units averaged $857 per month. By contrast, communities with amenities, which have increased in popularity year-over-year, are averaging higher monthly rents. In 2020, 1-bedroom units averaged $1,119 per month, 2-bedroom units averaged $1,242 per month, and 3-bedroom units averaged $1,456 per month.
Moving into 2021
As consumer and population trends shift, especially after a year impacted by the COVID-19 pandemic, investor interest in secondary and tertiary markets have continued to rise. Investors have the ability to get their foot in a market before it stabilizes —an investment strategy that can provide immense financial benefits if executed correctly.
For those interested in further details, read the full report visit www.jacobgrant.com/get-our-2021-market-trends-report.
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