Income

Home prices in the Boise area are rising 4 times faster than incomes

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Afford Boise

Soaring rents. Skyrocketing home prices. Double-digit housing cost increases in the Boise area are creating increasingly urgent problems for low-income, working-class, and even moderate-income Idahoans who need housing. This is Affording Boise, an Idaho Statesman special report series on housing.

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Salaries do not follow.

As Boise’s housing crisis escalates, with house prices soaring, a key factor at play is that people aren’t earning enough to keep up. Along with rising rents, it has also led to car-dwelling families and single mothers moving to multiple school districts in just a few years.

High demand and low supply drive prices up. Stagnant wages drive people away. As housing costs rise faster than wages, affordability declines.

“For the average Joe, it’s getting pretty unaffordable,” labor economist Jan Roeser said over the phone. “…The data shows quite clearly how Boise’s price has risen.”

Roeser, who works for the Idaho Department of Labor, called Boise an “overpriced market” because of the disconnect between house prices and income.

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Data from the US Census Bureau, Bureau of Labor Statistics, and Intermountain Multiple Listing Service tell the story of the growing disparity between workers’ incomes and the cost of housing.

In February 2012, the median price of a home in Ada County was $158,000. In February 2017, it was $256,600, up 62.4%. Five years later, in February 2022, it was $549,900.

This represents an increase of 114.3% compared to 2017 and 248% compared to 2012.

Meanwhile, the median household income in Ada County was $53,909 in 2012. In 2017, it was 12.9% higher – $60,858. Now, Roeser estimates median household income at $77,272 (a 27% increase from 2017), based on 2019 data adjusted using the Employment Cost Index, a survey employer payroll survey to monitor changes in employee compensation.

For example, over the past five years in Ada County, home prices have increased 4.2 times faster than incomes. Over the past 10 years, they have increased by 5.7 times faster.

The median house now costs seven times more than the median income, up from 2.9 times in 2012 and 4.2 times in 2017.

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Low supply and strong demand drove up home prices and incomes did not follow. New homes from Hayden Homes under construction in southwest Boise in January increase inventory. Sarah A.Miller [email protected]

Roeser said the steep rise in housing costs has pushed some people to Canyon County, which has long been cheaper than Ada.

But Canyon County no longer offers much relief to ordinary workers. The median price of a house in Canyon County rose from $169,754 in February 2017 to $434,450, a 156% increase. Canyon’s median household income rose from $47,324 to approximately $63,199, an increase of 33.7%. House prices rose at a rate 4.6 times faster than incomes.

In February 2012, the median price was $87,000 while the median income was $41,555.

The median house now costs 6.9 times more than the median income, up from 2.1 times in 2012 and 3.6 times in 2017.

As home ownership has become more difficult for people, more are renting. Construction of apartment complexes in Treasure Valley has boomed in recent years, but demand is outstripping supply and rents have skyrocketed.

This further strains the limited supply of rentals. In the fourth quarter of 2021, the rental vacancy rate in Ada and Canyon counties was 1.6%, according to the National Association of Residential Property Managers.

Meanwhile, the median two-bedroom apartment in Boise is now renting for $1,218 per month, up from $952 in March 2020, according to Apartment List.com.

The government recommends people with low or middle incomes not to spend more than 30% of their income on housing and related costs.

For Ada County households earning the median income, that means no more than $23,181 per year, or $1,932 per month.

“Affordable housing for people who are just on average income, I mean better than average, but definitely not what you would consider high income – there are really no apartments to rent, there is no there are no houses to buy,” Roeser said. “It’s really very unfortunate.”

In November, Boise was ranked the least affordable city in the United States, according to a study by Oxford Economics, an economic forecasting firm in England. The study assessed incomes and house prices.

Housing costs may be more affordable for people moving to Boise from other places where they make more money and can therefore afford higher prices, or from cities where housing is more expensive than in Boise, so people can use the proceeds from the sale of their homes there to buy here.

Traditionally, education has been the most effective way to eventually earn higher wages, Roeser said. As housing costs rise, she sees leveraging education for more money as a way for people to become more competitive in the real estate market.

Roeser said she thinks the median household income will rise over the next few years. Employers will have to try to meet housing costs and people could leave the area by then, she said.

So far, “the data speaks for itself,” Roeser said.

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