We hear it all the time: houses in the Treasure Valley getting snapped up with cash offers as a line of people compete for the home. Seniors struggling with rising property taxes as young professionals are priced out of the market, while low income wage earners can't pay their rent. What's going on, and what can be done to fix the problem in the Boise metro?
As the Ada County median home price jumped 12.7% since last August, we're taking a step back to find out more about how we got here. Idaho Statesman reporter Kate Talerico joins Idaho Matters to give us perspective on the complex issue of affordability facing the valley, and the different philosphies about how to fix it.
This interview is part of our new series called "Growing Pains." Over the next week or so, we'll explore stories and issues surrounding the Treasure Valley's rapid growth and increasing unafforability. Subscribe to our podcast to hear every interview, and download the Boise State Public Radio app to send us a voice message using our Talk To Us feature.
Support for "Growing Pains" comes from Broadcast Society members Jennifer Dickey and Andy Huang. Member support is what makes these interviews possible. Support this coverage here.
Read the full transcript here:
GEMMA GAUDETTE: This is Idaho Matters, I'm Gemma Gaudette, and we are continuing our new series called Growing Pains with a look at affordability in the Treasure Valley. In our last conversation with Don Day of BoiseDev, we reflected on the scale of the rapid growth over the last 10 plus years. So now we're going to hear from another journalist who follows these topics to Kate Talerico is a reporter for the Idaho Statesman. Kate, good to have you with us.
KATE TALERICO: Thanks for having me.
GAUDETTE: So before we get going with Kate, I want to listen to this voice message from a listener named Charlie, who lives in the west end of Boise near Esther Simplot Park. He and his wife purchased their home in 2016, and since then the value has doubled.
LISTENER AUDIO: Most people would say, oh, that's a great thing. But for us, we moved into this neighborhood because it is one of the most diverse neighborhoods. The neighborhood dynamics are slowly changing as investors are purchasing up houses to rent them higher rental rates. And in the meantime, pricing for housing has gone up so much that the only people that can afford to live in our neighborhood are upper middle class families.
GAUDETTE: So, Kate, how unique is Charlie's story in the Treasure Valley that a home he purchased just four years ago in a diverse neighborhood for Boise standards has now doubled in value and then his neighbors are, frankly, being priced out by investors.
TALERICO: I mean, this is happening all the time. 10 years ago, the median price of a home was $158,000 in Boise and as Don said earlier, it's now $400,000. And that's not just because people are moving in from other places and wanting to buy homes. It's absolutely because there are investors who are looking to get in on just how popular this this valley is becoming. And as they go and renovate homes and kind of give them a facelift, that's not just increasing prices for new homeowners. It's also increasing rental prices around this valley as well.
GAUDETTE: So, Kate, I mean, as you mentioned that $400,000 median price, that's 12.7% increase just since last August, to put that in perspective. I mean, our prices are rising faster than other parts of the country. And as you mentioned, I mean, we know that a lot of homes are being purchased in cash, you know, over asking price, you know, sometimes without people even looking at the house. Right. So a lot of folks in the industry are pointing to a consistent lack of inventory in the valley. But in your reporting, I mean, is that the only factor driving up prices?
TALERICO: Yeah. So when we talk about affordability, I think it's really important to kind of separate the affordable housing issues into these two different buckets. Right. So what we're talking about right now is really this affordability crisis that's happening mostly among median income earners. So these are people like teachers, police officers, salespeople, Boisians who are earning somewhere between $40,000 and $80,000 a year, who maybe 10 years ago could have bought a home here, but now they can't. And then on the other side is people who are on, you know, just such low incomes that they're probably relying on subsidized housing, Section eight housing vouchers, units rented specifically to people who make less than 50% of the area median income. So that's really more of a wage problem we're talking about than a housing problem. So supply and demand is a huge part of what's happening here. There's more people who want to move in here and especially into highly desirable neighborhoods like the West End or the North End that are close to their jobs, close to amenities than there are houses there.
And so now what we do see is the market's trying to catch up, but the price of construction has risen so much just in the last 10 years, there's really not enough construction laborers out there in the Boise market to do all of these jobs. And so you're just seeing prices increase not only from demand, but also just from the cost of of doing business and land prices, all of these various factors.
GAUDETTE: So we know that lack of inventory is an issue, right, it's part of the problem. So then is denser housing a solution? And Don mentioned this, you know, in our last segment about Boise versus Meridien, right. In Boise, we have had such a push for density. Right. Higher buildings, you know, in smaller spaces. Right. These high rises versus single family homes and not as many like apartments and condos and things like that. So is density a solution to this?
TALERICO: Well, certainly the more houses that you can pack onto a certain parcel of land, the less expensive those units are going to be. Now, density tends to happen in really highly desirable neighborhoods like downtown, for example, where the land is going to be more expensive. So you're still looking at quite a high price for a condo in downtown. So that's where, you know, the city's looking at, can we increase density? And some of these neighborhoods where land is a little bit lower priced and things can be more affordable.
I think that when we talk about housing affordability and how difficult it is to afford a house, oftentimes we're thinking about, you know, I can't buy a house as big as my parents house in Boise. And I think that that's just going to look different. As you know, maybe people are their starter home is not a three bedroom, two bathroom ranch out on the Boise bench. It might be a townhouse out there. It might be something a little bit smaller, because when you do reduce that scale, you do a bit of affordability.
GAUDETTE: Let's talk about the rental market in the Treasure Valley, because we know that some people, as investments in particular, may be people who live outside of the area are buying up as Charlie, our listener mentioned, coming in, buying up these properties. And then they are able to, you know, make rents pretty darn high. I mean, have we seen as rapid of a rise in these rental prices as we have in how the median home price has gone up so much?
TALERICO: Oh, yeah, absolutely. I believe that over the last year, rent prices have risen about 15%. And this is individual single family homes that are being turned into rentals. But also, you know, you've got groups like Kennedy Wilson, which is based out of the Beverly Hills. They've come in. They've bought a ton of some of the older rental properties around the valley and upgraded them, increase the rents. And they're seeing that this is a market where there's lots of people looking to move here and they know that there is money to be made as incomes potentially grow. But the problem is, is that they have stayed relatively stagnant. Wages are not rising as quickly as rents are. And so that's the problem that I think we're tending to see when it comes to affordability is that wages maybe haven't grown as quickly as those investors expected them to.
GAUDETTE: Right. We're talking with Idaho Statesman reporter Kate Talerico about this deeply rising housing costs in the Treasure Valley. So Kate you literally just mentioned this, right, about wages not keeping up with the cost of housing, even from a rental perspective. So I do in particular want to talk about wages and how does the region's relatively low wages, I mean, come into play in this entire picture?
TALERICO: Yeah, like one of the things that I've heard that really resonated with me is I was talking to someone about affordable housing, like subsidized affordable housing here in the Valley. And there's a lot of activists who say that we need to build more publicly subsidized affordable housing.
And this woman I was talking to is saying, well, that's really just a wage subsidy for all of our employers. If we're subsidizing people's housing, then we're providing a subsidy for employers who aren't paying their employees a living wage enough to make rent. And I think that that's a really interesting point.
Another point on this is that, you know, the National Association of Realtors, their chief economist, came out with a study about a year ago saying that the home prices here in Boise were getting so high that it was becoming a problem for employers that they didn't want to move their offices to Boise because where once we had the benefit of of lower housing prices here, now that benefit is a little bit less right as housing prices rise. And so you're seeing employers choose not to move here as house prices rise.
GAUDETTE: So you mentioned some people who are getting priced out of their homes. I mean, I think there was a front page article in The Idaho Statesman within the last year that focused on a particular senior citizen in Boise who had purchased our home back in the 70s. And she purchased that home so that she could stay in her home when she retired. She cannot afford the taxes on that home. And she [inaudible] this is just one story of many. And are we seeing that with senior citizens on these fixed incomes? I mean, people of color, low wage workers. We talked about that. Yet if you're coming in from outside of the area like a California, for example, and you were able to sell your home for an exorbitant amount of money, you can come in here and you may not necessarily be a high wage earner. It's just that you're coming from an area where your home got so much money. So are we seeing, you know, certain groups of individuals being priced out of this market?
TALERICO: Yeah, certainly for people on a fixed income, those property taxes can become increasingly unbearable year after year as the value of their property goes up and their income stays the same. So one thing that was talked about a lot at the last legislative session was property taxes. And there is kind of two theories on this. One being, well, we should just reduce local governments budgets, local governments derive their most of their general revenues from property taxes. And so if you can reduce their budgets, then you could reduce property taxes.
But what's really happening is that the value of homes is is increasing so much more than commercial businesses or farms here. And so most of the increase is falling on those residential homeowners. So Democrats in the last session had the idea that they proposed to increase the homeowner's exemption. So to protect a little bit more of the value of your home from property taxes so that you're paying only a certain percent of the value of your home, only a certain percent is taxed. And then the other ideas to increase the circuit breaker program, which is meant to be for seniors and people on fixed incomes and to give them some tax relief and that those programs haven't been updated for years. It's been a while.
GAUDETTE: It has been. And we're going to really delve deep into property taxes tomorrow when we continue the series. So Kate, you recently wrote about a possible incentive that Boise Mayor Lauren McLean is looking into, and this is getting developers to to build less costly housing. I'm curious, what are developers saying? And could this work right?
TALERICO: So the idea is to ask developers to include a few rent controlled units. So these would be units that are marketed towards people making around 80% of the area median income. So rates that are not too far off from the average rental rate right now, but that would be fixed for a certain amount of time. In return for allowing them to have greater density or to have greater height or less parking requirements. And what I heard from developers is that, you know, it just might not be enough for them. You know, you can't ask -- a developers in it to make a profit, right? Like a developer wants to make a profit.
GAUDETTE: Right, you're not a developer if you're not wanting to make some type of profit.
TALERICO: Yeah, yeah. There is very few people who are who are nonprofit developers and their investors are asking them to make a certain amount of return. And so therefore they have to fix their rents at a certain level in order to get that return for their investors. And so sometimes adding those affordable units or those rent controlled units isn't going to make that return for their investors. And so that's what they were saying, is that, you know, maybe all of these things, density, height, aren't going to be enough for us to to provide those units.
GAUDETTE: So you're actually wrapping up your time with the Idaho Statesman and the beat that you cover. And we are excited for you, but but sad to to see you go. Can you share quickly a story of someone that you've met while on this beat that really resonated with you and we'll stick with you as you move forward?
TALERICO: Oh, my gosh. I mean, they there are so many. I think that, you know, it's been really interesting to not just hear from, you know, some of the long time homeowners in Boise, but also people who are young, like myself. Right. Who are dealing with the affordability problems as well. And, you know, I got to talk to this really interesting group of younger folks, mostly millennials who call themselves YIMBYs.-- Yes In My Backyard-ers. And so they're kind of trying to counter the NIMBY, Not In My Backyard opinion. And so it was just this total opposite of what you usually hear it at public hearings. Right, of people who are against having new housing go up. And I thought that they offered kind of a different look at housing and what some of the solutions are here, which is rather than to say let's stop the growth, to say let's find solutions and let's try to welcome in the people that are moving here. And and that was certainly interesting to hear from them. Yeah.
GAUDETTE: I want to thank you for coming in. Best of luck to you in your new endeavors. Yeah. We've been talking with Idaho Statesman reporter Kate Talerico about the rising cost of housing in the Treasure Valley. Make sure you tune in tomorrow. We will do a deep dive on the property tax debate and maybe some solutions. Support for Growing Pains comes from Boise State Public Radio Broadcast Society members Jennifer Dickey and Andy Huang.