Idaho poised to be the next big investment landscape

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Headlines scream of “too much supply” in Idaho’s real estate market, potentially causing some investors to shy away. But focusing on oversupply is an oversimplification and may cause investors to miss one of the best opportunities for long-term upside since the Great Financial Crisis. A closer look at the most recent data and trends reveals a robust economic picture that paints a far more optimistic outlook. Idaho remains a prime real estate investment opportunity, with strong fundamentals that outweigh short-term concerns.

A draw for people and jobs

Idaho, as a whole, boasts impressive economic growth that outpaces much of the country in several key metrics. Median home prices have doubled in the last decade, placing them on the higher end of the spectrum compared to other states (Hunter, 2024). This lack of housing highlights the need for developers and investors to support high-quality, affordable rentals to support the growing population.

Relative job growth since the pandemic is the highest in the nation, a staggering 12% (Yun, 2024). These “Zoom Towns,” once seen as temporary havens for remote workers, are proving to be vibrant communities with lasting appeal. They continue to attract employers and an educated workforce, helping to drive a 10% population surge over the last five years (Sløk, 2024). Atop the list of fastest-growing states in the U.S. This economic strength is further reflected in personal income, which has grown by an impressive 5.6% in just the last year, signaling the strength of the state’s economy (U.S. Bureau of Economic Analysis, 2024).

The Best Performing Cities (BPC) index further solidifies this stability. This index measures 12 indicators of economic growth and access to opportunities, providing a comprehensive assessment of the performance of cities over the past two years. Remarkably, three of the top 10 small MSAs are in Idaho or encompass parts of it: Idaho Falls at No. 1; Logan, Utah, at No. 2; and Coeur d’Alene at No. 7. Idaho’s standout performance is due to “excellent five-year job and wage growth, bolstered by a small but growing high-tech sector and high rankings on resilience and income distribution metrics,” the report found (Milliken Institute, 2023). This recognition signifies a thriving job market, attracting new residents and boosting housing demand. Idaho’s diverse and expanding employment base further supports continued growth. Tech companies like Micron, Meta and Amazon are setting up shop in the state, demonstrating their confidence in its economic potential. Micron is a standout as one of the largest companies investing in the state, opening their global headquarters in Boise and having recently received $6.1 billion from the federal government to expand their manufacturing facilities throughout Idaho (Boak, 2024).

Addressing the supply issue

While headlines may focus on increased supply in some areas, it’s crucial for investors to see beyond those numbers. While the record-high new deliveries in 2023 and 2024 will likely lead to temporary flat or negative rent growth in some markets, the overall outlook points to a relatively quick absorption. Construction activity slows to historic norms after this year, and coupled with the steadily expanding population, the supply/demand equation will reach equilibrium sooner rather than later.

The buzz in the industry paints an incomplete picture of Idaho’s real estate market. While there may be a temporary lull in rental growth in specific areas, the state’s economic powerhouse fueled by job growth, population influx and rising incomes is undeniable. This translates to a long-term advantage for investors who look beyond the surface. With a focus on basis advantage, Idaho continues to be a prime long-term investment destination for savvy real estate investors.

As partner and chief acquisitions officer of Brinkman Real Estate, Brett Silverstein executes the company’s acquisitions strategy throughout the Intermountain West region. He can be reached at [email protected].