"But experts worry that the very things that make homes attractive to investors - affordable housing costs, a strong rental market, a superior quality of life - are threatened by the investment boom."
"Property investors from California and other states are snapping up homes in Boise, Meridian and Eagle over the Internet and sight unseen. In the first nine months of 2005, Boise ranked fourth-highest in the nation for the share of home loans taken out by investors, according to LoanPerformance. Investors accounted for 20.5 percent of all home loans in the period - up from 11.4 percent in 2004 and 8 percent in 2003."
"Real estate chat rooms
and Web sites are full of talk about Boise, Meridian and Eagle, investors
say. National magazine and newspaper articles list the Boise metro area as a
top city for business and "underpriced" homes, according to local agents."
"Boise city planning director Hal Simmons said he talks to real estate
agents and developers who have seen "busloads" of investors from out of
state come through the Valley and pick up properties."
""It's clearly a trend that (the Boise metro area) is being discovered
and invested in by people outside of Idaho," Simmons said."
"The out-of-state investment boom can be good and bad, say local property
owners and real estate experts:"
"Higher home values mean that local property owners who want to sell their
homes can do so more quickly and for more money."
"The run-up also can mean higher home costs for people looking for homes
and higher property taxes on inflated home values."
"Residents looking for a place to live may be priced out of the housing
market or get into bidding wars with investors with more money."
"People who live next to homes that become investment rentals can find
themselves with transitory neighbors and, possibly, lost potential value if
properties held by absentee owners aren't kept up."
"Some experts worry that an over-heated housing market could create - and
then burst - a real estate bubble, bringing down property values and slowing
home sales."
"'Boise was put on the map as underpriced'"
"Local buyer's real estate agent Lynn Sturgeon said about 80 percent of
her business is conducted over the Internet with people living out of state.
Buyers find her on the Internet."
"The last two years there has been a shift of out-of-state investors,"
Sturgeon said. "It's hit hard. Somehow, Boise was put on the map as
underpriced."
"For the past five months, said Chris Findlay, a Boise real estate agent
and developer, out-of-state investors have been snapping up homes under
$200,000 across the Treasure Valley. Findlay said colleagues in California
even heard Boise real estate discussed on a radio talk show program. Clients
find him via his Web site and through word-of-mouth, he said."
"Forbes magazine listed the area No. 1 on its Annual Best Places for
Business and Careers in May. Within the last year publications like The New
York Times and Newsweek have chronicled similar Internet real estate trends
in Eagle and Pocatello, respectively."
"Findlay and Sturgeon both say their business picked up after the Forbes
magazine list came out in May. Investors are choosing both older and new
1,400- to 1,500-square-foot homes throughout Ada and Canyon counties,
generally with pricetags under $200,000, Findlay said."
"Idaho cheap compared to California prices"
"Tony Shaberman, a 35-year-old engineer from California, decided traditional
stock-market investing was far too risky. And he said home prices in
California made it impossible for him to invest in rentals there."
"The Sacramento home he purchased for $160,000 in 1994 is worth more than
$400,000 today. So he and a partner went house-hunting on the Internet. To
date, they have invested in several rental properties in Southwest states
like Arizona."
"Shaberman heard about the Boise area through his Arizona agent, who grew up
in Idaho. And now Shaberman said he's looking to buy in the Boise Metro area
this winter, most likely without ever visiting Idaho."
"The Treasure Valley's main draw is the affordable prices. "Compared to
California, they look real cheap," Shaberman said. "I look at home values
around $100 per square-foot and other factors, like is it a growing city."
"In the first six months of 2005, sales of single-family homes in the
Treasure Valley were up 26 percent compared to the same period the year
before. Property values also are on the rise: In Ada County, the average
home was valued at $230,882 in the third quarter of this year. That's up
nearly $30,000 from the first four months of 2005. In Canyon County, the
average home price is more than $26,000 higher in the same period."
"Even with increases like that, Idaho home prices are small change to buyers
with the resources to pay."
"April Florczyk, an agent with Re/Max West in Boise, said her last seven
listings all sold with more multiple offers than usual. Of those, four went
to out-of-state buyers, she said."
"A lot are investors who are coming in and buying homes now and will
eventually move into the area, but will turn them into rentals until then,"
Florczyk said. "The majority of them are coming up from California."
"Investor Susana Kjellsen has relatives in Canyon County and said she
became interested in Boise after the Forbes ranking."
"Kjellsen, who is retired, lives in the Silicon Valley south of San
Francisco. She said a Treasure Valley real estate agent sends her e-mail
listings daily that meet her criteria on size, neighborhood and price. She
is particularly interested in the area near Boise State University and St.
Luke's Regional Medical Center."
"Kjellsen and her husband have several rental properties in Las Vegas and
Sioux Falls, S.D., which they purchased sight-unseen over the Internet."
"We wanted to protect our investment in terms of stable renters, good
area, potential for appreciation," Kjellsen said. "And in the county I live
in, you can't find anything under half a million dollars."
"Bidding wars and high prices for local buyers"
"Gina Emery, an agent with Holland Realty in Eagle, said outside
investors are driving prices up and entering bidding wars over even bare
land. Out-of-state investors are buying homes and letting them sit empty for
around a year then reselling - or "flipping" - the homes after they
appreciate."
"Some buyers are now including "escalation clauses" with their purchase
offers, promising additional money over the highest bidder to ensure they
get the property, Emery said."
"The local guy is having to participate in the bidding to even move
across town," she said."
"Emery mostly handles sales of building lots. Recently a client bid $150,000
on a bare 5-acre lot the day it hit the market offered at about $130,000.
But the sellers pulled it from the market after a flurry of high bids came
in, Emery said."
"I saw it on the multiple listing service (a few days later) for $180,000,"
she said."
"Home prices in the Boise metro area appreciated 10.05 percent in value
over the past year, according to the House Price Index, a quarterly report
analyzing housing price appreciation trends by the Office of Federal Housing
Oversight."
"Treasure Valley real estate agents say they have local clients who can
barely afford escalating home prices. Rising home prices should be a
concern, said Simmons, the Boise planner."
"I am sure anybody who thinks about it is worried about affordability and
the ability of first-time buyers to get in the market," Simmons said."
"Some market watchers have other worries, too. If too many homes hit the
market at inflated prices, and if interest rates increase, market demand
could dry up. That could eventually lower home values across the valley. And
could mean slower appreciation rates for years, according to local real
estate agents and planners."
"The Idaho housing boom should remain strong even if other markets
experience the end of the housing bubble, according to a Zions Bank forecast
from last August. The areas in the so-called bubble are experiencing
sky-high appreciation rates. A Zions Bank economic forecast prepared by
Thredgold Economic Consultants predicted that Idaho housing values would
continue to rise for the next two years."
"Rentals, absentee owners worry some"
"Outside investors say Boise area homes make a good deal. For a down payment
of $10,000 to $15,000, Shaberman said, he can make 10 times that much money
when selling the properties years later. In the meantime, he said, most
investors hope to just break even on mortgage payments while renting the
home."
"The Boise area remains a strong market for rentals because a lot of
people looking to rent, from college students to established families, real
estate agents say."
"Even with more renters buying homes, the rental market has stayed strong,
Findlay said. Some outside investors say they've found that the Treasure
Valley's quality of life draws a generally conservative, responsible
renter."
"But some residents still worry about the impact of rental homes on their
neighborhoods."
"Ed Beisly, a retired band teacher, has lived in the same Meridian home
since the early 1970s. A number of homes in his older neighborhood have
turned into rentals, he said. He doesn't necessarily mind rental homes, but
he does worry about the transitory nature of renters. Beisly said he doesn't
get to know those neighbors as well as long-time owners."
"My concerns are just appearances," Beisly said. "It's important that
properties in your neighborhood have a lawn that's kept up, it's not burnt
out, and it's mowed every week."
"Eagle city planner Nichoel Baird Spencer said residents often are
concerned about maintenance and upkeep on rental properties, especially when
the owners live out of state."
"Crime tends to increase in more rental areas, just because there is not
someone there who owns the property to have heightened awareness," she said.
"I just think the longevity of a rental is not the same as ownership. They
don't build up a rapport or know their neighbor as you would with an owner."
"Cecily Tippery grew up in the Boise area, and now lives in Discovery
Bay, Calif., with her husband, Craig Klooster."
"When the couple wanted to invest in rental properties, they looked at
Boise. They own a condominium and bought a 1,700-square-foot rental home in
southwest Ada County this past April."
"Tippery said she sees the properties as long-term investments and isn't
looking to "flip" them. She and her husband are particular about the people
they rent to, and lucky, she said. The Boise area is a good bet for
responsible renters, she said."
"Since we are not there, we need to have some sort of reassurance it will
be taken care of in general," Tippery said. "If we had the money right now,
we would probably buy another property there."
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