The housing market has been a hot topic in recent years as high mortgage rates and rising prices have created affordability challenges across the state. To address these challenges, multi-family housing unit permits have had an increasing share of overall housing permits in Idaho.
Additionally, the labor force side of the equation is growing strong, as construction employment is the second largest growing industry in the state.
Affordability challenges
Rising unaffordability is a nationwide challenge, both rent and house owner’s equivalent of rent have shown increases in almost identical ways. Prices stagnated during 2008-2011 as the housing crisis turned the housing market upside down.
Outside of the housing crisis, housing costs have continued to increase even faster since 2021, as inflation and mortgage rates began to rise. The prices have been shrinking the number of homes on the market and rising costs of inputs (lumber, concrete, steel, etc.) for new homes.
Since 2023, nationwide rent costs and housing owner’s equivalent rent costs have both increased almost four times higher than they were in 1982, the base period benchmark selected for the Consumer Price Index.
Figure 1. Consumer price index for rent of primary residence and owner’s equivalent of rent, 2003-2023
Source: Consumer Price Index, U.S. Bureau of Labor Statistics
Another commonly used indicator of affordability is the proportion of households paying more than 30% of their income for housing, known as “rent-burdened households.” The maps in Figure 2, use this indicator to illustrate the evolution of the housing affordability challenge in the context of Idaho.
In 2000, the areas of the state that had 35% or more of rent-burdened households were mostly limited to: the most populated counties of the state (Kootenai, Latah, Ada, Bannock and Bonneville counties), some of the smallest populated counties in the state (Butte and Adams counties) and counties with natural amenities and resorts (Bonner).
Looking forward to 2023, a vast majority of counties in the state, regardless of population size or region, now have 35% or more households that are rent-burdened. Where affordability issues were more isolated to specific areas in 2000, housing affordability issues are far more widespread two decades later.
Figure 2. Share of renter-occupied households spending more than 30% of income on gross rent
Source: U.S. Census, 2000 Decennial Census and 2019-2023 American Community Survey
Shift to multi-family housing units
The Great Recession caused a massive decline in housing permits and slowed the construction of housing. Housing permits didn’t recover to the pre-Great Recession level until 2016. The housing shock of the recession created an eight-year period where less housing was built than expected, creating an unexpected shortage.
In light of housing stock and affordability challenges, Idaho housing permits have shifted with a growing share of multi-family permits in recent years. In 2023, multi-family permits were 33% of total housing permits, compared with the pre-pandemic average (2003-2019) of 19%. An increased stock of multi-family housing units is an important shift in the market for both consumers and producers.
Consumers have more variety in housing stock to choose from, which is increasingly important in the current housing market defined by low stock, high prices and high mortgage rates. Producers are looking to multi-family units as a solution to the challenging housing market and flexible work arrangements increasing rental demand. [1]
Figure 3. Idaho housing building permits, 2003-2023
Source: Building Permits Survey, U.S. Census Bureau
Employment
As permits for multi-family housing continues to rise, construction employment has grown to meet demand. Construction employment in Idaho has increased 25% above the pre-Great Recession high of 2007 as of 2023. Employment in this industry also returned to pre-Great Recession levels in 2020, taking 13 years for construction employment to recover.
To emphasize how long it took to recover from the Great Recession’s employment decline, it took four years to reach the previous construction employment high in 2007. Even with the employment shock of the Great Recession, construction employment has been the second fastest growing industry in Idaho over the past two decades behind health care and social assistance. These continued robust gains in construction employment, illustrate that Idaho is a growing state in both population and economic opportunity.
Figure 4. Idaho construction employment, 2003-2023
Source: Quarterly Census of Employment and Wages, U.S. Census Bureau
Seth.Harrington@labor.idaho.gov, labor economist
Idaho Department of Labor
208-696-2364
Sources:
[1] Permits to Build U.S. Apartments Drop Below Pre-Pandemic Levels
This Idaho Department of Labor project is funded by the U.S. Department of Labor for SFY25 as part of a Workforce Information grant (40%) and state/nonfederal funds (60%) totaling $885,703.
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