Sars, swine flu or coronavirus, rental properties in Eastern Idaho are a solid, long term investment.
While the Dow is having a selloff not seen since 1987, rental properties are being snapped up in the Idaho Falls area quickly and at prices higher than last year.
People need a place to live regardless of what the current flavor of impending doom is. This includes the physical or psychological influences of coronavirus on the economy .
History is not an indicator of the future. But, a look back to the swine flu of 2009 can give an indication of how to interpret current events.
Have a look at the chart above. It shows vacancy rates during the swine flue pandemic of 2009. The vacancy rates are rough estimates from the census bureau. The unemployment rate is a three month average of each quarter. While there was an increase in vacancy rates during the swine flu epidemic, they also went below the vacancy rates before the swine flu started while the epidemic was still happening.
Also notice that the unemployment rate peaked with the vacancy rate more than a year after the stock market crash of 2008. Idaho has a tendency to lag national economic trends by at least a year. This would indicate that the economic crash of 2008 had more influence on rental vacancies than the swine flu epidemic. Even with the swine flu epidemic and the fallout from 2008 hitting Idaho’s economy, vacancy rates trended downward after the peak in the third quarter of 2009.
What could impinge on property owners’ income streams is the possibility that tenants could miss work because they are ill or as an indirect result of others becoming ill. Even at that, lawmakers are already offering bills at the federal level that would offer paid sick leave to those that suffer from lost wages resulting from having to stay at home because they are ill or they are caring for a family member that’s ill.
Keep the coronavirus in perspective by comparing it with the illnesses and deaths during the current flu season. The Centers for Disease Control estimates that between October first 2019 and March 7 2020 there have been 36 million flu illnesses, 370,000 hospitalizations and 22,000 deaths from the flu.
Look at the bar chart above . The coronavirus data wasn’t omitted. On the day sampled (03/16/20), the real world effects of the corona virus has had such a small impact, in comparison with the flu, that they didn’t appear on the chart.
In contrast, on the same day the statistics above were sampled, the coronavirus had caused 1629 total illnesses and 41 deaths according to the CDC.
The above statements aren’t to trivialize the losses and the trials of the people who have contracted the coronavirus. They simply illustrate that a disease is already in place that has physically affected more people than the coronavirus.
If the physical effects of an illness were going to cause problems for rental investors the flu would’ve done it by now.
The biggest effects of the coronavirus on investments are the scare and reaction it has caused, in comparison with the flu. Are the psychological effects of the corona virus on our economy real? Yes they are. As stated earlier, despite what’s happening in the overall economy people need housing.
Eastern Idaho and specifically Idaho Falls are a places people want to live. Census statistics show that the population of Bonneville county has grown steadily since 2000. In addition, the pace of new construction hasn’t kept pace with the increase in population and housing is financially out of reach for many.
What all of the above facts add up to, is a market with increasing demand and inadequate supply.
Right now interest rates are low and while there is a very limited supply of rentals, now is still a good time to invest if you’re in a position to do so. If the prospect of getting into a long term investment that has monthly returns appeals to you, contact Kirk Rehfield (Jacobgrant Owner Relations) at Kirk@jacobgrant.com or 208-795-8298.
