Charter Pointe was exactly the type of subdivision prospective first-time homebuyer Amanda Cunningham wanted to live in: two-story homes surrounded by farmland with an elementary school close enough for her son to walk to.
"It's hard to find a home here — I can't do it," Cunningham said in an interview.
She can't actually afford to buy a Charter Pointe house yet. Instead, she rents from the company that owns the home she would like to buy some day: American Homes 4 Rent.
First-time homebuyers face growing competition from out-of-state investors and corporate landlords looking to capitalize on Boise's increasing rents. Those investors are changing traditional residential neighborhoods and aggravating the shortage of homes for beginning homeowners.
In Charter Pointe, 50 of the 1,000 houses are owned by American Homes 4 Rent. But it wasn't always like that — not before the recession.
Charter Pointe, located off South Maple Grove and West Lake Hazel Roads in unincorporated Ada County, was built by Hubble Homes in 2005. Within five years, the housing market bottomed out, pushing home prices in Boise down by 46%.
The brunt of the housing crisis fell on suburban subdivisions like Charter Pointe. Many of the new homeowners in the neighborhood had bought in 2006, at the peak of the housing bubble. Some later lost their homes to foreclosure.
Into those empty homes stepped a new kind of owner: investors who realized they could make a profit by renting until home prices increased again.
Hundreds of individual investors and companies like American Homes 4 Rent, based in Agora Hills, Calif., swooped into neighborhoods like Charter Pointe across the country.
American Homes offered cash when few Boiseans could buy. In 2013, it purchased 179 homes throughout the Treasure Valley.
While America has spent most of the last decade climbing out of the Great Recession, the real estate behemoth never slowed its purchasing streak. Filings with the Securities and Exchange Commission show the company owns nearly 500 homes in the Boise area and is continuing to expand its portfolio, mostly in suburban neighborhoods.
As property values have surged, American Homes is now building its own homes, including a yet-to-be-built 240-house development in Star. The company is already building homes in Nampa.
American Homes 4 Rent could not be reached for comment, but a Boise commercial real estate agent who helped the company says the company saved homes that could have fallen into disrepair as it worked to meet a need for rental housing.
"What would have happened had those homes simply gone vacant and abandoned?" said John Starr, of Colliers International, in a phone interview.
How the recession created the single-family-home investor
In December 2010, foreclosures in Boise reached an all-time high with 3.6% of housing loans.
Millions of Americans defaulted on their mortgages. The fate of entire neighborhoods was decided at auctions. Real estate investors and private-equity firms scrambled to buy discounted homes.
The recession created the perfect setting for the single-family-home rental model. But it was investors who brought the idea to scale.
One of those was B. Wayne Hughes, the founder of Public Storage, based in Glendale, Calif. He transformed the single-family rental market exactly as he had transformed storage: By amassing vast numbers of properties from foreclosure auctions, he took what had been a mom-and-pop industry and turned it into a real estate investment trust: American Homes 4 Rent.
Shaun Tracy, a local real estate agent, also had invested in a handful of homes in Charter Pointe in the 2000s. He watched as American Homes started to enter the Boise market during the recession.
"Real estate investment trusts typically would purchase commercial properties, not residential single-family home properties," he said in a phone interview. "That's new, historically speaking."
Companies like American Homes became a force within the single-family housing market. By 2013, American Homes owned 10,000 houses nationwide. Now it owns upwards of 50,000.
The company and its local representative could not be reached for comment.
The key to American Homes' success was finding the right property in the right market. The company looked for cheap homes in areas it predicted would bounce back from the recession. Boise checked all the boxes.
"They would show up at foreclosure sales, knowing that no one else would have money," Tracy said of American Homes. "Houses were selling for pennies on the dollar. So they pounced. They said, 'We're going to buy every house we can.' And they did. And they paid in cash."
Take the home at 191 W. Tehuti Court in Kuna, purchased new in 2006 by a family with $161,600 in loans from America's Wholesale Lender, which repackaged and sold the family's debt to the Bank of New York Mellon, which in turn seized the house after the owner defaulted and then sold it to American Homes 4 Rent in 2014.
During the first quarter of 2013, sales of homes to institutional investors made up 10% of all home purchases in the Boise area, according to Attom Data Solutions, a property data firm. That share has decreased over the past five years.
A profitable investment
While American Homes 4 Rent is the biggest player in the Boise market, small investors from Oregon and California are also building their own portfolios of single-family homes here.
Their main target? Starter homes.
In 2017, American Homes CEO David Singelyn explained the company's strategy to REIT Magazine: "We look for areas with good rental demand, with immigration and employment growth and neighborhoods that we know will attract long-term tenants. We look for newer homes in neighborhoods with good schools because we want to attract families."
The single-family home gives investors an exit strategy, too. Where the owner of an apartment complex needs another investor to buy the property, American Homes can simply sell to a prospective homeowner.
With home prices setting new records in Ada and Canyon County every year, the investors are likely to cash in when they do sell.
For now, the companies are making a bet that the homeownership rate, which dipped after the recession, will stay low. The Boise metro area's homeownership rate fell from 72% in 2000 to 68% in 2017, according to the U.S. Department of Housing and Urban Development. New Census data indicate that the trend may be reversing nationwide.
Some renters have found it increasingly difficult to save up for a home as their rates rise.
"It's up to us to educate tenants in a new way that there will be annual rental rate increases," Singelyn said at an investor's forum in 2017. "This has been a very passively managed industry for 30, 40 years, up until the institutional players came in."
In Charter Pointe, Cunningham pays $1,550 per month for her 2,200-square-foot house. She's happy with that price as she waits for the market to slump so she can afford to buy a home.
Tracy, the real estate agent, wonders when that will happen, if at all.
"The rentals make things very much more difficult for first-time homebuyers to afford a house," he said. "The days of a $200,000 home in Boise are gone."
'No one's here very long'
In 2011, 90% of the houses that sold in Charter Pointe were foreclosures or short sales, according to StateImpact Idaho, a now-defunct collaboration between Boise State Public Radio and NPR.
Meichell Grimes and her husband bought her home there in 2014.
"We moved here because it was a quiet family neighborhood," Grimes said in an interview outside her house. She wanted to live next to other homeowners, people she could get to know as she raised her four children.
But over the years, she has watched five different sets of renters have moved in and out of the house across the street. It's not always clear which houses are rented out in Charter Pointe, she said, but she can often tell from all the cars that are parked along the driveways. They indicate that multiple adults share a house, rather than a family.
Buying entire streets sometimes, investors have the power to change the dynamic of neighborhoods.
Some Charter Pointe residents don't mind the rentals, but others like Grimes say they wouldn't have bought in the neighborhood if they'd known that investors would come to own so many houses there.
Grimes has given up trying to introduce herself to her neighbors. "It would be nice, but I don't care anymore," she said. "The renters switch out a lot. No one's here very long."
For Grimes' family, the changes in Charter Pointe aren't enough to prompt a move. But others have passed the tipping point.
Tara and Scott Arellano were so eager to leave the neighborhood that they took a loss on the Charter Pointe house they bought in 2005.
"These out-of-state investors come in and buy homes in these neighborhoods that families are thinking are going to be a certain type of community, then you have these rental properties where people aren't invested," she said in a phone interview. "We were heartbroken."
In 2013, they sold their home and moved closer into Boise's downtown to an older neighborhood they felt was more established.
"We had hoped there would be a nice sense of community, that we could stay there. That just didn't happen," Tara said.
