2021 BOISE IDAHO REAL ESTATE BLOG
Mid 2007 Treasure Valley New Construction Real Estate Market Report Main Boise Idaho New Home Trends

Real estate trivia- What happens when inventory of homes is plentiful and growing, sales are slow, construction is down and new developments and phases are everywhere and continue rolling out? Lower prices, right? We have increased supply and lower demand which means prices are falling, correct? Not really. My economics professor would have struggled to grasp this and no one has given a comprehensive answer yet.

Ada County Idaho Home Values
Canyon County Idaho HOme Values 
 
One local realtor noted that even though, there are many homes on the market, most local buyers have seen them and they don't fit their needs.  The realtor determined that inventory is left over "investor" purchases and little to no thought was put into these homes with regard to the local buyer's needs. They also felt the homes were only built with the bottom dollar in mind.
 
There really are not any good statistics to report. If you subscribe to our real estate reports you know that the latest trends are ugly. Builders, realtors and other industry professionals are looking for the light but it does not seem to be getting closer. Even recently, Micron has had layoffs and though the state projects those employees will be absorbed with the low unemployment in the region it will be hard for them to find comparable jobs. How many of them will need to get out from under their present house payment based on a Micron paycheck?

 
According to local real estate auctioneer, Alan Armstrong of ArmstrongAuctions.com, he has been getting more and more requests to conduct real estate auctions in the last six months. Many of these requests are for top notch properties. In fact he will be auctioning off two brand new custom homes in Nampa on the 24th of July. Armstrong also stated that many real estate auctioneers that are fellow members of the National Auctioneers Association are expecting a surge of business similar to the savings and loans days of the early 90's when thousands of homes and other properties were sold nationwide at auction.
 
Does this mean doom and gloom? If you look at individual situations there are going to be some difficult stories told but from 30,000 feet the consumer will come out ahead.  "The consumer can really live in just about any location they want as formerly closed subdivisions are now open, meaning any builder can build there. The consumer has all the power and doesnt need to settle for anything less than the best of quality with regard to their new home" Ken Firmage, Diamond Homes.
 
Now that the buying frenzy is over, developers need to produce better neighborhoods at more affordable prices in order to move lots. The ability to sell is going to tie closer to the quality of their product as competition increases. Builders have quickly realized that lot prices are critical in creating niche products and niches are becoming more important as a sales strategy to build and sell homes.
 
 "Unless we can provide a product in a subdivision with tons of amenities, great location, and an affordable price tag we will not build a spec home" Ken Firmage, Diamond Homes.
 
"The biggest difficulty is finding lots that are priced so that you can afford to build something other than a 1,000 sq. ft. house to keep within the price point" Chuck Miller, Chuck Miller Construction
 
"We have changed our product by reducing the size of the homes, providing a larger number of single level homes, and we have worked to provide some unique open floor plans which make each home feel larger with a higher level of amenities targeted for a specific buyer profile" Barry Teppola, The Legend Company
 
One new business that may help create more affordable housing is working to join everyone that brings a development to the market to work to share in the risk and reward. Idaho Development Investment Group thinks there is fundamental problem with most of the new subdivisions in the TreasureValley. "The majority of these subdivisions are not an integrated team. Developers, Builders and Realtors need to move to a shared-risk, shared-reward integrated business model to provide a better end product to the consumer. An integrated approach to development ultimately benefits the end consumer with better pricing, more equity and a better lifestyle" John Belloumini, Idaho Development Investment Group.
 
So where are we?
According to ConstructionMonitor.comAdaCounty pulled 172 permits in June, the lowest number since December 2001. CanyonCounty shows 106 permits just 3 more than the previous month but Canyon has not pulled that few since December 2000. The market is really beginning to show strains.
 
13 Month Boise Idaho Building Permit Activity
Month to Date Building Permits June 2007
Weekly Building Permits by County
 
 
Interestingly enough, as demand falls permit values have risen. This may be due to the quality of homes built in todays competitive market when consumers are demanding more and willing to pay for it.
 
 
 
Another perspective
 
 
Jan to June
Ada County Total Permits
Total Builders
Avg Permits per Builder
 '00
1815
415
4.37
 '01
1773
414
4.28
 '02
1642
372
4.41
 '03
1914
372
5.15
 '04
2362
434
5.44
 '05
3671
500
7.34
 '06
2826
400
7.07
 '07
1547
326
4.75
 
 
 
 
Jan to June
Canyon CountyTotal Permits
Total Builders
Avg Permits per Builder
 '00
899
176
5.11
 '01
1024
173
5.92
 '02
1261
170
7.42
 '03
1174
168
6.99
 '04
1164
187
6.22
 '05
1467
242
6.06
 '06
1797
287
6.26
 '07
709
182
3.90
 
 
One of the benefits of a slow market is the weeding out factor. As you can see from the above charts there are fewer builders pulling permits in each county as those that act as a trade, as opposed to a business, dwindle away. Of course, this applies to the entire industry as realtors disappear and companies react to the market by reducing staff.
 
Comparison: Top Five 2007 Builders YTD compared to 2006
 
 
 
Builder
 
 
Ada
2007
2006
County
Total Permits
Total Permits
1
CBH Homes
392
536
2
Hubble Homes LLC
93
223
3
Aspen Homes
69
26
4
21
35
5
Syringa Const
24
13
 
 
 
 
 
Builder
 
 
Canyon
2007
2006
County
Total Permits
Total Permits
1
Hubble Homes LLC
131
193
2
CBH Homes
99
421
3
DR Horton
29
26
4
Young American Homes
22
21
5
Holton Homes
14
16
 
Foreclosure
Again, we focus on the consumer. Surplus of homes on the market and the sub-prime mortgage problem for possibly many existing homeowners in TreasureValley are factors that truly give the consumer buying power.
 
Foreclosures hit 37-Year High-Realtor Magazine Online, Worst still to come for us housing sector-MoneyWeek. We have all listened to the news and stories such as these about the US housing market and the rise in foreclosures. "This has definitely affected certain parts of the county in different ways. Although we have seen an increase in the foreclosure market here in the TreasureValley, many think the worst is still to come for us in Idaho" Charlie Nate, http://www.idahodataproviders.com/. While this may bring dismal feelings for some it creates opportunities for others. 
 
Many realtors say that waiting for some sort of fall out to save a few more thousand dollars on a home may find a buyer missing out on a great house and may spend it in interest if the rates go up. Ask your lender what a quarter point in interest would mean on your home loan?  
 
So what is the Good News?
 
Higher energy costs and competition are forcing builders to build higher quality, affordable homes.
 
"The consumer needs to understand this is a great time to buy.  Interest rates are low and the availability of product is strong The new home builder views the process as a business, and understands that they must appropriately price their product to sell.  They cannot afford to sit on an empty home for too long" Barry Teppola, The Legend Company.
Competition is good for the consumer because it creates the problem for the industry to make a better product. When builders were selling as fast as they could build and had buyers on them to produce, it is possible that quality was sacrificed to keep up with the pace. Now the consumer has time to shop and they know it. They are taking more time and doing more homework than ever before.
 
"The internet is becoming much more of a source to buy homes than ever before.  Currently 87% of the consumers use the internet as a home buying tool" Jim Paulson, ReMAX. "Many of the buyers out there shopping for a home are researching the market but taking a wait and see attitude to see if we have stabilized in price.  Interest rates have been slowly rising which offsets some of the savings on price reductions, so this is a double edge sword."
 
BuildingCredibility.com has received over 16,000 visitors in the last 30 days and 40% were repeat visitors. The majority are local but the most popular out of state visitors are from California, Washington, Oregon, New York, Utah, Nevada, and Texas which correlates to the 2006 Migration Report.
 
New Communities
The community is becoming just as important as the home. Schools seem to be more a part of the discussion and now of course the commute factors- time and gas are a bigger consideration. The closer people stay to home the more value community amenities will have. Pools, schools, walkways, open space, playgrounds etc make a subdivision more appealing then in prior years.
 
Two other growing aspects of the industry are energy star and green. Energy star is definitely catching on in this market. Green seems to be getting really big on the internet but not as big in the market place. Energy star has plenty of awareness as our energy needs and concerns have grown. Green will become a priority as our values change as well.
 
Posted by tlangford at 8/14/2007 4:41:00 PM
Account Login   Account Registration
Comments (0)
No comments yet, login to post a comment.
Add Comment
Provide comments on this blog entry. If you have an account with this site please sign in.

Samantha Dunn, Idaho Real Estate Agent

READY TO LEARN MORE?
Samantha Dunn

208.949.4948

 

Let's get started