The Treasure Valley housing market is coming off its hottest summer in years. In July, Ada County home sales were up nearly 40 percent over July of 2012. The average price was up by about 20 percent.
The stats all points to a market that’s recovering from the housing bust of just a few years ago. But there’s one aspect of the industry that hasn’t been quick to recover: new home construction.
When the housing market was at its worst, a glut of new homes made it a buyer’s dream.
“At its height we had over 5,000 homes actively listed for sale here in the valley,” says Marc Lebowitz, the head of the Ada County Association of Realtors. “By January of this year, we had about 1,600.”
Lebowitz says what was once an excess of homes for sale has now flipped and turned into what people in his line of work consider a shortage.
“We typically define a balanced market sort of evenly, treating buyers and sellers as having a six month inventory,” he says. “Right now it’s below three.”
When the number of new homes dips that low, Lebowitz says it breeds desperation in buyers. And that led to a sort of recklessness that Lebowitz says he heard about often over the summer. Lebowitz says this happened because existing homes were many buyers’ only options.
There aren’t many new homes coming onto the market in spite of the low inventory. Just before the housing bubble burst in July 2006, buyers could choose from nearly 2,400 new homes in the Treasure Valley. This summer, buyers had less than 1,000.
But one place where new homes are getting built is the Avimor development along Highway 55 north of Eagle.
Dan Richter is in charge of the project. He says Avimor basically went dark during the housing crunch, but as the market’s recovered sales too have picked up.
“The last two years we’ve doubled sales each year,” he says. “Next year I anticipate probably coming close to doubling this year’s sales.”
Richter says the lack of new home choices in the Boise area continues to send buyers into his relatively remote development. The surge in sales has Richter again thinking the ultimate vision for Avimor – a 35 square mile project complete with schools, shopping and healthcare – is attainable. But Richter’s optimism is tempered by one thing: the labor market.
“If I sold 200 homes I couldn’t get 'em built because we don’t have the labor force in the valley any longer,” he says. “For awhile I was building a house in 60 days and now I’m up to 90 days to build it. The trades have more work than they can handle right now.”
Construction jobs disappeared when the bottom fell out of the housing market. According to the labor tracking company Economic Modeling Specialists International, there were nearly 3,000 residential building jobs in southwestern Idaho in 2006. Today, there are about 1,200.
John Seidl is a homebuilder and the president of a regional trade group. He says two electricians he used to work with are good examples of the decline. One went to work for Boise State University, the other for Micron. Sedil says such defections have led to big changes for homebuilders like him.
“In ’07 I think we built 37 homes,” he says. “And now we’re comfortable doing about 10-to-12 a year.”
Seidl says even if there were enough workers to build a lot of homes, there’s another shortage taking place that would limit companies like his. The industry that supplies materials to builders has also shrunk.
“No one keeps doors in stock anymore,” says Seidl. “They have to be ordered from the factory. Now, we’re having to wait a long time to get product just because it’s not available.”
Seidl thinks the shortages will start to subside as more people see building homes as a way to make a living again, and more companies see there’s increasing demand for their materials.
But no one is predicting new home construction will reach pre-crash levels anytime soon. In Ada County, new home permits issued last month were only about a quarter of those issued in September 2006. That means most homebuyers will continue to buy existing homes. And those interested in a new home will have fewer choices and have to wait longer for it to get built.
Copyright 2013 Boise State Public Radio