Treasure Valley has been witnessing a new trend: new home buyers who are willing to trade in extra space for a smaller price tag. Chad Olsen, owner of Envision 360 Homes, is planning to build 20 new 2,400-square-foot homes this year. These spacious two-story houses were set to be priced at $299,000 and according to Olsen, designed to attract buyers looking for more square footage for their dollar.
Times have changed, though, and so have potential buyers’ wishes. Per the requests of buyers, Envision 360 Homes have built some single-story homes instead. Buyers claimed they simply don’t need the space, and ultimately wanted to sacrifice 600 square feet to keep the price of the home at $270,000.
Says Olsen, “Traditionally, having extra square footage has been good. I find it interesting that people are going away from the two-stories, because there’s so much extra room for not many more dollars.”
Idaho buyers may not be ready to accept the fact that Treasure Valley is experiencing a steady increase in the value new homes. There are many factors that have contributed to this change:
A SPLIT MARKET – Existing real estate before the recession hit has slowly been regaining value, which contrasts with the constantly increasing cost of new construction. Buyers can purchase existing homes for a third less than a new home, something builders were not expecting. Because of this, builders are now cautious about new construction. While costs continue to rise, builders are choosing to wait until inventory drops before adding new homes.
RISING COSTS – Due to the consistent rise in costs for labor, land and materials, builders are finding it difficult to price new homes below $300,000.
EXPENSIVE DIRT – Envision 360 paid $12,000 per lot, land that was worth about $3,000/lot during the recession. The land is increasing in value right alongside the materials. Developer Dave Yorgason said potential buyers aren’t always interested in new homes. “The move-up buyer would rather remodel their house, or buy a home and remodel it,” he said.
IT’S GOOD TO BE BIG – CBH Homes, Hubble Homes, Boise Hunter Homes, Coleman Homes and Brighton Homes are the five big builders who have snapped up most of the land inventory, leaving little opportunity for small builders.
CONSTRUCTION OUTLOOK: MIXED? – Despite all of this, real estate broker Mike Turner thinks builders will stay plenty busy this year. Buyers have been uncharacteristically interested in new homes in January and February of this year, and Yorgason expects new construction sales to outpace new home listings this year. Olsen says new construction is addictive. He said, “After completing a successful subdivision, it’s easy to think you can bite off a bigger hunk with your next project. When do you finally put your hands in your pockets and walk out of the casino? How much do you have to make? Or how much do you have to lose?”
Treasure Valley is hot right now. Builders are definitely taking advantage of the growth and general popularity of the area!
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