Wednesday, July 9, 2014

Home Building Heats Up in the Treasure Valley

After the Treasure Valley housing market collapsed in 2008, new homes that previously sold like Girl Scout cookies sat empty with “For Sale” signs graying in their front yards.

Corey Barton, owner of Meridian’s CBH Homes and one of the most prolific builders in the Valley, came up with a plan to sell off some of his pent-up inventory. The “Deal of a Lifetime” was a clearance sale. CBH Homes closed deals on about 200 houses for as much as 70 percent below their listed prices.

Barton said the sale helped CBH Homes keep cash moving through what he thought would be the end of a slow period for builders. He didn’t know that the true low-water mark wouldn’t come until 2011. That year CBH Homes built about 300 homes, down nearly 82 percent from its 2005 peak of 1,650.

“Every year, we couldn’t believe the market kept going down and going down,” Barton said. “We kept building and purchasing all the way through the bottom.”

To the relief of Barton and many others, the market showed signs of life in 2012 and surged in 2013, bringing work to almost all types of home contractors and subcontractors, though some — such as certain niche contractors who specialize in work on existing, high-end homes — have been left behind. Barton said he sold 725 homes last year and is on pace to sell 950 this year. But that total still would be down about 40 percent from 2006.

Improved lending practices have cut down on his company’s potential market but also have removed the risk of another bubble, he said.

“We’re getting back to where property values, population and job growth are all in equilibrium,” Barton said. “I think back to normal would be in a few years.”

In 2012, 1,997 new residential structures were added to the property-tax roll in Ada County, according to the county assessor’s office. That number increased to 2,534 last year, still well below the county’s 2005 peak of 6,491.

The recession was devastating for the entire Valley home-building industry. Permits for residential improvements in Ada County — including new home permits — dropped from 6,491 in 2005 to 1,232 in 2011, a 73 percent decline, according to the Ada County Assessor’s Office.

CBH Homes cut its payroll from 100 employees to 50 during the slowdown. The number of licensed contractor entities and professionals in Idaho fell 25 percent from 2007 to 2012, according to the Idaho Bureau of Occupational Licenses.

In 2013, Barton said CBH Homes had a hard time finding employees and subcontractors to keep up with its increased building. Too many moved away or changed professions during the recession, he said. But Barton expects the workforce to come back with the increase in demand. He has 60 employees now.

“The workforce is getting a little stronger to where the availability of skilled labor is improving,” he said.

Jeff Thompson is president of both the Building Contractors Association of Southwestern Idaho and of Meridian’s Thompson Homes, which makes houses priced at $500,000 and up. He said all association members are busy. His company is on pace this year to return to the six to 14 houses per year it averaged before the downturn.

“Midway through 2012 was when the phone started ringing again,” Thompson said. “We’re already seeing an increase in inquiries this year. It’s solid. It’s a really good sign for us.”

Barton said homebuyers and mortgage lenders needed to watch home values rebound before they could shop and lend with confidence.

“Everybody’s active right now,” Barton said. “It’s kind of like a cut on your hand. It starts to heal, it slowly gets better, and then it’s back to normal.”

Pockets of the home-building industry haven’t recovered.

Boise contractor Guy Shinn, of Guy Shinn Painting, specializes in high-end painting on existing homes. His customers are typically wealthy or upper-middle class homeowners willing to pay for staining, window glazing and varnishing.

Shinn said he now bids 20 percent less than he did in 2007, and he has cut his employee roster from 19 to six. Now, Shinn said he’s about to go out of business. Other niche painting, taping and floor-covering contractors are also struggling, he said.

“Six months into the recession, I thought it would go on for a year,” he said. “It’s taken me six years to finally worry about it.”

Read more here: http://www.idahostatesman.com/2014/03/04/3060570/home-building-heats-up-in-valley.html#storylink=cpy



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