Boise Real Estate's Vanishing Builders
The Boise real estate market used to be home to hundreds of builders.
Now, most are gone, victims of our economic downturn and declining Boise real estate market.
Consider what it’s like to be a builder:
- You must purchase a lot at today’s price, wondering if lot prices will decline or the developer will go broke before you sell your spec home.
- You must convince a reluctant lender to provide construction financing, then pay the lender’s upfront loan fees and interest until you sell your spec home.
- You must compete with the seemingly endless onslaught of short sales and foreclosures that undercut your ability to sell at a profit.
- You must deal with the possibility (likelihood?) of higher future interest rates that will affect the salability of your spec home.
- If you fail to sell your spec home at a profit, you may have to come out of pocket to achieve a sale or lose it to the lender while ending up with ruined credit.
Small wonder the Idaho Business Review reports than the number of Ada County homebuilders has fallen by 79% since 2005.
IBR also reports that 770 builders pulled permits to build homes in Ada County in 2005.
But, in 2009, just 160 builders pulled permits and only 60 of those builders built more than one home.
A builder simply cannot survive building only one or two homes a year.
Most of our formerly-active home builders, including many who were building upwards of 50 homes a year, are now gone from our market.
Source: Idaho Business Review
January 23rd, 2010 Posted in Inside Real Estate
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By Bob Bass on Jan 25, 2010
This is so true Phil. It will be interesting to witness the transition in the market place of the 60 builders who are still building.