Builders: price is ripe

When Charles and Noelle Desrosiers started in November to look for a home in Boise, they had a few ideas in mind: they wanted it to be close to school and work, they wanted it to be attractive, they wanted it to be new, and they wanted it to cost less than $250,000.
 
They discovered their answer in a row home not far from downtown. With 1,550 square feet divided between two levels, it is new and cost $235,000.     
As it becomes more and more difficult for Americans to afford homes, builders in the Treasure Valley are finding ways to build new, stylish homes that meet residents’ needs without the extra square footage and amenities that could push the cost past the affordability realm.
Noelle Desrosiers said their skinny new house was just what they’d been looking for – it was the right size, the right location, the right look and the right price.
Metrostudy’s Treasure Valley director Eric Allen said, a few indicators show the new home market has become even more affordable as the economy changes.
First, 53 percent of new homes in the valley in the first quarter of 2008 were priced below $250,000, whereas in the first quarter of 2007 only 47 percent fell below that marker.
The average permit value in Ada County for the first quarter of 2007 was $244,726, but in the first quarter of 2008 the average fell to $229,637, according to a report by BuildingCredibility.com. Canyon County showed a similar decline.
Another indicator is in January 2008, more than 60 homes were built in the valley for under $90,000, and some new homes in Eagle are selling for less than $200,000, said Bruce Wetten of TitleOne.
“Things are being built at a different level,” said Wetten, who heads up a roundtable discussion for real estate industry professionals. “I think homebuilders who are building multiple homes are all looking at changing their price point.”
Metrostudy’s Allen said the rising cost of land and materials has stretched the traditional home costs out of the bulk of the buying pool’s reach. In response, builders have had to make adjustments. He said attached housing units like townhouses and condos have started popping up more frequently not only in city centers, but in the suburbs.
But attached homes are not always the answer.
“A majority of the population and a majority of consumers will always buy a detached home compared to an attached home,” Allen said. “One of the struggles that the attached market has is that when an attached product competes with a detached product on price, the attached product is going to lose nine times out of 10.”
So, builders have had to start figuring out ways to get detached homes back into the reach of people whose budgets lean more toward the attached-home price range. These changes often come in the form of smaller lots or fewer amenities.
Corey Barton, owner of CBH Homes, said they’ve seized any cost-cutting measure they can lay their hands on.
“We’ve really tried to design more efficiently, and of course we’re building houses that are more suitable to what the buyers can afford to pay for,” Barton said. “We’ve designed some smaller square-footage plans that are very appealing as well as some larger homes that are more efficient, more cost-effective to build.”
CBH Homes has introduced a new line of homes that start out with just the essentials at a baseline price. If a buyer wants more and can afford more, then he can add any number of upgrades, from soaker tubs to three-car garages. These basic houses – called the Advantage Line – come in models ranging from 900 to 3,500 square feet per unit.
CBH has also taken efforts to streamline the efficiency of their building process.
“We’re paying especially close attention to time, efficiency and communication so we’re not doing things over and over again,” Barton said. “We’re being very careful not to waste materials, and we’re looking for better materials that are less expensive.”
Barton said they’ve been able to cut 10 percent to 15 percent from the cost of building and they’re passing on a 10 percent to 20 percent cost cut to the home buyers. For example, a 916-square-foot home from CBH’s older collection is priced at $112,490, while the 900-square-foot Advantage version costs just $98,990.
Cuts like these allow homeowners like the Desrosiers to get into a new home for a doable price.
“It’s perfect for us,” Noelle said. “It worked out for us on a financial level and on a convenience level.”