It is no secret that the economy in Idaho Falls, and eastern Idaho in general, has been on the upswing in recent years, with population growth and employment reaching high levels.
With new businesses opening in the area on a weekly basis, and an unemployment rate among the lowest in the nation for a city of Idaho Falls’ size, the influx of new residents has provided area officials with a bit of a conundrum.
Where will they live?
The local real estate market is seeing a crunch, with the demand for housing outpacing developers’ abilities to keep up. This is resulting in higher costs for developers and customers alike.
And, according to many in the local housing industry, there is no sign of this growth slowing down.
Developing dreams and issues
After more than a decade of work in the medical billing industry, Katie Davenport decided to take a leap of faith and focus her time and energy into real estate investment. An Idaho Falls native, Davenport recognized the growth of her hometown in such a short span, and in October she felt the timing was right to make a career change and focus attention on the rising real estate market.
“About two years ago I bought my first rental property knowing I was probably going to be getting out of medical billing, and that’s exactly what happened,” Davenport said. “I preferred more passive means of income, compared to what I was doing, but it was time.”
Davenport, along with her husband, David, currently own seven rental properties in the area, with hopes of expanding to 10 properties by April.
“We’re just having to play the game and keep watch on new listings,” she said.
Davenport, however, quickly discovered that entering the real estate market at this time was no easy task.
“I had really terrible timing,” she said. “I wish I would have started a year ago.”
That is the sentiment of many looking to break into the local market. Over the past year, real estate prices have increased upward of $20,000 on an undeveloped lot in the region, according to Jake Roberts, owner of Vantage Point Homes in Idaho Falls.
“From what I’ve been told, costs are going to be even (higher) this year,” Roberts said. “Before, I would buy lots in bulk, from six to eight (lots) to try and get a discount. Now, I’m having to buy as I need them and where I need them.”
The rise in real estate prices is a simple result of supply and demand. And the demand has been greater than many developers can manage. In 2018, more than 30 applications have been submitted to the Idaho Falls building department for new residential construction, and those in the industry are expecting more to come.
Brett Magleby, president of the Greater Idaho Falls Association of Realtors, said the area’s housing prices have risen 7 to 9 percent in the past year, and inventory remains at an all-time low with most houses lasting just a few days on the market.
“At the end of January we had 231 homes actively on the market, and a year ago we had 267,” he said. “That’s a 13 percent drop in inventory in one year. And if we even go back seven years to 2011, there were 830 homes on the market here at the same point in time. That’s 72 percent lower inventory on the active market than we had seven years ago.”
Magleby said a four- to five-month supply of homes for sale signifies a healthy market. At present the Idaho Falls market has a three- to four-month supply. When the supply is out of balance — either too many homes for sale or not enough — it affects prices.
Between Aug. 23, 2017, and Feb. 23 there was less than a month’s supply of homes between $100,000 and $200,000 in Bonneville County, according to numbers supplied by Magleby.
In 2017, the median price for single family homes and condos sold in Bonneville County was $178,000, that’s $44,000 higher than what it was in 2011. There were 2,036 homes and condos sold last year compared to 1,019 in 2011, according to the Snake River Multiple Listing Service.
Randy Hill has operated R. Hill Construction out of Idaho Falls since 1984. With only a few employees on the payroll, this small operation builds just a few houses a year, but it’s allowed Hill the opportunity to make a comfortable life.
“We’ve been pretty fortunate here and there,” Hill said.
But the region’s real estate crunch has provided new headaches for Hill’s small operation. And it is not necessarily due to the rising real estate costs, but to the lack of employees to help with the increased work.
“We’ve been having trouble finding skilled laborers, so we’ve just hired laborers and have been trying to teach them,” he said. “It’s just not like it used to be when you could get as many guys as you wanted, and that’s the biggest thing.”
An unemployment rate of only 2.3 percent has been a blessing and curse for the construction industry in Idaho Falls. While residents have seen a steady increase in employment opportunities, industries such as home building have seen a higher demand for more skilled workers to help through the recent construction boom.
“We’ve been fortunate to find a few people to help us out,” Hill said. “But still, it’s taking a little longer to get your jobs done.”
Vantage Point’s Roberts has noticed a similar trend.
“It’s been a fight, for sure,” he said. “Three or four years ago I would tell people on a 1,800-square-foot home that it would take six months to build. Now I’m having to tell them it will take eight to nine months to build, just to cover myself.”
Roberts estimates his company’s production schedule has slowed by a third in the past year, due to both added demand for housing and lack of employees vying for positions. And Roberts is not anticipating the market to slow down anytime soon.
“I think the number’s are really going to pick up in the next 10 years,” he said.
Pushing for improvement
Local officials are enthusiastic about the region’s real estate boom, but they are trying to anticipate the consequences of such an influx. Ammon Mayor Sean Colettiwelcomes the boom, but has some concerns.
Coletti, who was sworn into office in January, noted that a 9.8 percent population growth since the 2010 census has put additional strain on Ammon’s infrastructure, with the roads being a particular concern. These will be issues that he hopes to address in the coming year.
“It’s certainly been a challenge to our infrastructure, but our growth seems to be at a good, healthy pace,” Coletti said.
But further expansion raises question. How much growth is too much at such a fast pace?
“In 2006, even Rockwell Homes was building upward of 400 homes a year,” Magleby said. “Now, they’re only going to build around 150 this year. And it’s not because of demand, but they can’t get the subdivisions (approved) or the area to do.
“We’re a little bit nervous with the market,” Magleby said. “Because prices are still at an all-time high.”
Reporter Marc Basham can be reached at 208-542-6763.