The Challenge: Affordable Homes As Demand Increases, Builders Are Refocusing Their Attention
Three years ago, Steve and Kathy Leonard tried in vain to leave their nest.
Back then, the couple lived in a mobile home on land owned by Steve’s mother. They couldn’t find a house they could afford.
There were few choices. Competition for homes for working-class families was high.
“We decided we’d try again later,” Steve Leonard said.
Times are changing, market analysts say.
Builders today are refocusing their attention on the lower-middle housing range. And with good reason. Lower cost housing sells.
But average home prices continue to rise, and that’s driving the market’s bottom end out of reach of more and more people. The result: Fewer options for people whose budget is just outside the range of the $85,000 home.
“I talk to a lot of people who say ‘The bank qualified me for $66,000, but Realtors just laugh and say they can’t help me,”’ said Diana Witherspoon, an agent who works mostly with customers who want to spend less than $100,000.
Since Jan. 1, Kootenai County home sales between $85,000 and $100,000 have accounted for more than 25 percent of all sales, according to the Coeur d’Alene Multiple Listing Service. Last year during the same period, they accounted for 19 percent of sales. The year before, 17 percent.
At first glance it appears that the entire market may simply have vaulted up a few thousand dollars a year. Not true, market watchers say. New homes are being targeted more toward the lower- to middle-income brackets.
“I think the builders are recognizing that with the wage base what it is in this area, that’s the market that’s selling,” said Andy Golmicz, with Resort Property Management.
“That’s where the demand is.”
New and proposed developments could add 500 to 1,000 homes to the under-$100,000 market. Developers of Beauty Park, a controversial subdivision proposed for 15th Street and Thomas Lane outside Coeur d’Alene, have said city approval of their project would bring 335 one- and two-bedroom homes, marketed at $75,000 to $95,000.
The City Council will consider that project May 2.
Those who watch the market don’t doubt they’ll sell.
“The market has slowed, but there’s still plenty of people looking in that range who are stuck in apartments or waiting,” said Allen Plahn, with John Beutler Associates. “It’s an excellent range for firsttime home buyers.”
There’s some basis for his optimism. For example, all but two homes in Davis Park, a 311-home Coeur d’Alene subdivision in that price range, have sold in three years, said agent Peggy Sawicki.
One reason might be the availability of state and federal assistance.
Kootenai County’s median family income is $36,300, according to the U.S. Department of Housing and Urban Development.
Since housing costs are so high here, low-interest Idaho Housing Agency loans are available for houses priced at as much as $95,600.
“I hate to say $95,000 is ‘affordable housing,’ but it meets our criteria,” said IHA spokeswoman Ann Lawless.
It doesn’t meet the real demand, though, local housing officials say. While developers are plugging holes lower in the market than they have in the past, an increasing share of county residents are losing out on home ownership.
“Those houses are way out of reach for the medium-, low- and very low-income families,” she said.
The county’s average low-income family brings in about $17,850 a year, said Lucy Lepinski, housing program director with the North Idaho Community Action Agency. Those families must shop for homes well below $85,000.
There aren’t that many available. Houses below $85,000 last year accounted for almost 40 percent of all sales. So far this year, that figure is hovering at just above 25 percent.
One of Witherspoon’s clients, a single working mother, has looked for a home in that range in Post Falls for more than a year. The best she found was a single-level home for $79,900 - still too costly for her.
“It was smaller than my apartment,” the woman said.
The problem, say affordable housing advocates like Phil Colozzi, executive director of the North Idaho Community Services Corporation, is that rising land costs make it impossible to build homes in that range. Yet the demand at higher levels is pushing the cost of existing homes up.
So, “You can’t find a thing out there now for under $70,000,” he said. Builders “have to go where the money is.”
Not that builders are unwilling to try. Some are busy drafting ways to profitably tap into that market segment.
Later this month, Crescent Homes is expected to unveil a new approach to home-building that would offer two- and three-bedroom homes with two-car garages for as little as $69,000, said Chuck Mehalechko, firm marketing director.
He offered few details but said the company would probably offer homes with vinyl siding, standardized window styles and sizes, and uniform roof designs to save money.
“We experimented with a lot of forms of construction,” he said.
“By eliminating waste and going to some new products, we think we’ve come up with a way to keep costs down.”
Colozzi is skeptical. Lots and homes would have to be small, he said.
“Who wants to live in a 600-square-foot home?” he asked.
He instead is hoping all the interest in the $85,000 range will result in saturation of the market. Then housing costs would drop on their own.
But, Colozzi said, “I’m not going to hold my breath.”
Besides, the current market is a blessing to some.
Last week, with virtually no search, the Leonards bought an $85,000 home - their first - in Post Falls.
Steve Leonard concedes he’s getting less for his money than he would have a few years ago. Still, the couple is happy not to be shopping.
“It was easy,” said Kathy Leonard, a teacher’s aide at Seltice Elementary School. “A lot easier than I expected.”