This is a report by Mark Mendiola, a Pocatello journalist, taking a look at what the drop in eastern Idaho home sales has meant in that area.
Dave Fredrickson and his son Shane, 28, have barely survived a slump in home sales and a sharp downturn in new housing construction in Bannock County that have forced droves of Pocatello-area real estate agents and building contractors out of business since 2008.
New home sales in Bannock County have steadily declined the past six years, dropping from 129 in 2005 to 27 in 2011. “That’s the lowest in more than seven years,” Dave Fredrickson says.
Total single family home sales during that period fell from 1,199 to 684, according to statistics compiled by Greg Johnston of Home Specialists Real Estate Company.
Most of the new home construction has been in Chubbuck, Fredrickson says, but that has declined from 282 in 2006 to 22 in 2011. So far in 2012, five new houses have been built in Chubbuck, next to Pocatello.
Dave Fredrickson, left, and his son Shane recently completed construction work on five houses on the south end of Pocatello. (photo/Mark Mendiola)
The Fredricksons, partners in “Memory Builders” since 2009, recently completed constructing five new houses for a Jason Street residential development on Pocatello’s south end, which included curb, gutter, sidewalks, all utilities and a storm water drain system.
Memory Builders was general contractor and project manager on the Kahni Newe’ housing community project for Northwestern Shoshones – a U.S. Housing and Urban Development (HUD) 184 project that took 10 months to complete, starting in September 2010.
“We’ve been six months waiting for our full payout,” Dave Fredrickson says, blaming the delay on bureaucrats failing to authorize Zions Bank to make the payment despite the submission of full documentation.
He says a government requirement for the project’s storm water drain system unnecessarily added more than $25,000 to the project’s cost or about $5,000 per house when the same could have been accomplished for less expense.
Fredrickson says enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act unduly restricts the ability of banks and other financial institutions to make loans, dashing hopes among housing contractors that financing for construction would loosen up.
“Until Dodd-Frank is repealed, it’s going to be a struggle to get construction back to where it should be,” he says, noting there is a large pent-up demand for new houses to be constructed in Bannock County, but lending requirements are much too strict.
The president of a large bank reportedly said his company had to hire 100 lawyers to ensure it was not violating Dodd-Frank, “but what do small banks do?” he asks.
Shane Fredrickson adds: “They can’t seem to find a happy medium. It’s either too loose or too tight. The banks should be smart about it in the first place and not have to worry about the federal government interfering.”
Kim Weber, vice president and manager of the local D.L. Evans Bank, says his bank has been more receptive the past six months to lending on presold or owner-built projects. It also would consider a “spec” project (built to specifications) for the right builder.
“I have done three to four presold construction projects in the last nine months. I have not seen any interest at all by builders to construct spec houses. Of course, the builder's financial strength would be key in our assessment of a spec home project,” Weber says. (more…)