Did Developer Fold and Run?

Seems it isn’t just government that has problems with the truth.

A reader recently told us of a real estate industry spokesman claiming a developer left $1,000,000 on the table as earnest money rather than pump $75,000 per acre into a huge parcel of land west of Boise. This info was reportedly dispersed at a “seminar.”

We made contact with the guy and he would not confirm or deny the report. He either had to say, “True the market is really shaky.” or “Not true, I lied to those attending the seminar.”

“I don’t want my name published anywhere,” he said. “We have had enough bad publicity.”

Then the dude regained his composure, used his friendly TRUST ME voice and said, “Our sales are right in line with 2004. The 2007 market looks good, we are encouraged, there was a readjustment, but all indications are for a strong recovery.” RIGHT!

For growthophobes this all may be good news. Combined with the drastic cutback in building permits in Boise and Meridian, and the huge inventory of unsold houses, perhaps we can catch our breath and collect some taxes to pay for all the infrastructure demands caused by the newbies.

We took a drive “in the country” Sunday and there isn’t much COUNTRY left anymore. We saw a new cookie cutter sub at the SE corner of Kuna-Mora and Cloverdale and were shocked at the number of houses north of Star in the foothills. Sprawl is alive and well in Ada County.

If you have lived in the area more than 10 years, take a drive out Chinden west of Eagle Road. Few crops left, but plenty of roof tops. Take a left turn into any subdivision and make a couple of random turns among the fake waterfalls–you will be lost within five minutes!

Comments & Discussion

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  1. We growthophobes are doomed to lose the fight against sprawl and infill, and growth in general. Why?

    1. People with REAL money are still building hotels in the Treasure Valley. They control the politicians and they know what’s going on and they know we can’t stop it.

    2. We live in a free country and people can move where ever they want.

    3. We live in a free country and people can have as many babies as they want, wether or not they can afford to house, clothe, educate, or feed them.

    It’s a done deal and if you don’t like it, you will have to move to Carey, or Arco, or Oakley.

  2. I’ve done a few of those drive’s. It’s so sad to see it all change. All for money! The Quality of life is long gone for this part of Idaho.
    We should be proud! Money Money Money!

  3. I don’t think a land deal gone bad is real big news or a signal of change in the development and growth of Ada and Canyon Counties.

    You are right about getting lost in cookie cutter subdivisions. But as Rod said people have a right to move where they want (I couldn’t stand living there).
    Rod’s talk about unregulated baby making has nothing to do with growth issues at hand as the average Treasure Valley household has 2.54 persons.

  4. Clancv and you dont think that is a lot? Shouldn’t it be down around 1.25. Maybe you read diffent articles than I do. Where’d you come up with thats okay?

  5. Robert, The average/ household statistic came from a conversation but here is the most recent Ada Couny numbers from 2.59

    No I don’t think a half of a kid is alot for each married houshold.

  6. It really is refreshing to see a developer take it in the shorts for a change. I get tired of hearing them say they are building planned communities for all these wonderful socially responsible reasons, like they are Mother Theresa or something.

    The bottom line is that they want to make money. Lots of money. The subdivision I live in now is currently going through a legal battle with the developer because he got incredibly greedy and is trying to soak residents for every penny in the most unscrupulous ways, possibly even illegal. He has had to drop the prices on his spec homes close to 100k to get them sold, yet he still is trying to take advantage of people.

    Greed is the bottom line, any developer that talks like he is doing something responsible and cares about the community is full of it. They are interested in their bank accounts. I know I sound pretty jaded but it has become obvious to me that their interests are self serving.

  7. Clippityclop
    Feb 21, 2007, 12:34 pm

    Amen, Chester!

  8. One question for Chester. In your business do you not try to make the most money possible? If not you must not be working for yourself. We never say oh look at that greedy school teacher when they petition for raises, but for some reason everyone thinks the developer is greedy. He is the one taking all of the risk so of course he should get paid for that. I think it is lame to think that greed is the only reason developers do what they do. Are you not smart enough to think they are doing to make a living?

    As far as someone having to lower the price of their homes to sell them has nothing to do with greed, it has to do with making a business decision to get rid of product. Maybe you don’t realize the carrying costs of those homes. Maybe you didn’t realize that it is better to take a little bit of a loss and sell them cheaper now then to wait and take a big loss later. I probably didn’t hear you complaining about the greedy developer when you bought the property and built there. If it weren’t for that “greedy” developer you probably wouldn’t be living here, which come to think of it, might be a good thing.

  9. I like to think that people in business are socially responsible to a degree, I understand that people are in business to make money, but the is a limit. There comes a point when making a profit in business turns to an ugly side.

    The real estate market got a little silly here the last couple of years. Developers certainly took advantage of this making it difficult for the average joe to afford housing. The excesive money coming in from out of state had a negative impact on locals, whose incomes certainly did not change at the same speed as the market did. Did you hear any stories about developers planning affordable housing or affordable planned communities? I didn’t.

    I don’t consider 300k to be affordable.What we saw were subdivisions coming in with signs that said, prices starting at 389k! Wow, what a deal. When developers start talling half truths and trying to make their plans sound responsible much like Hammer Flats, where the developer says that his plan will help wild life, I have to question those kinds of statements. The way I see it, the best thing to do for wildlife is to leave the area alone, just like it is.

    My developer is currently trying to impose unreasonable fees by manner of threat of shutting off utilities, liens and legal actions solely for monetary reasons. So excessive that the reasonable person would find them obscene. He is not doing this for any other reason then he thinks he can get away with it. What is the reason that three years ago you could buy a new home for 140k but now the same house is 300k? Have the costs associated with building increased that much in the valley? I don’t beleive so. They are charging that because they think the market will pay it, still clinging to that hope that they’ll get it.

    Sure there is a cost associated with carrying the cost of homes, but if you play, you pay. Developers and builders should have better measures of what the market is going to do, but that was not the case here. I am not in that profession but I was smart enough to know that it would not last. There was no way that the market could sustain that kind of pressure. The bubble had to burst.

    Sure, developers had to make a living and they made a pretty darn good one. So if they were not smart enough to prepare for a downturn, then shame on them. I just believe that you have to be socailly responsible in private as well as government and I just have not seen that lately. I’m sure there are some out there that do this, maybe I went too far with a blanket statement, but you don’t hear about that. I personally could choose another profession that pays me more but I feel better making less money doing what I do, because I’m not driven by money. I sleep better at night. As far as living where I do, I agreed to pay some things that I had no choice in because it was solely market driven which as I see it =money.

    You don’t have to like me snoop, I don’t care if you do or not. But I just can’t buy the notion that these folks are kind, compassionate business men that are trying to do the best thing for the community so they can sleep better at night.

    EDITOR NOTE–Developers do build low cost “affordable housing units” but they do it for tax credits, not because the rich want poor neighbors.

  10. Whether a developer/builder is greedy or not does not matter. The whole issue is supply and demand for the different levels of housing. That is the beauty of the free market. Sure the developer/builders are able to sell for more, but so is the farmer who originally owned the land. There has also been a market for building materials that fluctuates up and down. As Boise starts to urbanize both economically and socially, the affordable housing for families moves further away. Corey Barton and Hubble are still out selling product for $60-100/sq ft, it just happens to be in Nampa and Caldwell.

    As far as construction cost. I built a detached 2 car garage w/bonus room 5 years ago. The same builder said it would cost approx double because of materials and labor to build today.

  11. You make a great point Chester and I agree with you on most points. I do however want to point out that building costs have not gone up drastically, land prices have. Call it farmers being greedy or whatever, but when the market got hot so did farmland. The developer that bought during that time has had to raise his lot costs significantly to break even.

    I am in the same boat with you though when it comes to wages. If you look at how much housing/land has gone up compared to what wages have not done it is very aggravating. I bought a lot in Eagle four years ago for $55k and almost choked at that price. The cheapest lot in that same subdivision now and the lot sizes are about the same, is $450k. It angers me to see that because I know that in four more years I will be saying, “I should have bought all of those cheap lots for $450k.”

    I have seen however that the lull in the market has attempted to correct the problem. The only problem is that it halted prices from going up as opposed to lowering them. I appreciate your point of view and was merely trying to point out that there is not as much in the end for the developer as many would believe.

  12. We moved to Eagle a little over six years ago from the North End. We couldn’t afford our house if we had to buy it today. However, the housing market south of Floating Feather Road has been pretty flat for the last year, and four homes and a condo right on the golf course have been for sale/empty for months now so I would be real nervous if I had to sell because of divorce/transfer/job loss.

    Having worked in the real estate industry since 1973 I have seen many sellers who had to bring money to closing in order to get rid of their houses. People who don’t have much knowledge in real estate may still think prices always go up but it doesn’t work that way – we are seeing serious price drops printed on flyers outside of homes for sale.

    Once the influx of outside money slows down the market will again pay attention to what the locals can afford on their local paychecks. And, I predict there will be many foreclosures coming on the market in the near future which banks will be anxious to get rid of. That will be further pressure on real estate prices.

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