Challenges and Change Higher construction costs and the dwindling availability of buildable land are forcing a higher volume of home builders to move from Portland into the greater Salem market. “As Portland pushes against their Urban Growth Boundary, builders there are having trouble finding development land and so they’re looking to secondary markets like Salem,” said Mike Erdmann, Chief Executive Officer of Home Builders Association of Marion& Polk Counties. “Land prices in the Portland metro region have skyrocketed, and as expensive as out land is here in this area, it’s still considerably less expensive than it is up there.” In many cases, the migration of homebuilders makes it much tougher for smaller, more local builders to acquire building lots, Erdmann said. “In past years, we had developers like George Suniga and Larry Epping that developed large subdivisions
and were willing to sell individual lots, or small numbers of lots, to local builders, even if it meant that it took a few years to sell all the lots in the subdivisions,” Erdmann said. “Unfortunately, those developers have passed on, and in today’s market, volume builders are making offers to buy entire subdivisions before the project is even platted. That’s putting a squeeze on smaller builders, and it’s likely going to get worse in years to come.” Builders are still finding pockets of land in Marion and Polk counties, particularly in neighboring communities like Dallas, Independence, Turner, Stayton and Sublimity. As lot prices continue to increase in Salem, pushing housing affordability beyond the reach of many home buyers, builders are finding more affordable opportunities in nearby smaller communities. In 2017 alone, Dallas permitted nearly 120 new homes, more than
one-third the number of new homes built in Salem last year. Additionally, with home costs rising, less available land, and the influx of families living together or retirees downsizing from single-family homes, Erdmann cited another market trend having an impact: more multi-family apartments under construction, up significantly over the last couple of years. “Income levels aren’t keeping pace with increasing housing costs, both with new construction and existing homes,” Erdmann said. “This makes it increasingly difficult for people to afford home ownership, and so we’re seeing increased demand for more affordable apartment living. “Increased down payment requirements compared to 10 years ago make it more difficult for aspiring home owners to move from apartment living to home ownership,” he added. “So they spend longer living in apartments as they save up their down payment for a home.”
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