Kris Halle hasn't worked in the building industry since 1984, when he switched from subcontracting to realty sales. However, he has returned to the construction site, admitting the timing seems odd as builders struggle to find jobs.
But he's not switching careers. Halle's back to erect one particular house, in the Northridge subdivision of of Hailey, which the Windermere agent will also try to sell when the nailing ends.
Herein lies the real head-scratcher.
Halle and the project's landowner, Bruce Mallea, who's also the project's main contractor, are doing something most others have abandoned, as of late, because of the risk. They're building a spec house.
"Of course, people think we're nuts," Halle said. "But sometimes the best thing to do is what no one else is doing."
Mallea, a professional builder, said he has received similar "skeptical" responses.
A spec house is risky because it's built without a contract guaranteeing the sale. Mallea and Halle are building it on the "speculation" that someone will like it enough to buy it at the price of a new house, even though it wasn't customized to their tastes. They're asking $825,000.
Being a real estate agent, Halle said he's aware that existing homes already flood the for-sale market, while completed sales remain few and far between.
Wood River Valley home sales numbered 81 from June to August, traditionally the most prosperous sales months of the year, according to Mike Murphy, president of the Sawtooth Board of Realtors, a group to which all real estate agents in the valley belong.
"It's been fairly quiet," Murphy said. "Our phones aren't ringing much."
The summer of 2009 also saw exactly 81 sales. But, Murphy said, 2009 wasn't a good benchmark summer and neither was 2008, which saw 80 sales. To provide perspective, the summers of 2001 to 2008 averaged 251 sales each—three times that of this summer.
At least the dollar amount of sales has improved, as $55.6 million in real estate was sold this summer, compared to $48.3 a year ago for the same number of properties. This means the average sale price was $687,000 this May through August, close to the 2001-2008 average of $698,000.
While summer sales have remained low, the number of new foreclosures has quadrupled over summer 2009, according to Daryl Fauth, president of Blaine County Title. His report shows 68 new default notices being filed from May through August, compared to 16 in 2009.
As for sales, Murphy said business usually begins its winter slump by November, and houses are no longer put on the market by now.
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"But we're seeing a whole lot of houses come on," Murphy said, "which is disconcerting this time of year."
He said it's a sign that sellers don't want to sell but have to sell.
"We're seeing serious discounts," Murphy said.
Despite the abundant competition and low prices, Halle said he and Mallea believe their spec house has an edge. Halle said buyers are willing but waiting, their tastes being pickier than usual since supply far exceeds demand.
On that note, Murphy said he personally has clients, cash in hand, waiting for a house exactly matching what they imagine.
"One guy wants a house in this one area, but nothing is available," Murphy said.
Halle said he and Mallea are attempting to build someone's dream house.
"We knew the product had to be flawless," Halle said. "This isn't a job where you ever heard, 'Just nail it.' And we didn't want anyone to come in here and say. 'You should've done this.'"
Halle said this level of quality isn't something they could have done for a house like this a couple of years ago. But the price of land, materials and labor have all come down, enabling Halle and Mallea to build a house offering a lot but costing the buyer relatively little.
"It is a house that I think will make people go 'Wow. That's a lot of house for the money,'" Halle said.
Mallea, with occasional help from his subcontractor and real estate agent Halle, has done most of the work all on his own, making the construction time longer than usual. But the one-story house, started in July 2009, is about done, revealing the "wow factor" Halle describes.
About 2,100 of the home's 3,100 square feet is covered in cherry hardwood, as are all the cupboards in the oversized party-hosting kitchen. The lavishness continues to the house's countertops, each a single granite slab. The halls are an inordinately wide 5 feet, the ceilings loom high, and each of the three bedrooms has its own ornately tiled bathroom, not to mention one additional half bathroom. The large windows of the great room provide a view of Red Devil Mountain.
The Heroic Road house isn't too difficult to find, as it's the only one in the subdivision being erected.
The extent of new construction valleywide can be measured using building permits. A total of 424 permits have been approved this year in Ketchum, Hailey, Sun Valley and Blaine County, with only 5 percent of those projects being new homes or other buildings. These 21 projects of new construction have an estimated total value of $16.9 million.
The vast majority of projects are repairs, remodels and additions, which may seem like odds-and-ends work compared to building an entire house. But it adds up. Ketchum, for example, approved 90 building permits, only two of which were for new houses, valued at a cumulative $5.7 million. The mass of repairs and remodels totaled $13.1 million, providing at least some work for those in construction.
"Most of them are staying OK-busy with remodels and additions," Halle said. "They're not swamped, but they're not starving either. Of course, some others are worse off. And it breaks my heart that so many great guys out there are without work."
He said a few local subcontractors were used on the house for things he and Mallea couldn't do, such as electrical, heating and plumbing. Halle worked as a subcontractor 12 years before switching to realty in 1984.
Halle and Mallea should be done building in October and will soon know if their gamble pays off. They both said it's reassuring that prospective buyers have been interested from the get-go. But no one has signed on the dotted line yet.
"A lot of people have been real interested," Mallea said, "but I'm not going to get real excited until someone makes a move."
Trevon Milliard: tmilliard@mtexpress.com
Landowner and builder Bruce Mallea is constructing this spec house in Northridge subdivision in Hailey, making it one of the few new houses under way.
Photo by Willy Cook
