Analysis: Land prices major factor in new home construction

Boise Regional Realtors and the Federal Housing Finance Agency have both noted in the last month that the proportion of newly-built, single-family homes in Ada County and Idaho, respectively, has increased.

This is noteworthy because new homes are more costly than existing homes for sale. For example, newly constructed single-family homes currently have a median price that is nearly $60,000 higher than existing homes in Ada County.

While a significant increase in lumber has been cited as one of the factors behind the recent spike in cost for new construction, one thing that has received little mention lately is the cost of land. To measure the impact of land cost on new home prices, we looked at residential land data from the Federal Housing Financing Agency for Idaho’s four federally-designated metropolitan planning areas.

We used the fully vetted datasets for 2012 and 2017 plus a preliminary dataset for 2018, which was the most recent available for Idaho. What we found was that the cost of residential land doubled between 2012 and 2018, just six years, for Ada and Kootenai counties, and increased 34% for Bonneville and 45% for Bannock.

For reference, the median price for newly constructed homes in Ada County has also doubled in the same time period, from $221,210 in 2012 to the current $444,900 for August 2020, according to Boise Regional Realtors.

• Ada County
  • 2012: $206,000/acre
  • 2017: $386,600/acre
  • 2018: $407,200/acre
• Bannock County
  • 2012: $104,200/acre
  • 2017: $118,700/acre
  • 2018: $151,200/acre
• Bonneville County
  • 2012: $95,600/acre
  • 2017: $127,400/acre
  • 2018: $128,000/acre
• Kootenai County
  • 2012: $171,900/acre
  • 2017: $299,500/acre
  • 2018: $366,400/acre