Those looking to build in the northern Wood River Valley will need to be patient, with city officials and local architects reporting a wait time of years in the design, permitting, demolition and construction process.
Ratings and the number of permits issued in Ketchum have ballooned as the town’s population grew 25% from 2019 to 2020. The historic annual growth rate is 1%. Both in Ketchum and Sun Valley, the number of permits issued has stabilized while valuations continue to rise.
The change is due to a variety of economic factors, said Travis Killmer, partner at Williams Partners Architects in Ketchum.
“There are several factors behind this. The increase in the cost of land is one of them. Labor is getting more and more expensive. The increase in the price of materials is another,” he said. “For example, in the summer of 2020 we had a project under construction and the wood jumped. Well it was a [material needed for] building. Fast forward two years to now, and all building materials have skyrocketed.
Planning staff, architects, developers and construction teams are working at full capacity with the number of projects underway. Yet demand remains as high as ever.
“I would say we’re booked in a year and a half to two years, just with all the design and construction,” Killmer said.
Sun Valley Community Development Manager Brittany Skelton said Ketchum and Sun Valley have unique settings that create this environment.
“Unlike Hailey or Bellevue, where you have potential for a lot of new land subdivisions, we just don’t have the opportunity,” she said. “Our city limits are just a lot more packed.”
Construction in Sun Valley likely peaked in 2021, city administrator Walt Femling said.
“Single-family home construction is still busy, but is slowing down a bit this year,” he said.
Femling mentioned that Sun Valley also has a few multi-family developments underway. A 19-23 townhouse project is underway for Elkhorn Village, along with a project for six stand-alone clustered homes elsewhere in Sun Valley.
Ketchum planning and construction manager Suzanne Frick said the city is on track to grant fewer permits overall this year than last, largely because many of the projects that they were offered were taller, multi-storey buildings, as opposed to single-family homes. These large projects require more careful consideration and have been where most city officials have focused their efforts.
“When the pandemic hit, we saw an explosion in residential development, both the construction of new units and the renovation of current units,” Frick said. “Now we see many vacant lots in the Ketchum Community Core area becoming the subject of development interest for larger projects.”
Frick cited the proposed developments on 1st Avenue and Sun Valley Road (currently Antique Alley), 5th and Main Streets (the former Formula Sports Building) and Fourth and Main Streets (often referred to as “Hot Dog Hill”) as examples .
This trend toward larger projects has played a role in increasing real estate valuations in Ketchum. While the number of permits issued will likely be lower than last year’s total of 134 — the city granted just 42 permits this year, in addition to six demolition permits — the valuations will likely top the year’s total. last. Appraisals for those 134 projects totaled $98 million, while this year’s projects are valued at $36 million so far. Currently, that leaves the total value per permit at a lower rate than last year, which Frick says will change as some of the larger projects still underway are being issued their permits through a more comprehensive than a permit review for a single family home.
In Sun Valley, the town has increased its community development department from three full-time employees and one part-time employee to five full-time employees. This was done to keep pace with the volume of permit applications, as well as the demand for routine inspections after the 2021 record the city encountered.
Since 2016, Sun Valley has issued between 150 and 200 building permits per year. However, valuations have risen significantly over this period. They doubled from 2019 to 2020, from around $32 million to $63 million, then jumped to $94.5 million in 2021. This year, valuations are unable to break the record of last year, says Femling, but they will remain high. Five months into the year, total valuations at Sun Valley stand at $50.5 million.
Looking ahead, there’s no reason to expect the upward trend in home values and prices to stop, said Jeff Williams, founder of architectural firm Williams Partners.
“I think it’s really hard for us to know, but I don’t see prices going down except in a big recession,” he said. “There is too much scarcity, whether it is labour, land or something else.”
His partner Brenda Moczygemba said: “That’s the million dollar question, isn’t it?