West central Minn. home builders look forward to a stronger year
WILLMAR -- The recession led to some bleak years for local home builders but there are signs they may have weathered the worst of it.
Tim Carlson, owner of Carlson Construction of Willmar, sees at least one thing positive about the start of 2012. "We're dealing with one customer that's thinking about building a house, and that's one more than we had last year," he said.
Although the recession is officially over, declining home values and foreclosures continued to depress the market most of last year.
New residential construction in the city of Willmar hit a low point in 2011: Only 13 building permits were issued -- 11 for single-family dwellings, one for a duplex and one for a four-plex. The total value came to a little more than $3 million.
In 2010, permits were issued for 14 single-family homes, four duplexes and six four-plexes with a combined value of $4.9 million.
Compare this to 2009, which saw 35 residential building permits, including permits for 17 single-family homes, collectively worth $8.7 million.
The continuing drop in home values has many potential buyers reluctant to make a move, said Jason Long, owner of Oakridge Construction in New London.
"It's holding a lot of people back," he said.
"The last few years have been extremely tough on the building industry," Carlson agreed.
On top of this, there are still many foreclosed properties that need to change hands before the housing inventory settles down and owners start thinking once more about new construction.
"Whether that's another year or two, I don't know," Carlson said.
But builders see many bright spots. Many of them have been able to eke their way through difficult times by concentrating on smaller projects. Last year's harsh winter, for instance, led to rooftop ice dams and interior home damage, resulting in an uptick in insurance work.
The ag economy has remained relatively strong, Long noted. With farmers in comparatively better shape, they've been more willing to spend on new construction, he said.
His firm has had steady work through both 2010 and 2011. "All last year most of our work was on new houses. That's a good sign," he said. "Right now we've got work all winter and actually into early spring."
Said Carlson, "I definitely think 2011 was better for many people in our trades than the last two years."
Home foreclosures in Minnesota also have been on the decline. According to data collected by HousingLink, the state had 4,935 foreclosures during the third quarter of 2011. About 60 percent involved foreclosed homes in the Twin Cities.
Seventy of Minnesota's 87 counties saw a decrease in the number of foreclosures between the third quarter of 2010 and the third quarter of 2011. Kandiyohi County had 25 home foreclosures in the third quarter of 2011 and 33 during the same period a year before.
If telephone calls and talk on the street are any indication, 2012 likely will be stable or even slightly better for the area's home builders, Long predicted.
The warm, snowless winter might make a difference as well. Normally a slow time of year in the building industry, this January has seen more activity, along with more interest in building, Long said. "It keeps people thinking about building possibilities. We're even getting a few more phone calls here."
If his firm can maintain the same amount of business this year as last year, "I'm going to be real happy with that," he said.
Interest rates are still low, Carlson pointed out. "You would like to think that we're turning the corner," he said. "Hopefully we are. It's fun when the phone rings."