Home construction in Willmar already surpasses last year

Home construction in Willmar already surpasses last year

August 15, 2016

Home construction in Willmar already surpasses last year

WILLMAR—The city of Willmar has already issued more new home construction permits in the first seven months of 2016 than it did all of last year.

“I think the demand is there,” said Bruce Peterson, Planning and Development Services director.

There have been 31 single-family dwelling construction permits this year, totaling about $6 million in permit value. Last year there were 12 single-family and 10 twin homes, Peterson said.

Peterson said he believes a majority of the new homes going up this year will be investment or rental properties.

“That rental market is very good,” Peterson said.

The demographics of those looking for homes is changing, as young professionals and retirees are looking to rent.

“They’re looking for an alternative. There are a lot of people choosing not to own,” Peterson said.

The rental properties going up are not simple homes, but nicely finished units.

“These are not built as affordable housing,” Peterson said, estimating rent could easily exceed $1,000 per month.

Peterson also said building an owner-occupied home might just be too expensive for many.

“I don’t know if you can build an owner-occupied house with any level of finishing in it for less than $200,000,” Peterson said.

Even with these new homes going up, there is still a housing need in Willmar and the surrounding area.

“We have a real need for workforce housing,” Peterson said.

Workforce housing is not necessarily low-income, but housing stock that meets a wide range of needs and budgets.

According to the Minnesota Association of Realtors, the southwest central region, which includes Kandiyohi, Renville, Meeker and McLeod counties, had only a 5.3-month supply of homes in June, down from a 6.8-month supply during the same month last year.

The median sale price for a home in the region was $147,500 in June, up from $139,000 the prior June, but the number of new listings fell to 214 from 220 the year before. Homes were spending an average 84 days on the market this June, up from 75 days last June.

Willmar had 156 homes for sale in June, while in June of last year it had 165, according to data from the West Central Association of Realtors.

In addition to the increase in home construction permits, there has also been a significant amount of home addition and alteration permits issued, Peterson said.

Last year the city issued over 300 permits for things like new roofs, heating, ventilation and air-conditioning systems and additions.

“That is a big generation of dollars in the economy,” Peterson said.

As the economy has improved, the number of permits for construction and improvements has as well, as people gain more confidence in the economy and their own financial situation, Peterson said.

“It is rebounding. We’re doing a lot better here than a lot of other areas,” Peterson said.

With the increase in permits, the city has seen the collection of permit fees rise as well. This does not mean the city is making any more money than it did before however.

“Our revenues are close to covering costs. We’re not an enterprise fund,” Peterson said.

It has also been a very good year for commercial, industrial and institutional construction. With the new Willmar elementary school leading the way, the city also has permits for the new Hobby Lobby store, a new retail building which will include a mattress store next to Slumberland on First Street and for the Dooley’s Petroleum office and shop in the Industrial Park.

“We’ve seen a great increase,” Peterson said.

The number of permits the city issues each year, for a wide range of projects, would surprise most people, Peterson said. Last year the city issued 480 different building permits, 300 for residential improvements. Those projects totaled $36 million in value. 2016 will finish even better.

“I won’t be surprised if we don’t double that this year,” Peterson said.

From January through July of this year, there have already been 471 permits issued with a total valuation of $27.6 million.

West Central Tribune by Shelby Lindrud