Home Construction Trends: Slower, But More Luxurious

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Average home price continued on its six-year upward streak
RISMEDIA, Jan. 11 ? (KRT) ? The hallmark of housing construction in metro Milwaukee last year was fewer, but more luxurious, homes.

The number of building permits for one- and two-family homes dropped 14 percent last year in the four-county area. The region issued 2,569 such permits last year, down from 2,988 in 2004 and the lowest volume since 2002, MTD Marketing Services reported Monday.

The average home price continued on its six-year upward streak. It surpassed $300,000 in December to average $278,465 for all of 2005, according to the Menasha data-tracking firm. That’s about $17,000 higher than in 2004 and almost $75,000 higher than 2000.

“It’s all bling-bling. People want the fancier doorknobs, the granite countertops, the fancy tile and in-floor heat, more windows, bigger decks — not necessarily a bigger house, just more stuff,” said Dan Belman, designated Realtor with Don Belman Homes in Waukesha.

For builders, that meant: “Dollar volume was up, even though we built less homes,” Belman said.

“It’s what we’re seeing throughout the Midwest. The housing market cooled off from its record recent years,” said Matt Moroney, executive director of Metropolitan Builders Association of Greater Milwaukee. “But people still wanted bigger homes and more amenities.”

Aside from its upscale tilt, Moroney said, “the market was a lot like 2000, 2001 and 2002.”

Last year ended with a slump in new home construction, as fuel prices soared and consumers clasped wallets more tightly, Belman said. MTD shows 146 December permits issued, down 32 percent from 214 a year earlier.

“My office is across from a Speedway, so I can see it clearly: When gas goes up, our traffic slows down. When gas goes down, our traffic increases,” he said. “It’s too early to call 2006, but I did get a good start — I sold a house today.”

Competition will keep prices down this year, predicts Larry Gruber, manager member of Monarch Homes in Wauwatosa.

With economists forecasting that housing sales will shrink by 5 percent or more, Gruber said, “builders are going to have to work for their sales this year. Prices aren’t going to go up much, and there will be more service and attention to the customer. All the demand will be in the Gulf Coast come spring, as the rebuilding effort gets under way” in hurricane-ravaged states.

Some of Gruber’s colleagues are more upbeat, citing consumer interest at last weekend’s Home Builders Expo at Milwaukee’s Midwest Airlines Center.

“Attendance was up 16 percent this year, to 15,600 people,” said Moroney, whose trade group sponsors the show. “And a lot of the people builders talked to already had building lots — a good sign. We think this year will be as good if not a little better than ‘05.”

As the economy and interest rates go, so goes the home-building business, said Tom Hignite, co-owner of Miracle Homes in the Town of Polk. December was a dreary and worrisome month, with sparse model-home attendance, but activity has perked up in the last week and mailing list signups are at a five-year high, Hignite said.

“It may be that people are starting to feel good,” the builder said.

Here are some details from the MTD market report, which includes permits in most of Waukesha, Washington and Ozaukee Counties, but only Greenfield, Franklin and Oak Creek in largely developed Milwaukee County:

Metro Milwaukee: Average price $305,869 in December 2005 and $278,465 for the full year, up from $276,906 in December 2004 and $261,589 for that year.

December 2005 volume, at 146 permits, was the worst December showing since 2000, with 121 permits.

Most active communities: Franklin, 251 permits; city of Oconomowoc, 158; Oak Creek, 154 and city of West Bend, 147.

Racine-Kenosha counties: Average price slipped in December 2005 to $211,317, but remained at $216,078 for the year. That compares to $212,212 in December 2004 and $208,962 for the year.

Volume in 2005 was a little below 2004 but way ahead of 2003, with 1,416 permits in 2005, 1,424 in 2004 and 1,184 in 2003.

Most active communities: Kenosha, with 363 permits; Mount Pleasant, 223 permits; Pleasant Prairie, 163 permits; town of Caledonia, 103 permits.

Copyright ? 2006, Milwaukee Journal Sentinel

Distributed by Knight Ridder/Tribune Business News.

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