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City sees hope in housing numbers

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news Cottage Grove, 55016
SWC Bulletin
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Cottage Grove Minnesota 7584 80th Street South 55016

It stands out against the flat farmland along Jamaica Avenue, north of 70th Street in Cottage Grove, a house that sits as a reminder of a boom that seems long past.

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It's a model home -- the only home -- in The Preserve, an upscale housing development that broke ground in 2006, before the bottom fell out from the nation's housing market and new residential construction ground to a screeching halt.

But in Cottage Grove's latest new home construction figures released last week, city officials see a positive -- at the very least, there's still interest in building in the Cottage Grove market, even as the economy struggles to pick up steam.

According to numbers provided by the city, 60 new residential construction permits were issued through October. That puts Cottage Grove roughly on pace to meet the 70 new homes officials projected in the 2009 budget.

"All the indicators seem to be that the housing market is tending upward," said Howard Blin, community development director for Cottage Grove. "Existing home sales are up (and) new home sales are up slightly. And, most importantly, the inventory of unsold houses has been steadily coming down."

The latest figures are still far below the average of about 228 new residential units per year built in the city over the past 38 years. Last year, 89 new homes were permitted; 67 were permitted in 2007. The 38-year low for new home construction in Cottage Grove was 46 homes in 1982.

City officials have again estimated roughly 70 new homes will be constructed in the city in 2010. Brad Reiland hopes some of those are built in The Preserve, the development owned by Johnson-Reiland Construction, Inc., the company started by his father in 1974.

Reiland, a sales person for the construction company and a licensed real-estate agent, said Johnson-Reiland is reworking its business plan for The Preserve, hoping to entice possible homebuilders.

The company is beginning to offer some of the development's lots at half the original $150,000 cost, Reiland said, and is planning to construct houses in the $300,000 range -- down from the pricier $500,000 level originally planned.

There's still plenty of interest from people looking to build a new home, he said. And the Cottage Grove market -- especially with the new East Ridge High School in the district -- is an attractive one.

But economic barriers, like homeowners having a harder time selling their existing home, are limiting the numbers of homes being built, Reiland said.

"In the meantime," he said, "you sit there and look pathetic."

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