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New home construction numbers ahead of '07

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Cottage Grove,Minnesota 55016 http://www.swcbulletin.com/sites/all/themes/swcbulletin_theme/images/social_default_image.png
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New home construction numbers ahead of '07
Cottage Grove Minnesota 7584 80th Street South 55016

In an economy full of mostly doom and gloom, Cottage Grove can look at a slim ray of hope: The city this year has already surpassed 2007's record-low number of new housing starts, proof of at least a faint pulse in the city's housing market.

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But director of community development Howard Blin isn't getting too excited over the figures. Through September, city officials have pulled 78 new residential construction permits, already 11 more than all of 2007, primarily in the Pinecliff and Silverwood subdivisions along Hinton Avenue and 65th Street.

Officials estimate the city could top 100 permits for new home construction in 2008, a wide improvement over last year's residential doldrums but still well below Cottage Grove's pace for most of the past decade.

"While it's down from our normal pace of housing, (2008's number) still shows there's demand for new housing in Cottage Grove," Blin said last week.

He acknowledged, though, that the city probably isn't in a position to buck the national trend of a still-depressed housing market.

"I don't see us somehow leading the way out of the housing slump," he said.

But Lance Berwald, Cottage Grove-Hastings branch vice president for Coldwell Banker Burnet, said he sees "the very first rays of light to a turnaround" in some of the latest numbers. The amount of existing housing stock on the market and the number of buyers is beginning to again balance out. And when new housing again picks up, Berwald said he believes Cottage Grove is well-positioned to be ahead of the curve.

"If you were to look at a topographical map of the Twin Cities, the Cottage Grove, Newport, St. Paul Park area and down into Hastings has some of the last truly buildable land that is still close to the downtown metro," Berwald said. "People forget that."

Nationally, new home sales unexpectedly jumped 2.7 percent in September, according to figures released by the Commerce Department last week. Still, sales were down 33 percent from the same time a year ago.

That, in part, helps explain the reserved reaction to the figures. With the American economy still in free fall, Blin says, it's nearly impossible for city planners to judge when interest from developers will really pick up again.

"I think (with) the national housing market it's difficult to make projections," Blin said. "However, we are not expecting an increase in construction for 2009 and even 2010 is a very big question. But we would hope that by 2010, in approximately a year-and-a-half, we would start to see an increase. But I think the housing market has confounded many experts."

Despite the uncertainty, Blin says in recent months developers have again been contacting the city and engaging in the very early stages of planning with staff, a fact that "is a departure from where we were, say, a year ago."

"When this market really starts to turn, one of the first places you are going to see a real push in building activity will be here," Coldwell Banker Burnet's Berwald said.

With new housing starts in Cottage Grove at a historically sluggish rate and the number of interested developers well below the levels of even just a few years ago, the number of ready-to-build lots has fallen to figures not seen this decade, Blin says.

For a lot to be considered buildable, streets and utilities must be constructed at the site. Cottage Grove's residential lot inventory now numbers 218 -- roughly half of what the city's supply has typically been this decade. Just four years ago, in 2004, Cottage Grove's inventory included 496 buildable lots in a year that saw 307 new residential homes constructed.

"We're actually happy that we don't have a large number of developed lots for which there's no demand," Blin said. "We don't have a large number of lots just sitting vacant."

An additional 181 lots have been approved by the city for development but haven't been serviced by streets or utilities. Those plats can be easily brought online if development suddenly picks up.

If that's 2010 or further down the road is anyone's guess, Blin says.

"We'll know better in a few years, but I think we're at the bottom of the market," he said. "Whether we're starting to pick up, whether we're still at the trough of the housing market, I don't know."

Jon Avise can be reached at javise@swcbulletin.com.

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