It’s no secret that the past five or six years have been difficult for those associated with the housing industry, but 2013 has proven to be a pivotal year on the return to normalcy.
Local builders and real estate agents report that activity is up, and while the recovery has been slow in some cases, all signs are positive.
"I’d say it’s almost back to normal. After the last five years or so, back to 2007, it’s heading back the right way," said Bruce Stuhr of Bruce Stuhr Construction, adding that he is currently working on homes on Lake Sylvia and Cedar Lake.
While the City of Annandale has not issued any permits for new homes yet this year, there have been three remodeling permits issued and two new commercial properties.
There is also plenty of activity outside of the city limits.
"The phone’s been ringing off the hook," said Stuhr.
That’s a welcome change, because during the depths of the recession many builders went out of business, and those that remained were forced to downsize and scrape for jobs.
"Back then during the hard times we did just about anything that came our way, just to keep busy," said Stuhr, who at one point had laid off his entire crew, but now has five workers back on the job.
Rory Norgren of Norgren Builders also had to downsize his crew, but said he was able to keep busy through the recession and has been hopping so far this year.
"It has picked up quite a bit, actually, both new homes and remodeling," he said. "Actually, in some areas there is a lot of new construction."
Outside of town, Norgren said there has been more rebuilding and remodeling on lake homes, and construction of some new homes out on private lots.
"The lakes, during the recession, not everybody was broke, they just didn’t want to spend their money," he said. "On the lakes a lot of people are retirement age and they want to get their projects done. Enough is enough and they’re tired of sitting on it."
County records confirm Norgren’s observation. In 2011, there were just 39 permits for house projects issued in the county’s 16 townships. That number climbed to 53 last year, including 12 permits in Southside Township and nine in Corinna Township - by far the two most active townships in the county.
The overall number for 2013 has already surpassed 2012, with 65 home permits issued around the county so far.
Some other cities to the east of Annandale are also seeing increased activity.
"In some of the towns around here, the developments that went under before, there are six to eight houses going up," said Norgren. "Delano and Monticello are doing really well."
Dave Hartley of Lake Country Cabinets & Trim said that his company actually continued to grow each year during the recession, but in 2013 the pace of work has picked up.
"We’ve seen gains every year in sales, but this year has far exceeded our expectations. It really has taken off this year," he said. "It’s been across the board. I know flooring people, a lot of framers – it has almost hit that pre-recession level around here where everyone is back to work and everybody is busy. Lead times are getting extended. You can just see it. Everybody you talk to is reporting that same thing."
Thinner workforce
One factor in the increased workload for area builders is the lower level of competition - a fact not lost on the contractors who survived the recession.
"The other aspect of it, and maybe the unfortunate aspect of it, is that a lot of people went out of business. They couldn’t make it. So as things pick up, where there were five cabinet shops in the area, now there are two or three," said Hartley. "So that helps us pick work up too."
Norgren said that the economic boom in neighboring North Dakota as a result of the oil industry also helped lure away a large number of builders.
"A lot of guys went out that way. It has definitely helped here," he said. "Actually, a lot of trades, all of them, are short of help, so it has freed up quite a bit of work around here."
Beyond the short term recovery period, Norgren felt that the recession could impact the building industry for years to come.
"I know one thing, there’s going to be more of a shortage in quality help in construction and other trades – for carpenters and electricians," he said. "There’s nobody getting into those fields any more. I think everybody got scared off with the recession."
That means remaining builders are in high demand.
Real estate rebound
Area real estate agents are also witnessing a return to normal activity after the long recession years.
"It’s just starting to pick up. There’s a lot of action in the suburbs – Maple Grove, Otsego, Loretto, those areas, and it’s moving this direction," said Steve Bruggeman of Oak Realty.
With the recession came a shift in the types of properties that realtors have been able to move quickly.
"The market over the past couple of years has changed drastically. Right now what’s really hot is the first-time home buyer type of home. Those are flying off the shelf," said Bruggeman. "There are multiple offers on them. The interest rate is still low. Inventory is down. So when those come on the market they go fast."
Marci Segner of RE/MAX Integrity said that while new construction is still not back to pre-recession levels in Annandale, multiple offers are returning and fewer people are underwater on their mortgages, making it possible for them to upgrade.
"We are seeing an increase in value, which is really good. I think we’re past stabilization and now we’re actually seeing appreciation," she said.
The combination of lower inventory, favorable interest rates and the reduction of things like Rural Development dollars for loans have home buyers in a more urgent frame of mind.
"We just had our stats meeting, and we are the best we’ve been for (closed sales) in the last five years running," said Segner. "It’s definitely picking up."
Bruggeman agreed.
"The signs are good. We’re having one of the best years we’ve had in the last seven or eight years. It definitely shows in the number of files we’re closing, and the dollar amount that we’re closing on has definitely increased."
While Bruggeman said the market for lakeshore properties is still soft, Segner said that prices for those properties are steadily rising again. Will the positive trends continue?
"I think so, and I sure hope so," said Segner. "Nobody ever would have imagined it would get as bad as it did. In 2007-08, all of a sudden the bottom just dropped out. And then it got worse from there. But everything is cyclical. I don’t think it will get back to where it was, but those were some pretty inflated times."
The reassuring changes are beginning to restore confidence in the real estate market.
"Overall, the housing industry has definitely hit bottom and is on its way up. It seems like it’s finally turning around," said Bruggeman. "It’s that old saying, ‘Buy low and sell high.’ Well, now’s the time to buy, without a doubt."
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