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Shovel Ready?
Experts say the timing’s right for new home constructions – if buyers can find someone to build them.

As winter finally gave way to spring and the region’s homebuilders embarked on plans to break new ground, Kristine Hillmer, executive director for the Metropolitan Builders Association, began to fret. Her concern? A shortage of skilled labor.

She quickly cobbled together a panel to find solutions, including partnering with high school trade programs and technical colleges to increase the ranks of homebuilders. “The Metropolitan Builders Association is starting a concerted effort to ensure a labor pipeline of educated and dedicated employees,” she says. According to the National Association of Builders, 20 percent of economic expansion is tied to housing, so a push to widen the labor pool could have a ripple effect on the overall economy.

“Thirty percent of our workforce left the industry during the recession,” says David Belman, co-owner of Don Belman Homes in Waukesha. Now, “you’re going to have to wait in line for a carpenter. That’s not something where you can just go grab a guy. You need an apprenticeship.”

That’s not the only issue confronting homebuilders. Fewer lots are for sale: According to the Wisconsin Department of Administration, from 2001 to 2005, 19,938 buildable lots were brought on the market in Kenosha, Ozaukee, Racine, Washington and Waukesha counties, which equates to about 4,000 per year. In 2009, only 320 were approved, and that number dropped to 216 in 2010 (the most recent year for which data was made available). Additionally, prices for building materials are climbing.

Lumber prices have spiked as much as 80 percent over the past year, says Tim O’Brien of Tim O’Brien Homes in Pewaukee. “With just the lumber package alone,” he says, “prices have gone up between $4,000 and $5,000 per house. During the recession, lumber mills closed down. Demand goes up, and supply is still restricted.”

Scott Thistle, owner of Halen Homes in Brookfield, which builds 30-40 homes a year, was forced to raise prices for new homes over the past few months. Demlang Home Builders of Sussex, which builds semi-custom homes from the Illinois border on up to Sheboygan, also increased prices as much as 5 percent to accommodate material costs.

To offset costs, Belman has turned to alternative supplies, such as vinyl window frames (instead of wood) or prefinished floors, as opposed to hand-finished ones. “Drywall went up quite a bit, too,” says Belman, “to about $1,000 a house from the beginning of the year.”

Despite these hurdles, many say there has never been a better time to build new. Interest rates remain historically low, as do asking prices. “It’s a window I don’t think we’ll ever see again in our lifetime,” Belman says. “Now is the best time to build.”

Housing starts in Milwaukee, Waukesha, Ozaukee and Washington counties are up for both multi- and single-family homes, according to MTD Marketing Services of Wisconsin. In 2011, 893 homes were built, and that number increased to 970 in 2012. During the first quarter of 2013, ground was broken for 237 new homes. Still, that’s nowhere near the pace of 1,693 homes built in 2007 or the 2,000-plus homes for each year between 2002 and 2006.

Since starting Tim O’Brien Homes in 2007, O’Brien has experienced a rise in sales every year. In 2013, he expects to build 140 homes split between the Milwaukee and Madison areas. For a 2,100-square-foot home, the average lot and home package is around $275,000, and O’Brien says clients are looking for energy-efficient models.

That jibes with another trend: Buyers of newly constructed homes are more economically minded than a decade ago. “Oversized rooms are no longer acceptable,” says O’Brien. “Nobody wants to pay for that extra footage.”

It holds true for Demlang, too. “A 2,000- to 2,200-square-foot home is really our bread and butter right now,” says Demlang. “A lot of our clients are downsizing but don’t want to give up quality, like solid-surface countertops and upgraded floors.”

But according to Hillmer, the allure of a sparkly, brand-new home will never fade. “There’s always that feeling that everything’s new,” she says. “It’s designed around your lifestyle and your taste.”
This article appears in the July 2013 issue of Milwaukee Magazine.
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