The economy has dealt serious blows to metro Milwaukee’s homebuilding market – but no knockout punch. Smart builders have adjusted, changing quickly to stay in the game.
The five busiest builders in metro Milwaukee, listed below, have found that smaller homes are more likely to sell. In fact, the majority of houses they constructed in 2009 were about 2,000 to 2,400 square feet. In the past, 3,000-square-foot homes – or larger – were hot.
Ranch-style homes are even replacing previously popular McMansions. Jakki Brunn, selections and design manager for Kaerek Homes Inc. – the builder that tops the list with 50 permits in 2009 – says that over the last three years, baby boomers, empty nesters and, more recently, first-time homebuyers have been attracted to this style of one-story home.
The market newbies, boosted by up to $8,000 in federal tax credits, have been a driving force behind the homebuilding market. Scott Thistle, president of Brookstone Homes in Oconomowoc, which placed second with 43 permits in 2009, says that in 2003 and 2004, only 25 percent of his buyers fell into this category. “That is completely turned on end now, where 75, 85 percent of our buyers are first-time homebuyers.”
And more affordable, less excessive homes are what they want. “It’s really different than at the beginning part of the decade,” says Paul Bielinski, chief operating officer for Bielinski Homes, the third-busiest homebuilder. “We were living in a time of excess.” People don’t want to break the bank heating and cooling unused rooms anymore. Now, they’re “right-sizing,” Bielinski says, with open-concept, multiuse living spaces. Bielinski notes that buyers are moving away from formal living and dining rooms. Instead, a kitchen with a snack or breakfast bar and one large great room fills the bill.
People are scaling back, says Craig Vermeulen, area manager for William Ryan Homes, the fourth-busiest builder. “They’re looking more at just what they need.” Many clients are forgoing granite countertops or hardwood floors and are instead sticking with the basics, he says. Thistle sees the same trend. Granite countertops can always be added at a future date, he stresses. Clients today are concerned with “what’s under the hood,” such as high-efficiency furnaces and top-rated air conditioners.
But not quite every builder is on the back-to-basics bandwagon. Tim O’Brien, president of Tim O’Brien Homes, whose company ranked fifth in permits in 2009, still sees a demand for granite countertops and hardwood floors. And Kaerek Homes started adding granite countertops to its Quick Move Series homes in 2009, Brunn says. These homes were previously equipped with laminate countertops, but because they are often sold as an end product, rather than being built to a buyer’s specifications, they provide these amenities to stay competitive with the market of existing homes.
Builders are also focusing on energy efficiency – every top builder is Energy Star-certified. To receive certification, homes must meet stringent requirements set by the U.S. Environmental Protection Agency and the U.S. Department of Energy. And standards are getting tougher. Homes need to be 15 percent more efficient than homes built in 2004 to get an Energy Star rating, says Vermeulen.
What’s driving the move toward energy efficiency is the pocketbook more than the environment, says O’Brien. Conservation is nice, “but in today’s economy, people don’t have the discretionary income to do it just for that purpose,” he says. “We have to be able to show some kind of economic benefit.”
Metro Milwaukee’s Top 5 Builders
Builder, Permits, Total Value, Average Value, Average Value, Average Sq. Ft.
Kaerek Homes, 50, $8,675,000, $173,500, 2,057
Brookstone Homes, 43, $7,240,000, $168,372, 1,978
Bielinski Homes, 42, $8,686,000, $206,810, 2,123
William Ryan Homes, 32, $6,331,000, $197,844, 2,464
Tim O’Brien Homes, 27, $6,030,000, $223,333, 2,260
