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Home construction dips

It was a hard year for home builders in the Wadena area, as new home construction declined.

A decline in Wadena County building permits during 2006 mirrored national housing trends. The county's issuance of permits is noticeably slower compared to the previous few years, according to Deana Skov, zoning administrator.

"This summer during what normally would have been our busiest time, we had our biggest lull," Skov said about the end of June through July building season.

As of Sept. 20, the county had logged 168 permits, she said, as opposed to 254 total permits in 2005. Skov said she highly doubts that in the three months left this year the numbers will get close to where they were the last six years.

She pointed out that not all of the permits were for building. The 2006 numbers include septic permits and 14 variances or Conditional Use Permits and the 2005 numbers include septic permits and 17 variances or CUPs.

According to the U.S. Census Bureau and the Department of Housing and Urban Development, privately owned housing units authorized by building permits in August were 21.9 percent below the 2005 estimate. In September the National Association of Home Builders/Wells Fargo Housing Market Index declined for an eighth consecutive month to reach its lowest level since February 1991.

The high point in the issuance of Wadena County building permits came in 2003, when 303 permits were logged. Skov speculated those numbers were high due to low interest rates.

Skov said she has no good answer as to why permit numbers are low this year.

The decline in building permits has affected some local contractors and businesses that profit from new home construction.

Stan Ament, owner of Ament Construction of Sebeka, said the new home construction work for his company was cut in half this season. "It's really slow this year," he said.

Employees are only getting 30 to 38 hours per week as opposed to the average 45 hours per week they normally get this time of year, he said.

Ament said he thinks one reason for the building decline is the sluggish real estate market. People sometimes anticipate selling their homes and building new.

"Otherwise I haven't a clue," he said.

The realty market is slower this year than recent years, said Dave Mertens, realtor with Hinkle Realty of Wadena. There are not enough buyers for the number of people wanting to sell their homes. He said he has heard similar reports from other local realtors.

Housing prices went crazy over the last few years and now the market has taken a dip, he said.

"I wouldn't say it has taken a nose dive," Mertens said about the housing market. "[It's just] making an adjustment right now."

The adjustment is taking place not only in this area, but across Minnesota and the nation, he said.

Other contractors who rely on home building for a good part of their business are looking elsewhere for revenue sources.

Al Roggenkamp of Roggenkamp and Sons Excavating and Trenching said the portions of his business that deal with new home construction have gone down, but it has not affected his company's overall workload.

"It doesn't affect our income," Roggenkamp said. "It affects what kind of work we do."

His company is very diversified, he said, and has been able to find other jobs to replace the new home jobs they have lost.

The company's work includes digging basements, building septic systems, building roads, and demolishing buildings, Roggenkamp said. They cover a 13-county area, although they do not do work in every county each year.

Not all are feeling the pinch.

Camille Stone said Mark Stone Construction Co. has been busy with new home construction, remodeling and cabinet making in Wadena and Otter Tail County.

Colleen Faacks, executive officer of Mid-Minnesota Builders Association, said she has heard both sides from local builders. Some have to be creative with keeping busy while others haven't noticed a decline at all, she said. Some have had to expand their work area and travel further, but she said that is not a universal.