Foxconn may bring housing boom
Apartments would likely be built first for new employees
If the arrival of an enormous Foxconn Technology Group plant in Racine or Kenosha counties touches off a housing boom in the area, it’s likely to start with a build-up of apartments.
With a low jobless rate in Wisconsin, the facility — which eventually may have 13,000 workers — is going to have to attract employees from inside and outside the area and state. They’ll need a place to rent before deciding whether they want to stay in southeast Wisconsin and buy a house or condominium.
Foxconn announced last week that it would invest $10 billion to build a display panel plant in Wisconsin. At 20 million square feet, the factory would be one of the largest manufacturing campuses in the nation. Initially, it would hire 3,000 workers and over time could more than quadruple that.
“When this comes about, the housing is going to come in stages, because the first thing that’s going to happen is they’re going to build apartments if they can get zoning,” said Russell Kashian, an economics professor at the University of Wisconsin-Whitewater who tracks residential real estate. “We have a very low unemployment rate, so we’re going to have to pull people in from outside. And they are not going to come here and say, ‘Well, I’m buying a house tomorrow.’ ”
Over time — perhaps two or three years, Kashian said — many workers who decide they like Wisconsin and their job well enough to stick around will want to buy a house or a condo unit. That would launch the second phase of housing growth spurred by Foxconn.
When it happens, home builders will be eager to jump in, the leader of their trade association said.
“This will have a big impact on our industry to provide safe and affordable housing in southeastern Wisconsin,” said David Belman, president of Belman Homes and president of the Wisconsin Builders Association. “Members of the WBA are ready to help provide housing options for those who are new to the area and those who are looking for new housing options in the future.”
But putting up housing won’t
be without obstacles. Socalled workforce homes costing less than $250,000 — instead of the $350,000and-up price tag on many of the homes being constructed in southeast Wisconsin today — would need to be allowed by local municipalities. That might mean some communities would have to change lot size requirements and some other factors that raise the cost of home-building, industry professionals say.
“We’re going to have to really work with local officials to say you need workforce-size housing that people can afford,” said Mike Ruzicka, president of the Greater Milwaukee Association Realtors.
Said Belman: “If there is demand and a willingness and workability with the municipality, builders will come there and they’ll build there.”
Belman said that over time, there would be market for higher-end homes not far from Foxconn, too.
“Eventually there are going to be management positions, and people grow and get their roots in a community and spouses get income and they are going to be buying houses, and there probably won’t be enough supply of those homes there,” Belman said.
Construction workers needed
New homes would add to a community’s tax revenue, Belman noted. The builders association estimated that building 1,000 new single-family homes would generate $12.4 million in taxes for state and local governments annually.
With Foxconn putting the average salary of its employees at about $53,900 and many households having two earners, mortgages should be available.
But a housing building boom radiating from Foxconn could have an employee issue of its own: A lack of skilled construction workers.
When housing went bust in the Great Recession, many workers in the building trades were left without jobs and switched careers. Now, as the economy has improved, building companies are having trouble finding all the workers they need.
Belman said, “We’re working on things, but it’s not a fast solution.”
The builders are working with the technical colleges and even the Department of Corrections to develop the needed home-construction workforce.
It’s not too soon to talk about the possible impact of Foxconn on housing, Belman said. He said state trade associations plan to get together in August to discuss what a Foxconn plant would mean and how to be ready for it.
“This stuff is going to take a lot of planning,” Belman said.
Will affordability be an issue?
As in most of southeast Wisconsin, the prices of homes in Kenosha and Racine counties have been going up. Through the first half of 2017, the median price of homes sold in Kenosha County was 10.4% higher than in the same period last year, rising to $163,950 from $148,500. In Racine County, the median price was $152,000, or 9.7% higher than $138,600 in the first six months of 2016.
The prices for houses and rents for apartments are only expected to increase with Foxconn coming to town.
“The demand curve just shifted,” Kashian said. “Supply is going to take time to catch up. You just don’t suddenly put up houses.”
Kashian said not since farm equipment maker Allis-Chalmers supplied thousands of jobs to West Allis and metro Milwaukee has one company had the potential to be such a huge employer and have such a massive impact.
“Based upon the magnitude of what has been proposed, we can certainly expect to see growth in the local economy across the board — housing sales and construction, overall spending, expansion of infrastructure, etc.,” said Jim Popp, president of Racine-based Johnson Bank.