These aren’t little boxes
New homes under construction in January are bigger and pricier.
It’s too soon to call it a trend, but if January is any indication, many houses built in metropolitan Milwaukee in 2019 are going to be significantly bigger and pricier than a year ago.
January home construction permit data gathered by MTD Marketing Services of Wisconsin Inc. shows builders so far plan to put up 74 homes, averaging 3,315 square feet and having an average value of $456,486, in the fourcounty metro area.
That compares with 97 building permits issued in January last year, at an average of 2,854 square feet and average value of $372,721.
Price-wise, that’s a more than 22 percent jump from the same month a year ago. It’s also a 16 percent increase in space.
Although there is high demand in the metro market for houses costing $350,000 or less, builders say a dearth of skilled workers, higher prices for lots, rising costs for materials and, in some cases, municipal zoning laws have combined to make it a better business decision for them to construct fewer but bigger houses.
David Belman, president of Belman Homes and a past president of the Wisconsin Builders Association, said when buyers commit to building a new house that already is going to cost a lot of money, they usually want features that end up increasing the price even more.
“I would agree 100 percent the homes that we’re building are bigger, they’re more detailed and more complicated,” Belman said.
Helping to drive up new-house average value so far this year were three permits for homes to be built in Pewaukee that averaged $742,000.
Some other communities where average home prices contributed to a higher overall January average for Milwaukee, Ozaukee, Washington and Waukesha counties: four houses in Brookfield averaging $583,500; three in the city of Delafield averaging $587,667; and two in Franklin averaging $560,000.
Belman said he expects a good year for home building in metro Milwaukee, but it wouldn’t be surprising if housing starts lag 2018, which was the best year since the Great Recession in the fourcounty area.
There were 1,488 permits issued to construct new homes last year, up 3.5 percent from 1,437, MTD data shows.
“It’s still going to be a solid year for building and for buying homes, but it’s not going to be as strong as 2018. It’s going to be a little softer year,” Belman said.
“And that’s because of the pricing, the cost of materials, the availability of labor, the availability of vacant land. Those are all still challenges that we’re facing as an industry.”