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New and existing homes aren't moving like they used to in the Janesville area. Kyle Geissler reports.
T.J. Riley, left, and Jon Steurer with Preferred Homes install trusses in the garage of a new home under construction at 1115 Russell Rd. on Janesville's north side.
A building permit for a home under construction at 1127 Russell road on 01/20/09. It is one of the last three permits issued in Janesville, including one for the neighboring house at 1115 Russell Road.
JANESVILLE — Local real estate agents and homebuilders are hopeful 2008 was a year they soon can forget.
Janesville residential construction in 2008 hit a low not seen since the early 1980s, and sales of existing homes dropped as well.
Residential construction
In 2007, the city issued 220 building permits for single-family, two-family and multi-family buildings.
At the time, the 2007 mark was considerably below the 10-year rolling average of 268 permits and represented the lowest level of residential activity in 10 years.
Then the calendar flipped to 2008 and the floor fell out of the local homebuilding market.
Last year, the city issued just 91 permits, and nearly 80 percent were issued in the first six months of the year, according to the city's community development department.
In November and December, the city didn't issue a single residential building permit.
Blame it on the economy, said Todd Bogner, the new president of the South Central Wisconsin Builders Association.
"My take on it is that the media doesn't help either," said Bogner of Bogner Construction in Janesville. "When people are constantly watching the news about the economy, they don't feel like it's a great time to do something.
"If they're on the fence, they don't do anything."
But Bogner said it's a buyers' market, particularly with interest rates approaching record lows and gas prices back to a reasonable level.
"We've all been through periods like this when later you look back and recognize that you missed a great time to buy," he said. "If you're sitting on the fence waiting for things to bottom out, you'll miss the tide."
Still, Bogner expects 2009 building numbers will be similar to 2008 and possibly even worse.
People who don't want to build a new home or move to an existing one might instead turn to remodeling.
Significant remodeling projects require building permits, and with the big drop-off in permits in 2008, it doesn't appear homeowners opted for remodeling last year, either, at least through the official building permit process.
"I expect to see remodeling and renovation pick up this year," Bogner said. "Those people who haven't been affected by a job loss or some other situation will probably tend to stay in their houses and renovate."
Last year also was a difficult one for commercial building projects, said Gale Price, the city's manager of Building and Development Services.
The city was involved in 28 commercial building projects in 2008. The most significant in terms of property value and size probably was the planned office complex at Woodman's, Price said.
"A number of those haven't gone through yet because of financing or other issues," he said.
While the slowing economy certainly affected last year's commercial building activity, the level of commercial construction in 2007 would have been difficult to match.
"It was competing with 2007, which was a really good year," Price said. "We had two major high school additions start, as well as the development of the new Menards, the old Walmart site and Jeff Helgesen's 250,000-square-foot building on the south side."
Existing home sales
Consumers and developers weren't building new homes in 2008, and the pace of existing home sales in Janesville was only slightly better.
Last year, 644 homes changed hands in Janesville. That's similar to 1990, when 652 houses were sold.
But few people—other than real estate agents—are all that concerned with the number of homes sold.
There's much more interest in total sales volume and the average sales price of homes sold.
Last year's 654 sales generated $85.4 million, a volume that most closely compares to 2001, when 757 homes sold for a total of $86.8 million.
Since at least 1998, the average sales price of Janesville homes has been increasing.
That is until last year, when the average price of a home sold in Janesville was $130,702, a drop of 9 percent from 2007.
"The prices reflect what's happening with the local, state and national economies," said Verna Saladino, president of the Rock-Green Realtors Association. "Everyone needs to understand that prices are already low, and low-balling offers won't work.
"It's not just Janesville and our job losses here. Rock County in general is hurting and so is the state and nation."
Saladino said the National Association of Realtors expects a rebound by the middle of the year.
Locally, she's seeing some buyer interest and expects that to grow if credit markets loosen.
"The thing about Janesville is that it's still so affordable," she said. "With the lower gas prices, we're starting to see interest, again, from people in Madison.
"It's going to be tough for a while with the loss of General Motors. But as the state and national markets improve, Rock County will rebound."
Until that time, she said, the local market likely will languish.
The drop in home sales resulted last year in local the Realtors association losing 19 percent of its membership.
"This is a very expensive business to be in if you're not making any money," Saladino said.