Rock County home construction hits new low
Reader poll
Photo 
Eric S. Richards
Photo
Robert C. Sarow
Photo
Joe Sagona
Photo
Joe Sagona carries lumber to be cut for the floors of a new home under construction.
Photo
Joe Sagona cuts lumber for the floors of a new home under construction in Beloit.
JANESVILLE — While area homebuilders thought last year’s level of new construction was about as low as it could go, they’re finding a new basement in 2011.
While some have laid off crews, others are climbing out of that basement on a ladder built with residential and commercial remodeling projects.
“Remodeling is certainly carrying the day for us,” said Bob Sarow, owner of Wellnitz & Sarow Builders in Janesville.
In Rock County, the number of residential building permits declined every year since 2003, when the 677 permits pulled were the high point in a period dating back to 1999.
The same holds true in Janesville, where the city issued 312 permits in 2004.
Last year, it issued 49. Through April of this year, builders had pulled just eight permits for new home construction.
In Janesville, Rock County and Wisconsin, the precipitous drop arrived with the Great Recession in late 2007.
“It’s a different world,” said Sarow, who hopes to start building three new houses this fall. “It’s as slow as I’ve ever seen it.
“I was there in the early 1980s when it was supposedly so slow. But that was for a couple years; this is four years now.”
While the recession ended in June 2009, the prospects for a construction turnaround in the near future appear dim, according to a recent survey by the National Association of Home Builders.
“Builder confidence has waned even further as economic growth has stalled, foreclosures have continued to hit the market and the cost of building a home has risen,” said David Crowe, the organization’s chief economist. “Meanwhile, potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements and general uncertainty about the economy.
“Economic growth must pick up in order for housing to gain the momentum it needs to get back on track.”
Eric Richards, owner of Eric Richards Construction and the president of the South Central Wisconsin Builders Association, agrees.
“It’s extremely hard to compete with the existing home market,” Richards said. “The cost of materials is going up, which is globally driven because so much of our product is globally driven.”
Still, he sees signs of economic encouragement. A couple of companies have announced intentions to open in Rock County, and a handful of others are expanding.
“It will take jobs to turn this around,” he said.
Sarow agreed that the glut of existing homes at affordable prices is tough competition for homebuilders.
“People come in and say, ‘Tell me why I should build when I can buy so much cheaper?’” Sarow said. “There are a lot of reasons why they should build, but right now it’s tough to compete on price.
“A bigger problem is the number of vacant lots. If you can’t sell the lot, you can’t build a house.”
Fix it or expand it
In the meantime, several homebuilders have become home remodelers.
In Janesville, the number of permits for significant alterations or addition was 18 percent higher in 2010 than it was the year before.
“A lot of people are retrofitting their houses to meet their needs,” Richards said. “With so many houses on the market, people see what kind of financial hit they’re going to take and decide its best to spend money on their homes and stay there.”
Homebuilders have responded, Richards said, but it’s not exactly a novel strategy.
“That market has gotten very competitive,” he said.
Richards also owns Janesville Plumbing, which he said has become aggressive on the service side.
“Things will come around on the residential construction side, but we just have to figure out ways to hang on and make ends meet,” he said.
Doing just fine, thanks
As the owner of a small construction company, Joe Sagona has an economic advantage that many of the larger builders don’t.
He, his sons and his one full-time employee build houses from start to finish, one at a time. He doesn’t have multiple crews that require multiple jobs that are hard to come by in a tough economic climate.
“While things have been pretty dismal for a lot of guys, we have been busy,” said Sagona, who owns the Beloit-based Sagona Construction. “We never experienced the downturn that so many builders did.
“I’m always getting calls, and I’ve never advertised in 10 years. I’ve had so many opportunities to get bigger, but that could create big problems when the economy is bad.”
Sagona usually builds two houses a year, and he just started a large house that should occupy his time through Thanksgiving.
Others are in line to have him build houses next year.
“We are also into the remodeling, and I try to schedule all of that in between the houses,” he said. “We did a lot of additions last year for people who decided they couldn’t sell and were going to stay where they were.”
Sagona’s work takes him all through Rock County and into northern Illinois.
Sarow’s crews are traveling as well. He’s been able to keep his carpenters fully employed for the last three years, and there’s work for the foreseeable future.
But most of it is in Beloit, outlying parts of Rock County and in Dane County.
“Right now, it’s not really happening in Janesville,” he said.
Jul 12, 2011 at 11:22 p.m.
Suggest removal
While yes, it is true that Rock County's NEW home construction is low, let's look at the fact that many area builders have SURVIVED these touch economic times by adapting and diversifying their businesses. So many business owners (of all types) have had to remain positive and look for what is possible. It is disappointing that the headline chosen for this article creates a negative view of the local building industry. How about examples of some changes builders have had to make in order to remain in business and be successful? Let's hear about the silver lining, and not just the dark cloud.
Jul 12, 2011 at 1:33 p.m.
Suggest removal
Businesses will stand a certain level of taxes too and when it gets beyond that, they will look for places with lower taxes..Thats a fact.
Again, fedgov creates most of the problems that are the most difficult to deal with.
Jul 12, 2011 at 1:30 p.m.
Suggest removal
fear- I agree with most of that, but Detroit has a bunch of separate assinine "taxes" that most other cities don't even have....Yes, nafta has wrought destruction for the middle class of the whole country, but Detroit has its stunning array of issues that has pushed it further down the slope.
In addition, many cities are becoming practical war-zones and who wants to try to operate a business in that environment?
Most of the blame lies with fedgov.
Jul 12, 2011 at 1:04 p.m.
Suggest removal
I think the subject at hand was the home building in the Janesville area. I have seen many homes up for auction and yes I would look into one of those before building. As for Unions having any thing to do with the bad economy, I don't agree with that. The greedy CEO's are the downfall of major corporations and have always been. As for building new homes, of course we can hope for a turn around in the economy but I would not go to college to become a builder right now if you really want a job.
Jul 11, 2011 at 11:09 p.m.
Suggest removal
High taxes is what destroyed Detroit? You must be kidding! NAFTA destroyed Detroit. Period! Not even arguable. My God you people ar so flipping blind and mired in your own Ideology its just sad.
Detroit schools face the same uphill climb that MPS faces, people spitting in their faces without realizing the MASSIVE poverty that those teachers face. They need more money in poverty stricken areas, how does that not make sense to you people? Have you ever seen what its like at an inner city school FULL of kids in broken homes? Maybe we should just have a voucher lottery? What an absolute joke.
Unions DO NOT drive jobs to China, that is an absolute LIE!! You believe that you have no clue. Look around, MILLIONS of non-union factories are now in Mexico, China, Taiwan, and many other third world nations that have ZERO labor standards not only pay but safety and environmental. Did anyone watch the olympics in Bejjing? Green water, air quality problems, GREAT!! All so companies like Nike and thousands of others can pay Chinese laborers 10 bucks a week and bring their CRAP back here tax free.
Unions have NOT driven business out sheeple, GREED has, and political corruption. Thanks Bill Clinton for signing Nafta. George Bush for giving China most favorite trading status. Talk about anti-American, these people have sold the American people down the river all in the interest of the investor class, screw the middle class. Try to remember that ALL of these companies that moved away were making HUGE profits here , many paying Union wages(see GM). They sold us out, has NOTHING to do ith Unions, has everything to do with American Selloutism(not exceptionalism) because 10% of the population has sold out the rest to fight over table scraps.
America has NOT been a democracy for DECADES, we are owned by corporate interests, PERIOD. Not high taxes, NOT union wages, PLUTOCRACY. You are just a bunch of parroting sellouts, repeating talking points you hear on TV. BTW the current president and all his talk of free trade is a sellout as well. No different than the last 4 presidents. Sell out the people here so companies can ship manufacturing jobs away for NOTHING.
Anyone that thinks we have a tax problem is just wrong, the problem is that the middle class that CONSUMES and spends the most are fastly disappearing. You cant work hard (physically) and make a decent wage here anymore. So if you just want to sweat and bust your butt, you will be poor, sorry. Anyone that cant go to college for any reason is OUT of the American dream.
Jul 11, 2011 at 4:09 p.m.
Suggest removal
tracco6 - That's been going on at GE (and many other companies) for years and years. This wasn't just a thing for last year, but all people can say is "Did you see how much money GE paid in taxes last year?" Not new at all.
.
And I absolutely do not agree with it either.
Jul 11, 2011 at 3:23 p.m.
Suggest removal
With all of the existing properties available due to foreclosures in addition to those on the market due to relocation I don't understand why anyone would take on the debt of new construction. Especially in the Janesville area. The sad thing is there are homeless people who would very much appreciate a home to live in rather than being homeless, however there are not enough affordable housing units, Section 8 vouchers, or other programs and assistance to do so.
Jul 11, 2011 at 2:27 p.m.
Suggest removal
916WI, Republicans actually want to lower the top marginal income tax-rate to 25%. Bush had lowered it to 35% from 39%. Everyone else gets a 3% break.
Jul 11, 2011 at 12:01 p.m.
Suggest removal
tracco.......Correct me if I'm wrong, but didn't the Republicans push for extending the Bush tax cuts for EVERYONE??
Jul 11, 2011 at 10:39 a.m.
Suggest removal
Hey! If you want to get rid of the gas subsides - get rid of ALL that green energy crap subsides as well - how many millions are being wasted??? Democrats like to pick and choose winners and losers - that's why you will NEVER see them go across the board on anything. It's picking and choosing.
Abortions are a Democrat thing- congratulations, you are sounding more Repbublican with every post.
Jul 11, 2011 at 10:29 a.m.
Suggest removal
Hey! look at how much GE donated to the DNC. And how was they spent on lobbying democratic congressmen. GE is a major player in the defense contract game. If you believe they do not give ton of money to democrats as well as republicans you are lying to yourself. That door swings both ways.
Jul 11, 2011 at 10:08 a.m.
Suggest removal
Hey go look up how much GE made last year and how much in taxes they paid.Then look at exxon mobil they get tax breaks up the whazoo.And then what was the 1st thing the consevatves did when they took over congress extended the Bush tax cuts for the rich.I wish the conservative republicans would put that care and effort into getting rid of abortion.But the minute someone wants to raise taxes on corps and the rich,look how much effort they put into that.It really shows where their priorities lie.
Jul 11, 2011 at 9:20 a.m.
Suggest removal
Anyone who thinks state and local leaders are going to make any difference on jobs, they can do nothing because its all sabotaged at the federal level.
Jul 11, 2011 at 9:17 a.m.
Suggest removal
Our whole spectrum of politicians have seen to it that we can't buy anything made in USA anymore.
None of them care...Why should they?....They've got their guaranteed pensions and healthcare all locked up at our collective expense.
Jul 11, 2011 at 9:10 a.m.
Suggest removal
WOW tracco6 - you need a dip in the cement pond!
If I had my way, I won't buy from China but the unions have driven most manufacturing out of the country and when a company like Boeing wants to stay and employ Americans the union Board under Obama sues. So take your socialism crap to some brain dead web surfer of the Huffington Post and Media Matters.
Bring back jobs and tell your liberal politians to lower the corporate rate to be competetive with the global market and get the crap EPA out of the way to live with the laws on the books and not create their own. But again, that is under Obama now too.
Can't get it through Congress - force it through EPA and the NLRB. That is one true dictator.
Jul 11, 2011 at 9:10 a.m.
Suggest removal
What is a "markist?"
Anyway, the home market is glutted right now. It's going to be at least a couple more years before the housing market really turns around. Not going to see a big boom period like in the early-mid 2000's for a long time, either.
Jul 11, 2011 at 8:46 a.m.
Suggest removal
And Kay Im guilty too of supporting socialism, I have stuff in my house too made in China.
Jul 11, 2011 at 8:42 a.m.
Suggest removal
Wow Kay,do you own anything made in China then you are a socialist too.I say if you buy something anything made in a communist socialist country then you support its govt type also.Most conservatives want and support cheap labor well you got it ship the job to China and support there goverment.Didnt we spend trillions of $ to fight socialism and communism in post WW2? So kay dont give me that garbage about not supporting socialism,you do it every time you buy something from China.Oh and by the way Kay they have unions in China too.
Jul 11, 2011 at 8:01 a.m.
Suggest removal
Problems start at the top dog. 2012 is the year of the Conservative. Bye bye liberals, socialist and markist. We are feeling it, living it and rejecting it.
Jul 10, 2011 at 10:44 p.m.
Suggest removal
Wisconsin "Open for Business" Gotta love it!
Jul 10, 2011 at 10:26 p.m.
Suggest removal
That last example in the story is an excellent teaching moment. Bigger is not always better. I think Rock Co. and S. Wisconsin have another 5-10 years of a slow climb, and it will never be like it was, ever again. The area, and jobs won't support it.
Jul 10, 2011 at 8:20 p.m.
Suggest removal
Detroit "spiralled down" because of high taxes, corruption, crime and lack of police response to it.
Detroit schools got lots of money..Didn't do 'em any good.
Jul 10, 2011 at 7:18 p.m.
Suggest removal
factsplease........high unemployment rates and high tax rates also create a downward spiral........The school system will not be "ruined" if it's employees are required to contribute more to their pensions and HC premiums.......
Jul 10, 2011 at 6:41 p.m.
Suggest removal
If only they'd lower building codes and give TIFS etc to my wealthy developer friends, then all would be beautiful.
Jul 10, 2011 at 6:35 p.m.
Suggest removal
And nothing will happen in Janesville if we let our school district be ruined. Good schools attract good businesses and families. Failing schools create a downward spiral, like in Detroit.
Jul 10, 2011 at 4:08 p.m.
Suggest removal
All the better reason to raise property taxes! We should tax to the max baby! Our community is booming! Maybe Jim and Frank should sit down and see if they can connect two dots?
http://gazettextra.com/news/2011/jul/09/...
Before you post a comment, consider this:
Note: GazetteXtra.com does not condone or review every comment. Read more in our User Policy AgreementPost Comment
Commenting requires registration.