INSIGHT ON: Residential Construction – Building up new momentum

Posted on Apr 1, 2015 :: Insight On , Residential Construction
Sean P. Johnson
Posted by , Insight on Business Staff Writer
Van’s Lumber & Custom Builders Inc. has experienced a boom in demand for new residential construction in the northern counties of Northeast Wisconsin, such as this new home under construction in Sturgeon Bay. The company is experiencing one of its best years since the Great Recession hit the industry hard beginning in 2009. Photographs courtesy Van's Lumber & Construction

Van’s Lumber & Custom Builders Inc. has experienced a boom in demand for new residential construction in the northern counties of Northeast Wisconsin, such as this new home under construction in Sturgeon Bay. The company is experiencing one of its best years since the Great Recession hit the industry hard beginning in 2009. Photographs courtesy Van’s Lumber & Construction

There is a bit more urgency to Kurt VandenHouten’s spring ritual this year.

It’s been a while since VandenHouten has been this anxious about the seasonal thaw — at least since the Great Recession hit in 2009 — and the weight limits cities and counties impose on the roadways. Each day that passes until the weight limits are lifted is a day he can’t move heavy equipment and materials to building sites around Door, Brown and Kewaunee counties.

For the first time in several years, he has a backlog of residential building sites to visit.

“We are off and running with a number of projects where we already have the sign off and are ready to go,” says VandenHouten, who heads up sales for the Egg Harbor office of Van’s Lumber & Custom Builders Inc. “All the salesmen have a backlog of bidding to get out as well.”

The residential construction industry is roaring into 2015. Builders from Door to Fond du Lac counties report that after several tepid years and false starts, they are seeing consistent growth and a growing backlog of work. The days of surviving project-to-project may finally be at an end.

VANS_Greatroom_HR“There is just a better vibe out there,” says Craig VandenHouten, president of Van’s Lumber & Custom Builders and Kurt’s brother. “For the first time in a long time, we have more than ‘just enough’ work to sink our teeth into.”

The breakthrough for the industry seemed to have come in late 2013, though several contractors report the winter of 2013-2014 was a low point after several months of promise. By summer of 2014, though, the uptick seems to have firmly taken hold.

In Fond du Lac County, for instance, the Home Builders Association pared back its parade of homes to a single event in 2014. The spring show struggled, and there were no builders ready for a fall show, says Amanda Kemmel, executive officer of the association. This year, eight homes are already booked for the spring tour, and five builders have contacted her about the fall event.

“We might be a bit behind some other areas, but things are picking up,” Kemmel says.

Residential construction is also off to a strong start in the Fox Valley region, with communities in that region reporting 70 new residential construction projects through March of 2015, compared to 53 during the first three months of 2014, according to MTD Marketing Services, which tracks building permits in the region.

Not only is single-family housing booming, but Silvercrest Construction Group President Scott Murphy says multi-family housing is also staging a comeback. In addition to plans calling for larger units with generous layouts aimed at families, there is a growing demand for community-based residential facilities to support assisted living programs.

“About summer of 2014, it seems like someone just flipped the on switch,” says Murphy. “Things have just been crazy since then.”

It’s a welcome form of crazy, though. First quarter new housing starts in the Fox Valley had fallen from highs above 200 prior to the recession to as low as 42 in 2011 before beginning the current uptick.

Consumer tastes have also changed. Prior to the recession, homes with a larger footprint were the popular choice. Now, the spending is on interior amenities such as unique tile, reclaimed wood or upgraded hardware.

“Overall, people are still being cautious about size — they don’t want any wasted space,” says Mike Karrels, owner of Karr-Bach Builders in Fond du Lac. “They are definitely going for the upper end on the interior.”

While the builders who weathered the rough years are glad to see a growing workload of new houses, there are concerns they will be able to keep pace should demand ramp up too quickly.

One of the lingering after-effects of the Great Recession is that the pool of skilled workers has been greatly reduced. In addition to those who left the industry — either taking retirement or switching careers in order to keep working — there have been diminished numbers entering the trades on the front end.

“I think we are always worried that if the boom gets bigger, that skilled help we rely on is going to be harder to find,” says Karrels.

Even companies such as Van’s Lumber & Custom Builders, which employs its own craftsmen rather than hiring subcontractors, feels the squeeze. Chris VandenHouten, another of the brothers and the company’s job coordinator, says he would gladly hire more carpenters to keep up with the pace of new projects, if he could find them.

“I could hire five or six if I could find enough of them,” he says. “A lot of folks got out of the business and trades were not encouraged at the high school level. People just weren’t thinking about construction at the time.”

Still, builders are optimistic there are better days ahead.

“We are kind of in a holding pattern right now (because off the road limits), says Murphy. “But by April, we should be going strong.”