Lack of New Home Construction: Is it price? land? or both?
Lack of New Home Construction: Is it price? land? or both?
Despite the need for more housing, the construction of new single-family dwellings in Monmouth has stalled due to higher borrowing rates, rising building material prices, and a lack of available land.
“[We] have a housing shortage in Monmouth. So people commute from Burlington, the quad cities, Galesburg some up to over an hour away for jobs here at Smithfield,” said Lew Steinbrecher, Monmouth City Administrator. People come to work in Monmouth, in places such as Smithfield. Some buyers and renters may not want to live in Monmouth because other sites like those Steinbrecher shared can be more economically viable.
“I was thinking maybe rent a house; every time there would be a house that I would like, there'd be a for sale rent sale would go up, and then by the end of the week, it'd be gone. So it was like, you gotta be on it if you think you’re gonna find a place to live anywhere right now,” said Zachary Colberg, Monmouth College Alumni.
Data from CBRE, a commercial real estate firm, predicts “U.S. construction costs expected to rise 14 percent year over year by close of 2022,” Although “relief next year, with cost inflation falling to 4.3 percent and further moderation to 2.9 percent in 2024.” An average 2-3 bedroom 1500 square foot home would cost $300,000 with this estimation. “With the average price to build a home hovering around $200 sq ft,” according to contractor Eduardo Lopez of “Lopez Home and Design.” And with the ever-rising rents and increasing price of goods, the question may arise, “whether building new housing in Monmouth and surrounding areas are economically feasible.”
“The housing market is fluid and changes constantly,” said Carrissa Doyle of Doyle & Associates Realty. “At the moment, interest rates are high and, ideally, not a great time for buyers to get a loan. It's also the holiday season, and we’re entering colder weather, which is not ideal for people to want to move. We're also experiencing inflation, and the cost of living has increased, which impacts the housing market.”
“Land is also a factor with building. There aren't a lot of empty lots in a desirable part of town to build on. And the ground in the country is very costly and limited.” said Doyle. “The new construction going up off of North Main Street has been in the works for a few years regarding purchasing the land, etc. That's also being constructed by a large corporation outside of the area.”
“While yes, we are currently seeing lower income housing being built in the community,” said Realtor Brian Scott Young. “We haven't any newer housing being built, companies receive government subsidies to help offset the cost to build low-income housing.” Government incentives from HUD many be causing less single family homes being built and developers choosing the project with those incentives.
“The new housing complex, just north of our property (Oak Terrace and Costello Terrace), will be a great addition to Monmouth and Warren County. [A tax credit funded development]” said Hank Shimmin of the Warren County Housing Authority; such tax credits, and government subsidies helped build the current housing complex and can further inhibit more single-family houses.
Jesus Alvarez, Ben Dorn, Alex Martinez-Urbina