JLP Homes talks about housing
You could tell Jon Poetker had gotten some sun.
When Poetker, who is general manager of JLP Homes in Waterloo, came into his showroom Tuesday afternoon he immediately sat down. He said it had been a long day.
“In my career in residential construction, it’s as busy as it’s ever been,” Poetker said. “In my 20 years, better than I’ve ever seen.”
It may be hard to believe Poetker is at his busiest now, less than a decade removed from a hellish recession that decimated the housing market.
But Poetker insists the demand for newly-built homes in the area is there, and he’s not the only one.
In my career in residential construction, it’s as busy as it’s ever been. In my 20 years, better than I’ve ever seen.
Jon Poetker, general manager of JLP Homes LLC in Waterloo
“We’re now in the first full year of uptick in demand in the metro-east,” Jacob Watters of CCA Partners said.
CCA is developing Tanglewood, a 390-lot planned subdivision sandwiched between Hollywood Heights Road, Illinois 159 and Canteen Creek in Caseyville.
Formerly known as Forest Lakes, a previous developer with grand plans for million-dollar homes ran out of money in 2006 after building just one mansion on the sprawling acreage that came ready-made with a brand new road and sewer network. It’s been empty until this spring.
Watters has nicknamed the subdivision “Lazarus” and said it’s the biggest project of its kind on either side of the Mississippi River since the recession.
JLP and three other companies are building homes at Tanglewood. Watters said families with young children and older individuals are most likely to buy them.
We’re now in the first full year of uptick in demand in the metro-east.
Jacob Watters, CCA Partners
Poetker and Watters agreed demand among these groups has been “pent up” for years: Younger renters finally can afford to buy. Older homeowners who’ve lived for years in older houses have finally seen prices rise enough for them to be able to afford to sell.
“That sense of urgency plus the confidence in the market has made the market strong,” Poetker said.
But new neighborhoods and subdivisions aren’t appearing overnight. A labor shortage with roots reaching back into the recession is holding back the swarm of new homes Watters and Poetker say the market normally would be primed to produce.
“Subcontractors don’t have enough workers,” Watters said. During the recession, he said, workers were “wiped out of their trades.”
Employers who slashed their staffs in those years haven’t returned to pre-recession staff levels. The people they have added aren’t as experienced as many of the workers who were let go during the downturn.
“They’re afraid to ramp up again,” Watters said. “People have long memories when it comes to their businesses.”
Poetker said he’s increased his workforce bit by bit, but not to the level he would need to meet the current demand. “We have enough to manage but we can’t parallel the market. It’s definitely a problem in the current market, just the lack of work force,” he said. “It’s a major problem for the local industry upcoming.”
“It’s a great problem to have,” he added. “But it’s not fun when you’re on our end fighting it every day.”
(Employers are) afraid to ramp up again. People have long memories when it comes to their businesses. Banks aren’t lending. They got stuck holding a bag eight years ago. They’re hesitant to start lending again into this space.
Hesitant banks also are a factor.
“Banks aren’t lending,” Watters said. “They got stuck holding a bag eight years ago. They’re hesitant to start lending again into this space.”
A third factor holding back an explosion in home construction is the availability of lots.
Watters said that when the recession hit, developers in the middle of getting necessary government approvals put their plans on hold. Stronger firms survived the downturn and could kick those plans back into gear. The weak ones folded; their plans scuttled completely.
“A lot of builders are struggling to find lots to put homes on the ground. In a healthy real estate market, you should have 18 months of lots in front of you,” Watters said. But the current high demand for new homes came on so suddenly, he said, that developers and builders that don’t have a cushion of lots at various stages in the municipal approval pipeline now are clamoring for ground, hoping municipalities can fast-track their proposals.
Because of the platting process, from the time you walk in and meet the mayor with an idea for a subdivision to the time you can record it and sell that first lot, it takes at least a year and a half. And there aren’t that many subdivisions sitting at that platting stage. There’s not going to be enough lots on the ground to even keep up.
Poetker has seen that, too. “Because of the platting process, from the time you walk in and meet the mayor with an idea for a subdivision to the time you can record it and sell that first lot, it takes at least a year and a half. And there aren’t that many subdivisions sitting at that platting stage.”
Poetker said that if the demand for new homes keeps trending upward, builders will build more homes more quickly. “There’s not going to be enough lots on the ground to even keep up,” he said.
The fast lane
Fast-tracking is common in Mascoutah, a town that federal data indicates grew more than 6 percent since the 2010 census. But city manager Cody Hawkins said fast-tracking is only so fast.
“You need to have a development plan that’s approved by the city. We need to figure out what has to be done with utilities. You have to go through the planning commission,” Hawkins said.
He acknowledges it takes a while to get from “first thought” to breaking ground, but it’s out of a concern for public safety.
“The developers are doing their part as a business,” he said. “From the government side, we’re doing the permits and making sure the life essentials —power, water, sewer— are covered. Mascoutah is growing and it’s a good thing. We still have room to grow. We’re looking forward to that.”
Watters said he was still “highly confident and highly positive” about the way things are going in the metro-east, even though the issues facing housing construction here mean things are going slowly.
After all, “a slower recovery is more sustainable,” he said.
But there’s as much anxiety as there is confidence in the business. Remember the pent up demand?
Watters said restless residents may look at other solutions including remodeling older homes or simply moving to other housing markets when they want somewhere to live but don’t want to wait for it.