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IN DEPTH: Local area deals with effects of housing shortage

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For Mauston residents Amanda and Jake Bollig, the decision to buy a home was easy. The tough part, Amanda said, was deciding on the price point.

“We are a young couple, so it was hard trying to decide if we should buy a small starter home and then move after a few years when we decide to start a family,” she said. “Or, the other thought was, do we spend more to buy a bigger house we can grow into? It became a question of, do we want kids now, or do we want to wait?”

The couple decided to start small for several reasons: The Bolligs quickly learned the nest egg they saved for a down payment wasn’t going to be enough. Instead of the 10 percent they planned for, they soon realized they would need to put down 20 percent.

Kirkland Kettleson, Realtor/Broker with Century 21 in Wisconsin Dells, said 2017 was a sellers’ market and 2018 should be the same.

“If you were selling a home (in 2017), you were able to get top dollar and have your home sell in a very short time,” Kettleson said. “Because inventory was low, there were a lot of multiple-offer situations and bidding wars. My selling clients were very happy.”

Kettleson said homes in the $150,000 to $250,000 range are a very strong price point in the Dells. “It used to be that new homebuyers spent an average of $150,000 on their first homes,” Kettleson said. “Now a lot are spending upwards of $250,000 because it’s been hard to get what they want. There’s just little inventory at that lower price point.”

On the flip side, Kettleson said, buyers have really been struggling. “It’s been challenging and frustrating for them,” Kettleson said. “Ten years ago with the recession, there were foreclosures on every street. People couldn’t sell their homes. But it was great for investors and people who had cash in hand who could pick up houses to rent or properties to flip. It’s an interesting business.”

Working through shortage

Ed White, Sauk County Development Corporation executive director, said most communities are dealing with a shortage of rental and workforce housing.

“In talking with businesses, the number-one complaint is employees can’t find places to rent or houses they can afford,” White said. “Because of this, many employees don’t live in the community they work. They have to commute.” This can be bad news when a qualified candidate can’t accept the position because they have nowhere to live.

In the Reedsburg area, developers are in the process of building a 72-unit apartment building in Viking Estates on vacant land north of Cottontail Lane and east of Viking Drive.

In addition, a 33-unit apartment complex to be developed through the Wisconsin Housing Economic Development Authority was recently approved. The three-story complex will extend between Vine and Walnut streets and offer one-, two- and three-bedroom units.

“Clearly, the need has generated those two projects,” said Reedsburg City Administrator Steven Compton. “Single-family housing has been pretty stale since 2009-2010. There’s not a lot of housing or subdivisions going on. Reedsburg does have a housing need. We are the second-largest community in the county, behind Baraboo.”

Compton said in talking with local manufacturers and industrial markets, more employees are living outside the Reedsburg area and commuting because the price of available homes is outside their range or there is a shortage of rental units.

Tywana German, executive director of the Sauk Prairie Chamber of Commerce, recently told the Prairie du Sac Village Board she had to assist a local business in finding housing for a new employee relocating to the Sauk Prairie area. With little to no options for the person to buy a home at their price point, German took to cold-calling home sellers, and begging them to allow the person to rent until a suitable house could be found.

A recent workforce study conducted by the Sauk County Development Corporation showed county residents, stakeholders and employers feel a lack of workforce housing in the county has created a negative perception of the region.

A 2017 market analysis of the Sauk Prairie area revealed home values in the Sauk Prairie area significantly higher than the state and county averages due to the proximity to the Madison market. This trend is not expected to change in the near future. Median rent in Prairie du Sac, about $1,000, is much higher than the rest of the state and county as well as neighboring Sauk City.

Much like its neighboring communities, houses for sale in the Sauk Prairie area are bought quickly. Prairie du Sac Village Administrator Alan Wildman said new development is happening much slower than it has in the past, mainly due to the high cost of materials, lack of workforce and high cost of land.

The future

“The question now is the cost,” Wildman said. “Looking into the future, our concern is availability of land. There is land available, but the prices are a challenge for developers. It becomes a question of at what point can residents in our area still afford the price of a new home?”

In Sauk City, the problem is also availability of land.

“Development has been fairly slow because we are landlocked,” Sauk City Village Board President James Anderson said.

Mauston also suffers from slow housing development.

“Over the past 10 years new construction has been pretty sparse,” said Nathan Thiel, Mauston’s city administrator. “Mauston is averaging one to three new homes per year, and sometimes that number has been zero. The housing boom that some communities have seen, we just have not had that.”

Thiel, like other village officials, understands the demand for workforce-level housing.

“There has been quite a demand,” he said. “I know of at least one individual who put their house on the market and within a week had sold their home and for much more than they expected. A few realtors I’ve talked with have also talked about the demand. It seems we have homes valued for $100,000 or less, or homes priced at $200,000 or more. Right between those two price points, it’s pretty empty.”

Thiel said he’s also seeing an imbalance between the availability of rental stock versus homes for purchase.

Thiel said because Mauston is more rural then some communities, it has been hard to attract millennials who are more interested in having nearby access to entertainment, shopping, restaurants and other amenities.

“There’s this focus on being more metropolitan,” Thiel said. “That’s tough for a rural market. But what Mauston has done is spent resources on creating a sense of space and place; improving amenities that would attract people to move here. And we have seen some impact.” The creation of a splash pad for families, further developing its Riverside Park and Riverwalk and a dog park have all been attractive to new and current residents, Thiel said.

Mauston officials have reached out to potential developers, attending conferences and talking with people about development opportunities within the city.

“We have found it has been more of a ‘don’t call us, we’ll call you’ situation,” Thiel said. “But we figure if we make ourselves available and put out the welcome mat, they are more apt to call. That’s been our main focus.”

Thiel said the city has been in preliminary talks with developers about several vacant properties for building apartments, although nothing is “in action.”

“The biggest one would be right next to the library, and there are lots across from the dog park,” he said.

Possible solutions

There is an indication the mortgage market has largely stabilized and recovered since the housing crisis a decade ago. The third quarter of 2015 saw the housing market at its highest since the end of 2007.

According to the Spring, 2016 edition of Evidence Matters by the Office of Policy Development and Research, U.S. Department of Housing and Urban Development, tightening credit and the rising percentage of seniors with housing debt point to ongoing challenges. The Joint Center for Housing Studies of Harvard University shows 40 percent of owners aged 65 and older had mortgages in 2014. Approximately 46 percent of owners in this age group had mortgages in 2013. Older homeowners carrying significant mortgage debt may have to postpone retirement or make difficult decisions regarding spending on food, medical care, and other expenses. They also are less able to draw on equity to supplement their income as they age.

Wisconsin Dells Mayor Brian Landers said it has been his mission to establish the Dells not only as a year-round vacation destination, but also as an ideal community to raise a family or retire in. While Landers said the housing outlook appeared “bleak,” it has come around, somewhat.

“Within the last year we have seen a significant improvement in our housing,” Landers said. “One subdivision we had only had three houses in it for a number of years. Now there’s an additional four or five new homes there. And within the last year, we’ve gotten new building permits for it.”

Landers said this surge in new home permits and subsidized housing development is due in part to the Dells being recognized not only as a summer destination, but a year-round place to come as well. “I think employers are compensating their employees more,” Landers said. “Many of the people who live here work in hospitality which is typically at minimum wage. Now we are seeing that hourly rate of pay increasing and some even have benefits.”

Landers said with more funding coming from the Community Development Authority, individuals and developers are receiving assistance in the form of grants and lower interest rates. The Dells has also put forth a strong effort to crack down on nuisance properties stemming from absentee landlords. There has been much in the way of neighborhood improvements, older homes have undergone renovations and a housing development for people 55 and older will provide an additional 400 units.

Despite those steps, Landers admitted workforce housing continues to be a challenge.

“There’s just not enough to go around,” Landers said.

Landers attributes that to his belief outside developers don’t know enough about the area or its economy to take a closer look. “They know we have a strong tourism industry,” Landers said. “But they don’t really understand what our year-round growth looks like so they don’t give us a strong look.”

Landers said as far as attracting more single-family homes, building a new school — which has the potential to draw in new development and homebuyers — remains a struggle.

“People who work in the Dells have good jobs but live in other communities,” Landers said. “Those communities offer better school districts.”

Kalahari owners Todd and Shari Nelson have donated 80 acres of land for a new high school. Landers said the next hurdle is getting a referendum slated this year to pass.

“Unfortunately many people who live here don’t have any ties to the school district,” Landers said. “Because of that, many have developed a very narrow-minded view and are more concerned about their property taxes going up slightly rather than look at what having a new school could do for us.”

There are still those willing to sift through the remaining stock of homes in the hopes of finding that diamond in the rough. However, Kettleson, said, his clients today are much more educated on the home-buying process then those of the past.

“A lot of people learned from how the market was last year,” Kettleson said. “Buyers got burned. I think this year buyers are more ready to make offers, be preapproved and not wanting to lowball sellers.”

More than a decade ago, Kettleson said perspective homebuyers would walk into his office with a general idea of that they wanted in a home.

“Then, I would show them some houses and they would buy one,” Kettleson said. “Everything is mostly on the Internet today so now people are emailing or texting me with a list of houses they want to see. They know what the homes are listed for, what nearby homes are worth … My role as a realtor has changed. I’m not the one finding the properties as much. Now I’m just holding their hand through the home buying process and educating them along the way.”

Kettleson said another change he’s seen is more people willing to take a chance on a fixer-upper.

“I don’t know if it’s because of what people see on all the home remodeling shows but people aren’t afraid to buy houses that need work,” Kettleson said. “They can recognize a solid home that needs some work in a good neighborhood. People don’t necessarily need turnkey homes anymore.”

The Bolligs are a perfect example: they chose to buy a smaller home that needed some repair at $42,000.

“It doesn’t hurt to get a smaller starter home,” Amanda Bollig said. “In the long run, you are better off. Instead of having a huge house and mortgage hanging over your head to go with it, buy a smaller house and fix it up. It will take a lot less time to pay it off. That is, if you can find one.”

Follow Autumn Luedke on Twitter @Apwriter1 or contact at (608) 393-5777

Reporter, Sauk Prairie Eagle