Chippewa Valley Times

Community Development Director Aaron White recently informed the Eau Claire Housing Opportunities Commission that single-family home construction in Eau Claire increased in 2024 compared to the previous year, yet remained below the levels of the preceding four years.

"Obviously, COVID has changed a lot and impacted what's being built, but that's a representation of actual permits issued for housing over the last almost 10 years," White told the Housing Opportunities Commission, according to a video recording of its February 12 meeting.

According to White, permits for single-family home construction reached their peak in 2019 with 104 units for new construction. This figure did not include home rehabilitation projects. He noted a significant shift towards twin homes in several areas as opposed to single-family homes. The housing trends data will be included in an annual report required by the state, which is expected to be completed during this quarter.

White further explained that similar unit prices spiked in 2021 and have been climbing steadily since then. He attributed these increases to construction cost rises due to COVID-19, including material costs, labor cost increases, and a substantial shift in housing types driving market demand. The demand for custom-built homes with personalized floor plans contributes to rising average prices as builders focus on such projects. This trend aligns with their business model but results in higher costs for single-unit homes. He emphasized that this issue is not unique to Eau Claire.

White also highlighted that land costs have risen significantly. Home builders reported that lots previously available for $5,000 to $10,000 in 2018 and 2019 now sell for $45,000 to $60,000 per lot—a direct cost passed on to home buyers. Zoning changes may help address this issue; the city is reducing minimum lot sizes from 6,000 square feet to 3,000 square feet. While land costs per square foot remain unchanged, smaller lots should theoretically sell for half the price. However, finding suitable land for expansion has become more challenging.

He suggested it might be time for smaller builders to learn how to hedge commodity costs like larger builders do. Materials costs are influenced by publicly traded commodities such as lumber. Large builders can manage materials cost increases by buying and trading on future markets based on their planned building space.