Farmington’s housing market is turning aroundTo look at the latest numbers of new construction building permits, it would seem that Farmington’s housing market is still in a slump. The truth is it’s on its way back up, slowly but surely.
By: Michelle Leonard, The Farmington Independent
To look at the latest numbers of new construction building permits, it would seem that Farmington’s housing market is still in a slump. The truth is it’s on its way back up, slowly but surely.
When Farmington building official Ken Lewis calculated the latest single family home building permits, he came up with only 20 for the third quarter (July through September), and a total of only 51 since the beginning of the year.
Last year, the city of Farmington issued 144 building permits, according to assistant city planner Tony Wippler. However, a good chunk of those permits were included in the construction of a senior housing complex south of County Road 50 and west of Denmark Avenue, Wippler said. But there were 52 single family building permits issued in all of 2011.
Wippler sees 2012 rounding out with somewhere around 75 new housing permits, with most of those houses coming in to developments that have already been platted.
“We still have 380-some lots that are available to be built on, so the inventory is still out there,” Wippler said. “We have a substantial inventory on the books already.”
Minnesota Association of Realtors chief executive officer Chris Galler says it might be a while before Farmington really does start to experience the housing boom it did a decade ago. Right now, Galler said, the housing market for existing homes is picking up all over, and Farmington is no exception.
A resident of Farmington and a former Farmington City Council member, Galler has watched the community’s housing market explode, then fall back to its current status. In his days on council – he left in 1996 – Galler urged city officials to plan carefully for the growth that was coming. Now, he’s doing it again.
With all-time low interest rates available, Galler said, many homebuyers are looking to purchase existing homes. And many more are trying to refinance to capitalize on the lower rates.
“What you will see is there will be a whole bunch of people who have low interest rates, and as those rates start to increase to 6 or 7 percent, they’re going to hesitate on leaving and buying something else because the rates will have nearly doubled by then,” Galler said. “Their desire to move will be less, and new construction will have to wait.”
Area sales are in fact picking up again, Galler said, though the market is not nearly as robust as it was a decade ago. Projections indicate the housing market will continue on a slow, steady climb. Lakeville is already experiencing an increase in the number of houses coming off the market, but Lakeville has more accessibility to the freeway system, too. Farmington’s market will follow, like it did before, but it may take a little longer, Galler said.
“It will be a few more years yet before we see a real difference, but we will see that pattern again,” he said. “Nothing in housing happens fast, but markets all operate the same.”
Galler urges city and school district officials to start working together to address some of the needs that will be coming up as the community’s vacant homes start to fill up again. The trend he sees is that new families are moving to the suburbs again, and with that will come a new conversation about what types of amenities and services should be offered.
Once the existing housing inventory is nearing depletion, the city of Farmington can expect to see a pick-up in the new housing again.
The number of Farmington homes in foreclosure seems to be dropping slowly, as well. According to Wippler, the city of Farmington had 176 total sheriff’s sales in 2011. Right now, the city is at about 60 percent of that number with 105 on the books.
“Farmington’s number of foreclosures and sheriff’s sales seem to be trending down, but until we see the year-end numbers, we won’t know for sure,” Wippler said. “But we’re taking that as a good sign.”