The history of housing in the United States is one of perpetual flux, as the percentages of renters versus homeowners wax and wane and the types of preferred housing become more and less desirable.
Whereas the Chippewa Valley has not seen all housing options, such as enormous public housing complexes and rowhouses, it’s not always the same old, same old, as former preferred forms of housing ebb and others rise.
What’s more and less preferred in the Valley is more than just a matter of what’s popular. Debt is in play. Student loan debt precludes homeownership for not just millennials, but other age cohorts. According to the Federal Reserve Bank of New York Consumer Credit Panel, the number of student loan borrowers between 2004 and 2016 has more or less doubled across age groups, whether under 30 or older.
It’s not just the number of Americans, young and old, carrying student loan debt, but also the size of the debt.
The total student loan debt was $1.521 trillion in the first quarter of 2018, which seems relatively small when contrasted with the $8.8 trillion in mortgage debt, but not all Americans carry student loan debt, so the individual debt weighs heavily. A total of 44 million Americans hold student debt. The OneWisconsin Institute has found that graduates of Wisconsin universities take 19.7 years to pay off a bachelor’s degree and 23 years to pay off a graduate degree.
The amount of individual debt is also on the rise as those indebted in their 30s have seen their collective student loan debt more than triple between 2004 and 2015. Those in their 40s have an average student loan debt of $33,765, typically long past the moment when they flipped their graduation cap tassel from right to left. The Federal Reserve Board of Washington, D.C., found that an increase in student debt has led to a decrease in home ownership,
Compounding student loan debt is credit card debt, which averages, according to Experian, $6,375.
Further confounding home ownership is the 2007 subprime mortgage crisis and subsequent recession. Those who had a toehold before the housing crisis lost it. Many lost even more, such as array of middle class-trappings. The mortgage crisis and consequent foreclosures moved many Americans from homeownership and the monthly accrual of wealth via accumulating principal to renting.
The housing bubble, with the over-evaluation of some markets, followed by the bubble bursting and homeowners owning homes worth less than their loans, might also have some Americans buy-shy.
A third factor influencing housing trends is the fluidity of the workforce.
Working for 40 years in the same company and retiring with a gold watch and pension is an ever-rarer career.
The Bureau of Labor Statistics estimates that the average American holds 10 jobs by the age of 40 and predicts this number will rise for Millennials.
If you’re living a windblown life, it makes less sense, both financially and in terms of effort, to sink roots into a community through a home purchase.
According to the Pew Research Center, home ownership for young adults is sharply down with all of the preceding factors likely in play.
Menomonie new housing
Randy Knaack, mayor of Menomonie, has seen nationwide trends at play in his town.
Menomonie’s population is steadily rising, from 14,937 in 2000 to 16,363 today, with the growth fueled by growth in local business and the university, but it’s the number of multi-unit residences that is also rising.
Knaack said, “New residents are mostly seeking rental units in multi-use and apartments. In the home market, it’s duplexes and twin homes.”
Simultaneously, the number of residences so popular in the prior decades are waning.
“There’s a decrease in the number of new single-family homes.”
As some individuals and families struggle to save for a mortgage, there are also development challenges.
“Private sector developers and the cost of the housing are the greatest challenges in meeting housing needs. The challenge would be the expense to develop property, thus making it available for development.”
So, Menomonie is rising to the challenge.
“We are working on a possible tiny home community and a home buyer loan program.”
Home Sweet Menomonie
The home buyer loan program is called Home Sweet Menomonie. Whereas it’s a program to address a critical shortage of workers by attracting and keeping talent in Menomonie, it’ll also increase home ownership by offering no-interest, partially forgivable loans for down payments to purchase homes in the city.
Home Sweet Menomonie is a partnership between the city of Menomonie, the Community Foundation of Dunn County and the Greater Menomonie Development Corp. Local businesses and industries, medical service providers, and education institutions need workers and workers are more likely to come and stay when they have the financial means to sink roots into a community. You can borrow up to $10,000 for a down payment, with a flexible repayment schedule and a last year of payment possibly forgiven. The repayment schedule is between five and 10 years, with documented improvements to the properties being deducted from the final year of paying.
Chippewa Falls new housing
Upriver in Chippewa Falls, many of the same trends can be seen. For example, apartments, twin homes and duplexes can’t be built fast enough.
Chippewa Falls’ Mayor Gregory S. Hoffman, said, “Four 12-unit apartment buildings went up in Lake Wissota. They laid foundations for four more. Willow Creek has had a tremendous amount of twin homes with approval for another 80. Duplexes are going up in my neighborhood with permits for four to six more and another eight to ten more beyond that.”
As fast as they’re being built, would-be tenants are clamoring for them.
“The builder was putting up the duplexes’ walls in my neighborhood and seven people stopped and wanted on the list to rent them. Another guy putting up apartments didn’t have driveways laid or concrete poured, but he also had people lining up to rent them. He said he’d never had such a thing happen to him before.”
Even single-family homes are being built.
“Surprisingly, this year, we’ve had a number of single families going up, twenty-some, but we’ve had years where we’ve had hardly any single families.”
The rise in new single-family homes seems part of Chippewa Falls’ overall trend, which has seen a population increase in 2000 of 12,925 to 14,084 in 2016.
“We’ve had the most growth in housing units over the last four years than any other time in Chippewa Falls’ history. All these kinds of things, such as micro-breweries and employment opportunities, have attracted people. They want to come into the city and live here. We added 260 housing units last year, but the majority are apartments, twin homes and duplexes. There are a lot of baby boomers who want to move out of their big houses to apartments and they really like the twin homes and duplexes because they’re all on one level.”
There’s one kind of housing that is in chronic short supply.
“Affordable housing is an issue. Every community around here has that challenge. It can cost $180,00 to $200,000 for a modest ranch, so what constitutes affordable housing is also a question.”
However, the overall need for more housing can be framed as a positive.
“Being in a situation where we need more housing is a good thing. It means we have a good job market, people who want to live in the Valley. The negative is we have an ongoing, pressing need, even though we’re building more and more units.”
And when longstanding homes go on the market, they don’t last long.
“Most of the houses are selling extremely fast. Most are the market for 10 days or less. There’s a lot of need for all the types of residences.”
Eau Claire new housing
Eau Claire has seen the largest population growth, both percentage and number-wise, from 60,704 in 2000 to 69,835 in 2017.
Scott Allen, community development director for the city of Eau Claire, said, “A high quality of life is driving the influx; regional hub for medical and education services; natural amenities, including trails and parks; continuous downtown redevelopment and reinvestment.”
More people means more housing with twin homes and duplexes again leading new development.
Allen said, “We have seen a steady addition of twin homes/duplexes over the past three to four years. Duplexes are part of the ‘missing middle’ housing type, which seeks to provide more housing inventory for types ‘in the middle’ of the traditional scale of detached single-family on one end and high-density multi-family apartments on the other.”
However, single-family homes and high density multi-family apartments are also being built.
“It’s a genuine mix with most housing types, but again are seeing duplex development trend upward.”
What’s being built depends largely upon the neighborhood.
“On the south side of Eau Claire, we’re seeing more of the traditional large lot detached single-family housing develop primarily outside city limits in the town of Washington. That is balanced by more and more residential growth in the city limits on the city’s north side.”
It’s not just housing types that vary, as lot sizes proportionately shrink and grow according to the type of housing.
“With the increase in duplex development, we’re seeing smaller lot sizes than traditionally developed. Much of it can also be traced back to simple economics of looking to address higher land and development costs.”
Higher land development costs make affordability ever more salient.
“Affordability is reaching a crescendo here in the Chippewa Valley, with numerous groups and stakeholders working together to develop strategies for making housing costs more attainable for all.”
To control costs, developers repurpose and renovate.
“With rising land and construction costs, we’re starting to see more reuse and redevelopment of existing housing, especially in owner-occupied multi-family.”
Such redevelopment can require nimble rezoning.
“The reuse of older buildings and infill lots stretches the conformability with standard zoning practices. We also continue to work with existing neighborhoods as infill and redevelopment occurs, working to ensure compatibility.”
National trends/local impacts
Growing student loan debt, the reverberations of the 2007 subprime mortgage crisis, and more mobile employment patterns affect housing types in the Valley, producing a rise in multi-unit residences. Retiring baby boomers seeking first- floor living in smaller abodes on smaller lots is also driving the desire for more multi-units. What goes around has come around again, for single family homes in urban settings are a fairly recent phenomenon and the practicality and affordability of living in proximity, with less square footage on smaller lots, would be familiar to many American urban families in the 1840s and 1940s. Twin homes, duplexes, and smaller single families homes seems a trend that’s likely to continue.
Cody Filipczak, president of C&M Homebuilders and Real Estate, said, “Our twin homes and small package houses have become very popular in the last few years. With rising development and building costs, we can still price our twin homes starting at $160,000 and the package single families starting at $220,000. A lot of the baby boomer and millennial generations are picking smaller quality housing over the larger square foot housing. This is a trend that I see continuing for a long time.”
Whatever home types are most popular, the one constant seems to be a steady rise in population, as more people are attracted to the Valley’s opportunities and assets. As Mayor Hoffman observed, the consequent need for new housing in whatever form isn’t a bad problem to have.