Kathy and Mike Dineen moved into their custom-built home in a quiet Settlers Creek subdivision earlier this year, but now are surrounded by dirt-diggers, wood stacks and cement-toting trucks.
And they love it.
“It will be nice to have a neighborhood,” said Kathy Dineen, glancing at residential foundations rising across the street and on both sides of her Sarpy County house. “Instead of weeds, I'll see yards.”
Renewed construction activity at Settlers Creek — which opened near 72nd Street and Cornhusker Road in 2006 to a building spurt followed by a dry spell — helps illustrate a turnaround in a six-year decline in new single-family home demand.
Builders and bankers say business has been brisk this summer, and they believe the home construction market in the Omaha and Lincoln metropolitan areas has hit bottom and is headed for growth.
“More homes are under construction and more importantly, more people are buying new homes than a year ago,” said regional housing analyst Dan Whitney. “There is palpable optimism in the marketplace.”
According to a new report by Whitney's Olathe, Kan.-based MarketGraphics Research Group, which tracks local trends:
>> About 12 percent more homes are under construction this August than last August in an eight-county area that includes most of the Omaha-Council Bluffs metropolitan area and Lancaster County. That translates into about 1,600 homes now being built, or 176 more than at the same time last year.
>> In the 12-month period ending in July, about one-third more new homes, or about 700, were started in that same geographic area than during the previous year.
>> Douglas and Sarpy Counties today have 15 percent fewer new unoccupied houses today compared with last August, indicating that people are buying and eating up the oversupply.
While still far from the peak years of homebuilding, Whitney said his research points to the start of a recovery for an industry that suffered a 65 percent drop from 2005 to 2011 in single-family building permits issued in Douglas, Sarpy and Pottawattamie Counties. Tighter loan requirements have not eased up, but builders and bankers say consumer confidence over the economy appears to have lifted and consumers are taking advantage of unprecedented interest rates.
“Most everyone I talk to seems busier year-to-date than last year, in just about every price range,” said Jerry Standerford, a homebuilder and president of the Metro Omaha Builders Association. He said MOBA's summer Parade of Homes drew “tremendous” numbers — a sign that people are wanting to build.
And that bodes well for the entire economy.
For every 100 new homes built, Whitney said, about 213 jobs are created, based on a formula by the National Association of Home Builders. The metro area's employee income rises by about $10 million, and income of local businesses, including home improvement stores, jumps by nearly $4 million.
John Bothof of Northwest Bank in Omaha is among area lenders who have felt an uptick in new construction. He said that with a boost from homebuilding, Northwest is on pace to set a record for mortgage loans this year.
“Never have interest rates been better,” he said. “It's a great time, for people who can afford to build.”
Even though interest rates have been low for some time and the economy remains slow, Bothof said, those building houses feel they've weathered the worst of the storm and are ready to make the move up. First-time homeowners, meanwhile, aren't as nervous about plummeting home values and are buying existing houses that free up the custom home shopper, he said.
“It's a ripple effect,” Bothof said.
Perry Haralson, vice president at Cornhusker Bank in Lincoln, said his department has also seen a shift toward more residential construction, primarily pre-sold custom homes rather than builders' speculative housing that was rampant before the market crashed.
In the recent past, Haralson said, 80 percent of home loan activity was related to refinancing and just 20 percent was for new home purchases. Now, Haralson said, the ratio is about 60-40.
He views recent increased demand for residential construction with “cautious optimism.”
“I do think we're at the bottom and now it's more on the growth side,” Haralson said.
The ups and downs of new construction have played out at Settlers Creek. The subdivision was started in 2006 when the market began to sour, said developer Mike Rogers.
Only about 35 houses are built on the 229-lot subdivision that also contains room for a school and commercial development.
“It turned out to be the absolute worst timing,” Rogers said.
But today, he said, the area “is starting to take fire,” especially as available single-family lots at Shadow Lake subdivision have dwindled.
Settlers Creek currently has about 10 new houses going up and, Rogers said, more than 20 others are expected to get started later this year.
“The last six years were very, very difficult for us — the worst ever,” said Rogers, whose family business predominantly produces buildable lots.
In 2003, the 62-year-old Rogers Construction Inc. sold more than 250 lots. Last year, the firm sold 25 and has met that number already this year.
“Things are picking up again,” he said, “especially for the $275,000 range and above,” which is the demographic for Settlers Creek.
Rogers agrees with Whitney, who predicts a shortage of lots if developers, with the help of lending institutions, don't start plotting new subdivisions. Whitney said he considers Sarpy County already to have an undersupply.
An inadequate selection of lots deters shoppers, Whitney said. “It's like a grocery store not having enough food on the shelves. The customer is not going to go and look.”
At the still largely empty Settlers Creek, retired nurse Kathy Dineen was attracted by the growing City of Papillion and the new retail and restaurant outlets to come along 72nd Street.
She and husband Mike, retired Millard fire chief, moved into their new home in January. Daughter Janet Podliska, her husband and their two kids also live there until construction of their new home is finished at Shadow Lake. She's a special education paraprofessional with the Papillion-La Vista School District and husband Jeremy is a marketing manager at Oriental Trading Co.
Podliska said she is glad for the building activity around her parents' place, as it means they'll have more of a community. “There is so much going on and it's all happening really fast.”
Her children — Aleia, 8, and Simon, 9 — are pretty happy, too. Potential playmates are moving in next door to their grandparents' home. In the meantime, the little Podliskas are making the best of the neighborhood transition.
“We love it here,” said Aleia. “We made a dirt slide on a dirt pile over there.”
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