Anyone’s guess

Home builders unclear on 2007 outlook

By Janine Anderson

MasterCraft Builders’ new collection of home designs features amenities, such as sunrooms, that the company hopes will draw attention in 2007. Photo courtesy of Mastercraft Builders Inc.

Wisconsin’s residential construction companies are taking a cautiously optimistic approach to 2007.

Last year, the industry saw some of the biggest downturns in new home construction in recent years, but there was some good news nationally toward the end of 2006. According to the U.S. Department of Commerce, there was a slight increase in November new home sales, though it was below the same point from 2005.

Locally, builders are making changes to keep their homes selling as well as possible for 2007, and they’re hoping to see things hold steady throughout the year.

Michael Lawrence, general manager of MasterCraft Builders Inc. in Kenosha, said the number of existing homes on the market seems to be pushing new home sales down.

MasterCraft builds homes and condominiums, mainly in southeastern Wisconsin. Its condos typically sell for $140,000 to $190,000, and its homes go for $160,000 to $275,000.

Lawrence said he sees a market for new homes in a more affordable range, though land costs are driving the prices up.

“The one thing I see the most is the first-time home buyer left by the wayside,” he said. “We’re trying to attract that buyer. We want to try to get more products in the $160,000 to $225,000.”

Lawrence said people looking to move into a new home in that price range are increasingly interested in homes built on spec, at least partly because they don’t want to sell their existing home and move into rental housing until the new place is ready.

He said he sees a shift in the style of home people are looking for, too. Ranches are gaining popularity, he said, especially with baby boomers downsizing their homes.

Timothy O’Brien, division president of William Ryan Homes, said he sees struggles ahead.

“We believe there’s going to be some challenge with respect to the buyers coming through the doors,” said O’Brien, who works out of the company’s Brookfield office.

The company, though, is prepared, and O’Brien said he hopes to keep sales steady and possibly on an upswing this year. The home builder reduced its operating costs and cut the prices of some homes by scaling back on standard options.

Instead of can lights and kitchen islands, homes will have decorative fluorescent fixtures and standard counters. The higher-end features will still be available at a premium price.

William Ryan Homes’ properties sell for an average of $200,000 to $300,000 for a house and lot package.

The greatest design demand O’Brien sees is in flexible space. Buyers are looking for a house that can change as their families change. Some are eliminating the formal dining room in favor of a home office, while others want three-bedroom homes that can be converted to six-bedroom homes later.

Terry Temple, owner of Temple Construction Inc. in Madison, focuses on the high end of the market, with homes selling in the $900,000-plus range. His company is hoping 2007 brings higher-end custom homes, condominiums and land-development projects.

“It’s not going to be robust,” he said. “But the biggest plus is that interest rates are going down. We’re going ahead cautiously. It’s a tough year to make predictions on.”

The Madison market had a strong year in 2006, but Temple said he is ready for 2007 to slow down, in part because of overbuilding throughout the industry.

“We’re kind of plugging along and being cautious,” he said. “We’re watching on a monthly basis where we used to watch on a quarterly basis.”