As Rochester housing starts to grow, it moves southwest

As single-family home construction picks up in Rochester, it's also changing direction.

Rochester's northwest sector fired the home construction boom in building throughout the 2000s, most years accounting for more new homes than the other three sectors put together.

In 2011, the same number of single-family home permits were issued in southwest as in northwest — 55.

Through the first four months of 2012, southwest surged into the lead, with more permits issued for there — 38 — than in northwest — 30.

One builder said that's because there's a large surplus of available lots in southwest, while northwest Rochester has fewer lots open to every builder.

"That's where the lots are — in southwest," said Paul Meier, co-owner of Corban Homes.

That's a big change from the early 2000s. For instance, in 2002, the northwest quadrant accounted for 543 of the 945 permits filed in the city.

Southwest was usually a distant second in home building, with much smaller numbers built in southeast and northeast.

Now, other quadrants are catching up. In the coming months, Meier predicted, many homes will be built in the northeast quadrant, as the Stonehenge development grows.

It's become harder to put new home lots into the economy because the fees and development costs have increased, Meier said, so builders are using up lots that are already out there.

Home building picking up

Whatever the case may be, single-family home building overall has seen a revival this year.

Through the first four months, 87 permits have been issued, up from 54 at this time in 2011 and the most since 2008, when 96 were issued. However, it remains about half the number issued for the first four months of several years during the mid-2000s building boom.

Meier said that more people are looking to build homes, partly as an improved home sales market has made it easier for them to sell their existing homes.

Home sales have increased strongly in the past year, and there are fewer foreclosed homes on the market, Meier said. Through April, home sales are up 16.3 percent in Rochester, as 442 homes have been sold, according to the Southeast Minnesota Association of Realtors. Pending listings in April totaled 251, up 37 percent from a year ago.

Homes are selling faster, as the average days on market has dropped 15 percent to 137, SEMAR says.

"In the past, people were afraid to sell their house," Meier said, because of the housing slump of recent years.

Real estate experts say low mortgage interest rates have encouraged buyers, and foreclosures have dropped, meaning there's no longer a glut of homes on the market, as supply comes into line with demand.