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Deadshot Bay is the site of several housing construction projects.
Photo by - Nathan Bowe
Deadshot Bay is the site of several housing construction projects. Photo by - Nathan Bowe

Housing starts to pick up

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business Detroit Lakes, 56501
Detroit Lakes Minnesota 511 Washington Avenue 56501

Housing construction is picking up this year, after several years of being in the doldrums.

"I do see it getting better, it's coming along fairly good," said Allen Keller, owner of GCI Builders of St. Cloud.

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He owns the Golden Bay Shores development on Deadshot Bay.

"I think people are excited," he said. "People are actually spending money and buying things."

He started building eight condominiums this year, and has sold more this year than the past three years combined.

"I think people are finally realizing the economy has turned around and they're starting to spend money again," he said.

Lots of people are kicking the tires, but are reluctant to commit, either because they haven't yet sold their lake home or because they are worried about the upcoming election.

"A few people are waiting to see how the election goes -- people can be a little bit paranoid," he said.

Over at the Golden Bay Shores development, Kelly Winter was one of the workers putting trestles up on a new condominium.

He said the housing market seems to have suddenly kicked into gear.

"We've built five in about the last three weeks," he said. That's about how many were built in the past year or so, he added.

Things do seem to be picking up in the local housing market, said Detroit Lakes Community Development Director Larry Remmen.

"We feel very confident with what we've seen in the last year and the kind of requests for information we're getting that the housing sector looks good for now," he said.

Last year, just 20 new homes were built in Detroit Lakes -- down from the 30 homes built in 2010.

That's about half the level of new construction that Detroit Lakes saw in the housing hey-day from 2003 through 2008, when the mortgage crisis severely depressed the housing market across the country.

The fallout from the building boom left the city with a surplus of buildable lots -- an estimated 250 to 280 lots -- ready to go with sewer, water and streets in developments all around the edges of the city.

This year, the city is on pace to see perhaps 30 new homes built, unless activity really picks up in the next few months, Remmen said.

"We're very pleased with the number of housing starts in 2012 and we feel pretty positive about next year, that it will pick up even more," he said.

That would be good news for developers and city taxpayers, since the city floated bonds to pay for all that new infrastructure.

Deferred special assessments are now coming due on developers, who need to sell homes and fill up those developments to make the payments.

"The city has to pay the bonds, so it's difficult to further delay payments, because the city is not getting even interest on payments," Remmen said.

The city doesn't want throw developers under the bus, so it will allow interest-only payments on a year-to-year basis as the market gets back to normal.

"The city is looking at programs to encourage more housing starts," Remmen added.

Becker County doesn't issue building permits, since it does not enforce a building code, but it does issue site permits for new construction.

The county has seen a steady decline in the number of site permits for new houses. It issued 210 permits in 2006, 196 permits in 2007, 130 permits in 2008, and 91 permits last year.

It has issued 85 site permits for houses so far this year.

The combined value of those houses was $28.4 million in 2006 and $16 million last year. The value this year so far is about $13 million.

Judging by the numbers, more people chose to add on to their existing home during those years.

The number of additions rose steadily from 171 (with a combined value of $4 million) in 2006 to 297 additions (with a value of $5.4 million) in 2010.

So far this year there have been 49 permits for additions with a total value of $2.3 million.

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