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City building permit values decline in 2008

According to data supplied by the City of Detroit Lakes, building permit values are down overall, though residential construction is comparable to 2007 numbers. (Graphic illustration by Luanna Lake/Tribune)

Welcome to the recession.

The city of Detroit Lakes reports that building permits dropped dramatically from 2007 to 2008 for both housing and commercial projects.

In 2007, building permits for single residential buildings were valued at an all-time high of $9.6 million. In 2008, that number decreased to $5.5 million.

The biggest difference can be seen in the new commercial building numbers.

In 2007, new commercial value came in at $13.6 million. In 2008, that dropped substantially to $725,600 -- the lowest amount in the last 10 years.

Lucky Dog Training and Boarding, Dakota Kid and a Bristlin storage building were three of the projects included in that value for 2007.

Commercial repair and additions has also taken a major hit -- going from $20 million in 2007 to just $3.8 million in 2008. That's the lowest since 1998, which saw $3.1 million.

But to keep things in perspective, City Building Inspector Cal Mayfield said the numbers in 2007 were exceptionally high because of three substantial addition projects going on that year -- the Becker County Courthouse, Emmanuel Community and St. Mary's Innovis Health.

Other permit areas dropped as well, except, oddly enough, storage sheds, which doubled from 2007.

And while the value of residential permits decreased, the number of homes didn't. That number was actually the same or higher than in the past, but Mayfield said people are building less expensive houses.

"It was the second highest year we've had for house permits, but in the past the houses have been from $250,000 to $350,000 and now they are $120,000 to $180,000," he said.

Over the last 10 years, single residential permits have fluctuated, but stayed within the range of $3 million in 2001 to $9.5 million in 2007.

In 1998, 2000, 2002 and 2003 that category hovered around the $4 million to $5 million mark.

In 2004, 2005 and 2007 the category was in the $8 million to $9 million range.

New commercial permit values ranged from a mere $1.7 million in 1998 to $13.6 million in 2007.

Except for a surge of $8 million in 1999 and $12.5 million in 2000, new commercial has been around $3 million to $5 million the remainder of the years.

Unfortunately, January 2009 doesn't seem to be looking up either.

"It's even getting worse," Mayfield said. "I'm having contractors coming in here, asking if people are looking for contractors or if there are jobs to bid on."

Mortgage rates could play a role also, he said. So-called "jumbo loans" for more expensive homes carry substantially higher rates.

"That's what I'm wondering, if the uncertainty or the difficulty of getting loans (contributes) because, like I said, the dollar amount dropped so much."