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A HOUSING BOOM ON BOTH SIDES OF THE RIVER
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By Linda F. Jarrett
Homes Sweet Homes. People are on the move. In Missouri and in Illinois, new home starts are up and demographics are shifting.
There was a time when the area’s population was tucked between the Missouri and Mississippi Rivers, but that is changing. Some families are looking to the far west; others are giving a new look across the Mississippi to open lands and emerging neighborhoods of Illinois.
In its market review released last December, the Leadership Council of Southwestern Illinois found that residential development and existing home sales continued to rise in Southwestern Illinois. More than 2,500 residential building permits were issued in Madison and St. Clair counties in 2003, up from 2,394 in 2002, or a five percent increase. Edwardsville, Maryville, Shiloh and O’Fallon issued the most single-family housing permits among incorporated communities in Madison and St. Clair counties.
Single-family home sales also increased along with the average sale price of homes. According to the Belleville Area Association
of Realtors, the number of homes sold in
St. Clair, Monroe, Clinton and Randolph counties rose to 3,497, an increase of 45 percent since 2000. It also reported an average increase of 20 percent in the sale price of homes in those counties.
“Homebuilding continues to be a driving force in the region’s economy as more and more people are discovering Southwestern Illinois’ quality of life,” says Jim Pennekamp, council executive director. “The number of new home starts, existing home sales and the average sale price of homes continues to climb year after year indicating the housing market in Southwestern Illinois is the strongest it’s been in decades.
This trend was not so 20 years ago, when the Illinois and Missouri sides of the metro area were more distinct.
Pennekamp says, “If you were visiting
St. Louis or moving from someplace else, your focus would have been exclusively on the Missouri side of the River.
“The first trends were from St. Louis City to St. Louis County,” he says. “Now, we’re seeing the move from St. Louis County to Jefferson and St. Charles counties. The natural expansion of the metro area is focusing on the Illinois side of the river and an indication of that is the major home builders who are a part of this move.”
 Jerry Rombach, executive officer, the Home Builders Association of Greater Southwest Illinois. |
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Jerry Rombach, executive officer of the Home Builders Association of Greater Southwest Illinois says the Illinois communities of O’Fallon, Shiloh, Glen Carbon, and Troy continue to attract new developments.
“One market that’s about to pop,” he said, “is Caseyville. They just announced a major new high-end development with homes in the $400,000 to $1.2 million range. They have not had much of a recent track record of new housing so that announcement was monumental.”
Rombach cited several reasons why Southwest Illinois is seeing this boom in housing development.
“The primary reason,” he says, “is that the economic base of the greater St. Louis market is diverse enough that it has managed to stay solid. Job creation and maintenance have stayed consistent. And, as it relates to Illinois, people who have lived here know how convenient it is getting around the Metro area.”
Another reason is the commute. New ramps to the Martin Luther King Bridge, improvements to the Poplar Street Bridge, the opening of the Eads Bridge, plus the
I-270 and Jefferson Barracks Bridges contribute to a smooth ride to work—usually. The proposed new Mississippi River Bridge will add another avenue for commuters.
“Folks in Missouri who discover Illinois find that their commute, whether it’s to Downtown or to Clayton can be one half to two thirds shorter as opposed to O’Fallon, Mo., Wentzville, Wildwood or parts of Jefferson County.”
Rombach says land availability and land costs are also key factors for the rise in development. “There is a shortage of developable land in St. Louis County, and a natural boundary beyond which folks are not willing to go as it relates to the commute.
“So while they may able to find land in Franklin County,” he says, “they may not be willing to make a 90 minute commute, so Illinois presents a good alternative.
“And, not only is land still available,” Rombach says, “it’s comparatively inexpensive versus what’s remaining in Missouri. If land is $50,000 an acre versus $22,000 an acre, that makes a difference.”
Rombach sees only one cloud on the home development horizon and that is the “impact fees” some communities have chosen to assess homebuyers and builders. Edwardsville and Glen Carbon have adopted school “impact fees,” while O’Fallon has adopted the fee for parks.
“There could be an annexation fee which could be $2,500 a lot,” he explains. “Then you might have a school impact fee of $3,000 a lot. In O’Fallon, the park impact fee will be $1,700 a lot. So five years ago when you only had the normal development fees like utility and inspection fees and building permits, now you’re starting to see this layer of impact fees.”
He said that would probably just drive potential homeowners to the neighboring towns, but that the consequences of these fees probably will not be felt for five years.
| Brett Hardesty, president, Hardesty Homes. |
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Brett Hardesty, president of Hardesty Homes and former president of the Greater St. Louis Home Builders Association said the growth in St. Charles County continues to pass St. Louis County each year, with home prices going down the farther out the buyer chooses to go.
“Also, Lincoln County and the Troy area, north of St. Charles County, has become an emerging market,” he says. “It starts up Highway 79 and the area is beautiful with all the rolling hills. There is affordability factor at work here, and you can get more house for the money. The trade off is the commute and, maybe, an emerging school system.”
Hardesty says there are four things homebuyers need to keep in mind when choosing a house: Size, features, style and location.
“Location, location, location means everyone wants to be at Lindbergh and Highway 40,” he says. “But if you can only spend $250,000 for a house, that’s hard in that area. You’ll have to go farther out in the ring suburbs. Plus, if you want to buy new, with increasing land-use regulations, it’s becoming more and more difficult to develop new subdivisions.”
Many more people are opting for in-fill housing, but it comes with a hefty price. Tearing down homes that have reached their “functional obsolescence,” as Hardesty says. He has just closed on three acre lots and will be tearing down 1953 ranch houses to make way for bigger homes on the properties.
“You’re paying for the location and you have to design for scale and scope,” he says. “Some of these houses are huge.”
He says that many people are opting for smaller homes while putting more quality features in them such as granite countertops, computer nooks off the kitchens, hearth rooms and plasma televisions. “You can look at 3,200 to 3,800 square feet and say, ‘Do I want to put money into the size or maybe put more into style and better features?’ We’re seeing that trend more and more.”
It is said that a house is the best investment one can make. So, Illinois or Missouri, large or small, in-fill or new subdivision, homebuyers have many choices for their money. |
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