Amid Mitchell's dwindling inventory, area builders on a mission to bring more housing
With a dwindling stock of inventory of affordable homes and multi unit dwellings, Jeremy Jensen said the demand for new homes in the $250,000 to $300,000 price range in Mitchell is greater than ever.
MITCHELL — Finding a house in Mitchell has become a challenge, but Jeremy Jensen is working to change that one redi-built home at a time.
After years of building his home construction business in Mitchell, the local contractor is gearing up to build his largest housing development yet in a growing area of the city. Jensen’s 46-lot housing development that will bring over 40 homes, an apartment and a commercial business complex to a piece of land next to Menard’s comes at a critical time for Mitchell.
With a dwindling stock of affordable homes and multi-unit dwellings in the city, Jensen said the demand for new homes in the $250,000 to $300,000 price range is greater than ever — and that demand is a major part of what’s driving him to expand his business and take on his biggest developments.
“The market is hot for two- to three-bedroom homes in that median price range. We’ve been busier than ever building a variety of homes, including twinhomes, and we’re planning to ramp up production at a new facility that I’m in the process of trying to get built,” said Jensen, owner of Jensen Design Build.
To meet the growing demand for homes in Mitchell and the surrounding area, Jensen is pushing to ramp up the pace of building at a new facility on the south side of Mitchell. After years of doing business out of his existing facility along the Highway 37 bypass, Jensen is in the process of building a large facility along Interstate 90 where his team of builders will construct model and redi-built homes.
Jensen said the new facility along Interstate 90 would allow his team to construct over 50 homes per year, nearly doubling the amount they are pumping out at the existing headquarters.
“We are committed to helping Mitchell grow. Everyone knows Mitchell needs growth since it’s been seriously lagging behind other cities similar in size,” he said, noting Mitchell’s population grew by 3% from 2010 to 2020.
Jensen is one of a handful of developers who have plans to bring Mitchell a swath of new homes amid the tight housing market that’s persisted throughout the pandemic.
The scarcity of affordable housing options has been on the radar for many city leaders. Mayor Bob Everson said the lack of affordable housing is one of several key issues hampering growth in Mitchell – a city that saw the slowest growth among the top 10 largest South Dakota cities from 2010 to 2020.
Everson pointed to the surge in planned and ongoing developments as vital moves that he says will help “get Mitchell growing at a steadier clip.”
“We’re very encouraged to see the number of housing developments on the table. Our lack of affordable housing has been hurting growth opportunities. But we also need to be focused on jobs as well, which we’ve had plenty of vacancies as of recent,” Everson said. “There is a pretty nice range of prices in homes planned to go in the new developments, but we really need affordable ones.”
Cindy Hockett, a local realtor, is eager to see the handful of planned developments in the works as she’s been dealing with a “very low” inventory of homes on the market.
While Hockett said a $200,000 price range of new homes would be “very ideal,” she noted the soaring building material costs are making it “nearly impossible” for builders to accomplish.
“New homes in the $200,000 range are especially in demand, but I understand it’s probably not feasible for builders to put up homes in that price range in this market,” Hockett said. "Anything close to that $200,000 to $250,000 is in big demand."
Surge in housing developments
As Jensen is gearing up to build his housing development in southern Mitchell, a handful of local and area developers are in the process bringing additional large-scale developments on the other side of the city around Lake Mitchell.
Paul Groeneweg, a Corsica-based contractor, has begun building on his 22-lot affordable housing development that will provide homes ranging in costs of around $300,000.
On the west side of Lake Mitchell, local developer Chuck Mauszycki is seeking to bring over 100 homes to a piece of land along North Ohlman Street. Mauszycki is partnering with a new local nonprofit organization called Mitchell Area Housing Incorporated to build a portion of his planned South Lake Estates development.
Along the north side of Lake Mitchell, Ethan Co-op Lumber has been laying the groundwork to begin building the first phase of the Lakeridge Addition housing development that will bring around 80 homes to the area.
Mueller Lumber, a longtime local building company, has plans to build a new housing development on the south side of Mitchell near Dakota Wesleyan University along Interstate 90.
Adding all of the housing developments up – if they materialize – it would bring about 300 homes with a wide range of price tags to Mitchell.
Challenges of keeping homes affordable amid soaring material prices
Over the past couple of years, the building industry has grappled with rising costs of materials amid the post-coronavirus economy. While builders have been faced with lumber prices that had quadrupled from where they were prior to the COVID-19 pandemic, Jensen has managed to keep his homes affordable by staying in tune with industry market trends.
In the past year alone, the rise in lumber prices caused the average cost to build a new single-family home to increase by roughly $18,000, according to the National Association of Home Builders (NAHB). Despite the increased costs to build a new home, Jensen said he’s found ways to keep his redi-built homes around the $250,000 to $300,000 range.
“We have our buyers in place who work with brokers in the lumber industry to make sure we know what the market is doing and where it is going. That’s how we’ve remained competitive at the top of our market. We buy a lot of inventory when the market is at some lows,” he said of the process of purchasing lumber.
Another method Jensen has implemented to keep homes affordable is through his company’s unique home buyback program.
The home buyback program allows existing homeowners in Mitchell who are residing in an aging home to sell it to Jensen Design Build and get a new home built in return. Jensen’s team then remodels the aging home and resells it, a process that he says “improves an existing home for first-time home-buyers while creating a new one.”
“It’s on a case by case basis, and the deal has to be right. We have proof of concept, and the one we did last year turned out well,” he said of the home buyback program.
While Jensen looks for creative ways to keep his homes competitively affordable for the area, he said the rising material costs have left aspiring homeowners who want to build new with a harsh reality.
“Trying to build new at an entry level price is just not feasible in today’s market for a first-time home-buyer,” Jensen said. “Building a new home that is within the typical first-time home-buyer range would likely lead to losses for the builders.”