Booming home construction in Warren County hit a major speed bump in 2022, slowing to a tepid pace in the towns where construction had previously been concentrated.
Based on the number of new …
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Booming home construction in Warren County hit a major speed bump in 2022, slowing to a tepid pace in the towns where construction had previously been concentrated.
Based on the number of new building permits issued by several government offices, new housing construction in Warrenton and Wright City took a steep dive compared to the year before. Local building officials attribute a number of causes, ranging from economic conditions to simple bad timing.
In Warrenton, the city’s building department issued permits for 12 single-family homes in 2022, and a total of 36 apartment units (inside nine apartment buildings). That’s far off from the city’s numbers in 2021, which saw construction on 114 apartments and 35 single-family homes.
Ongoing high costs for construction might have something to do with that slowdown, said city building commissioner Mike Cross. But he said a bigger issue in Warrenton, especially with single-family homes, is that housing projects and subdivisions from prior years were getting finished up and there wasn’t any new land ready for home builders to build on.
He explained that before new homes can be built, ground has to be leveled, streets paved, and utilities like water and electricity installed.
“We had nothing ready for developers; no infrastructure was in the ground from the people who own ground,” Cross said. “Everything that was already available for building was built on, so for the available land that was out there, the infrastructure had to be put in. That’s now been done.”
Cross said that in 2023, homes will be going up in a subdivision off of Pinckney Street that has room for 96 houses. Land development, street paving and utility installation for the subdivision were being done throughout most of last year. Other new areas should be opening up for construction as well, Cross added.
“Hopefully we’re going to get close to some prior years when we had over 100 (new homes), that’s what we’re shooting for. But you’ve got to have the infrastructure in the ground for that to happen,” he commented.
Down the road in Wright City, where the breakneck pace of new home construction has been a matter of excitement and concern for several years, the city government issued just 46 new home permits in 2022.
It was a big slide for a town that saw 81 new homes in 2021 and had several years in a row with more than 100. City Administrator Jim Schuchmann, who formerly worked in home construction, said he believes interest rate increases from the U.S. Federal Reserve (aka “The Fed”) played a big role in the slowdown.
The Fed loans money to major banks, giving it a lot of influence over loan interest rates that get passed on to businesses and the general public. The Fed’s interest rate was at near-zero during the COVID pandemic, but shot up to over 4% in 2022 as a means to combat inflation.
With interest making it a lot more expensive to borrow money, home builders and home buyers pumped the brakes hard, Schuchmann said. “While it’s a little shocking to see, it’s completely understandable, given the circumstances.”
However, he added that concerns over interest rates have a lot to do with your perspective. When you’re used to a 2% rate on mortgages, 4% sounds like a lot. But in decades past, standard mortgage rates were at 8%, and 4% was a great deal, Schuchmann said.
“I think next year, some people will put things in perspective and say, ‘Oh, that isn’t so bad. We can afford that,’” he commented.
Unincorporated areas of Warren County saw less of an impact from whatever conditions were hampering home construction in Warrenton and Wright City. The county’s planning and zoning office issued permits for 108 single-family homes and 24 modular homes, for a total of 132 housing units.
That’s down just a bit from 2021’s total of 157 housing units. The decrease is almost entirely from fewer single-family homes.
The only area of Warren County that reported an actual increase in housing construction was the village of Innsbrook, where 50 home construction permits were issued, up from 26 permits in 2021. Builders have been opening up new development areas around the village in recent years, leading to significant expansions of the village’s boundaries.
