This Parade of Homes “dream home” at 3590 Mississippi Drive in Coon Rapids, was built by Parent Custom Homes and listed for $1.7 million. The company’s website says the home has been sold. (Submitted rendering)
If participation in the Spring Parade of Homes is a sign of things to come in the homebuilding market, builders are poised for another steady — if unspectacular — year of construction.
The 2018 Spring Parade of Homes, which begins Saturday and runs through March 25, will showcase 481 new homes to prospective buyers in locations from Minneapolis to Somerset, Wisconsin.
That’s exactly the same number of model homes as last year, and just a bit more than 2016 (458) and 2015 (431), according to the Builders Association-Housing First Minnesota, which puts on the event. The event also includes 63 remodeling projects.
Builders pay about $3,500 per unit to enter a model home in the Parade, the premier marketing event for new home construction in the Twin Cities. Participation peaked at a 1,249 entries in 2006 and plunged to 278 just five years later after the homebuilding market nose-dived.
David Siegel, executive director of BATC and Housing First Minnesota, said participation is about what the association expected this year. It speaks to slow-but-steady growth in the industry, which is “not a bad thing,” he said.
“The alternative would be excessive growth that would not be sustainable … or some rapid decline like we experienced during the crash,” Siegel said Monday. “It has been pretty consistent growth.”
Homebuilding permits have been slow out of the gate this year after solid gains in 2017. In January, cities in the 13-county metro area issued 424 permits for 919 new housing units, according to the Keystone Report.
Homebuilding permits were down 7 percent and planned units were off 16 percent. That includes permits for 402 new single-family houses, down 6 percent, and 517 new multifamily units, down 22 percent.
On the Spring Parade of Homes tour, Lakeville leads with 42 homes, followed by Plymouth (33), Woodbury (27), and Lake Elmo (21).
Prices range from $198,000 for a two-bedroom, two-bath rambler in Cambridge to $2.5 million for a four-bedroom home in Stillwater. Like the number of model homes, the price range is almost identical to last year’s ($199,000 to $2.45 million).
Prices are also consistent. This year, 39 homes on the tour cost more than $1 million and 27 are priced below $300,000. Last year, 40 homes were seven figures or more and 29 were less than $300,000.
One difference in recent years is how consumers plan their tours. Siegel said a lot more consumers are going online to do their research and create an itinerary before walking through model homes.
But old habits die hard. About 80 percent of the prospective homebuyers still use the printed Parade of Homes guidebook to supplement their research, Siegel said. Free guidebooks are available at Holiday Station stores.
Among this year’s builder participants is Blaine-based TJB Homes, which is showcasing four model homes in Edina, Blaine, Woodbury and Lake Elmo. The homes represent a diverse line of products with prices ranging from $489,900 to $998,900.
Tom Budzynski, owner of TJB Homes, said his company has entered two to six model homes each year since 1982. In some cases, the children of earlier customers are now looking to buy, he said.
It’s not especially cheap to be in the Parade of Homes, given the entry fee and the cost of staffing a home. Even so, the event is beneficial and it’s a good way for builders to showcase their products, Budzynski said.
“I believe in it,” he said in an interview. “I have believed in it and I continue to believe in it.”
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