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Rising material costs and lack of builders in Alexandria; tough to keep up with affordable housing demand

The supply can't keep up with the demand. Executive Director of Alexandria Area Economic Development Commission Nicole Fernholz says the city is working aggressively to ensure enough affordable housing.

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New home construction is robust in Alexandria. In 2018, 65 new single-family homes were built. (Echo Press file photo)

ALEXANDRIA — Affordable housing in Douglas County is an issue due to the demand for housing from a rising population, lack of builders to raise the housing supply and the high cost of building materials.

The Douglas County population is growing at a rate of over 1% every year, raising the need for housing, according to Douglas County's 2021 Economic Development Profile .

“A 2018 housing study announced to investors and developers that Alexandria has a demand in the housing market," said Mike Weber, Community Development director. "The anecdotal evidence is that housing continues to be in short supply,”

Jeff Hess
Jeff Hess

In 2021, in partnership with DW Jones, the Alexandria Housing and Redevelopment Authority opened up a 35-unit apartment building called Central Lakes.

“It leased up in under 45 days, which is unheard of,” said Alexandria HRA Executive Director Jeff Hess.

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The Alexandria HRA builds housing geared toward the lower end of the workforce and manages public housing — housing with rent based on 30% of a household income. According to Hess, Alexandria runs around 95 to 98% occupancy in its public housing, meaning there's little to no available living units.

The Douglas County HRA Executive Director Al Glaeseman said they will be assisting 243 households across Douglas County with rental assistance for February.

The households qualify to receive assistance from the Section 8 Housing Choice Voucher program and the state-funded bridge-financing programs. Both programs have waiting lists with 190 households between the two programs.

The Emergency Housing Voucher program has many who will have to let their Voucher expire due to the lack of affordable housing. They will then have to reapply and start over on a waiting list.

Al Glaeseman
Al Glaeseman

"Our assisted clients are the working poor and those who have retired and are on a low fixed income," said Glaeseman in an email. "COVID has been tough on our clients, as has locating recent and affordable housing. In the past 24 - 30 months, we have had four clients take their lives. No matter how much our staff can try to help with housing, if it isn't there, there is not a lot that can be done."

Hess says it is challenging to develop affordable workforce housing due to the high cost of materials and labor, which increased because of the rising demand for construction, and the lack of builders. Those factors, in turn, raise rent and mortgage costs.

Job stats from the Alexandria Area Economic Development Commission's website show 45 unfilled construction-related jobs in the Alexandria Area.

According to Weber, the supply can't catch up because there are not enough new builders coming into the trade. The market will stay high until the supply catches up with it.

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The U.S. Bureau of Labor Statistics shows a 56.8% increase in lumber and plywood in 2021. Other materials that have risen significantly in price include copper and brass mill shapes at 49%, steel pipe and tube at 48.8%, metal bar joists and rebar at 38.2%, plastic construction products at 26.7%, insulation materials at 11.8% and roofing and siding material at 10.9%.

“How come they don't build more $200,000 houses? Because you can't,” said Hess. “Housing is a commodity bought, sold and traded like anything on the marketplace. And the price is usually based on demand.”

Douglas County's 2021 profile shows from 2000 to 2019, rent increased 21%.

"Mirroring the state trend, the price of rent continues to rise, and incomes are not keeping up, making it increasingly challenging for renters to make ends meet," according to the profile.

The same profile showed the value of homes rose 43% during the same time while homeowner's income increased by 16%.

The profile went on to say, "The income for families is not rising at the same pace as home values, making it more difficult for families to purchase and own a home."

As of 2021, the median income for an Alexandria household is just under $52,984 a year, according to demographics recorded by the AAEDC.

For housing to be considered affordable, yearly costs should be 30% of a household's gross income or lower. By those numbers, the average Alexandria household should be paying $1,324 a month, but that only includes the average pay and not the residents at the lower end of the income spectrum.

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Estimates from realtor.com say a $1,300 a month mortgage puts you in a single-family home under $300,000. There are 15 homes under that threshold in the 56308 zip code. Again, those are just estimates and do not include other monthly expenses for housing, such as taxes and insurance.

The medium income for a renter in Alexandria is $26,851, according to a 2018 housing study. They should be paying about $700 a month in rent by those numbers.

Apartments.com lists three available housing units under $700 a month in the Alexandria area. Two one-bedroom units and one studio apartment.

Nicole Fernholz, executive director for the AAEDC, says the city has worked aggressively to ensure enough workforce housing.

“We work with the city of Alexandria on providing incentives to multifamily developers. When we build a 100-unit apartment building, we'll make sure that 20% of the units are affordable,” said Fernholz. "Right now, there are a total of 160 units, ranging in sizes from efficiency to a three-bedroom apartment. The tenant qualifies based on the household size income."

Nicole Fernholz
Nicole Fernholz

Fernholz added that she feels the local employers are doing what they can to confront the issue.

"Our employers have seen the challenges from the workforce shortage and have stepped up their game on entry-level wage," said Fernholz. "I know one of our major manufacturers just increased all of their wages across the board by one dollar. They said every time they do that, it's a million-dollar cost to the company."

Lynn Timm, the building official for Alexandria, has been working with Alexandria Technical and Community College on how they can recruit more students into building programs like carpentry. While the Vikingland Builders Association has implemented a scholarship for students going into a trade program.

“From the public side of the world, we're going to continue to do the things that we know are necessary and important and contributory," said Weber. "We're going to continue to support the private side in terms of building additional units. We're going to build in cooperation with some developers, and we're going to build additional units of our own. None of our builders are sitting around twiddling their thumbs waiting for work. Single-family home builders are booked for the coming year and, in some cases, into the middle of the summer of 2023."

Mike Weber
Mike Weber
licia marie photography

Weber says the housing in Alexandria has been an issue since he started working for the city in the 1980s. And will continue to be an issue unless they can create an inventory of housing that brings the housing costs down or increases the availability so much the two will offset each other.

“Success can be a failure experience. And that is very true in this community. This is a very successful, thriving community. This is the failure that comes with it as part of the byproduct,” said Hess, quoting a former boss.

Thalen Zimmerman of Alexandria joined the Echo Press team as a full-time reporter in Aug. 2021, after graduating from Bemidji State University with a bachelor of science degree in mass communication in May of 2021.
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