Origin Homes, of West Des Moines, recently approached the city, asking if it would consider lowering the cost of building lots in Brewer Creek Estates. The asking price for ordinary lots in Brewer Creek No. 5 are approximately $16,000, with some larger lots selling for $30,000. Some cost much more. Origin told the city such prices make final home prices higher than would-be owners can afford. Last night, the City Council of Webster City agreed, and voted unanimously to reduce the price of the lots to a nominal $100 each, providing Origin met certain conditions.

Since 2017, the city has invested $2,758,794 to develop Brewer Creek Estates Subdivisions 5 & 6, including sanitary and storm sewers, water mains, paving roads, and site grading. The city’s objectives are clear: recoup its investment, put new homes on tax and utility rolls, and increase the population.

When asked why the city would agree to cutting the cost of lots, City Manager John Harrenstein said; “The prices for lots in the 5th & 6th addition of Brewer Creek were adopted by Council in 2017. Since then, there’s been a global pandemic, inflation, increases in interest rates, and the cost of construction has changed. While there’s been some development in the subdivision, the pace of sales has understandably lagged behind original estimates. The City continually hears from local employers that one issue associated with their recruitment efforts is a lack of housing options. Examining lot prices in view of these concerns is appropriate.”

Harrenstein also commented on how the city looks at Brewer Creek Estates over the long run: “The real value for the city is the return on investment through construction of new homes and their associated property tax and utility revenue. Each year that passes with lots not producing those revenues is an opportunity cost for us. Our time frame for return on investment in the subdivision is much longer than 10 years; homes built there will be in place for over 50 years, if not more.” Since 2017, only 13 of 52 available lots have been sold, giving credence to the belief prices once seen as appropriate in 2017, now may be out-of-date.

The median price for a home in Iowa today is $269,000, with buyers paying between $175 to $220 per square foot. According to what we found on Origin’s website, the company’s prices seem competitive.

For example, a 1,600-square-foot home in Manning, with three bedrooms and three baths is listed for $219,900 ($137/square foot). A larger Origin home in Knoxville, (2,184 square feet) has three bedrooms and three bathrooms and lists at $324,900 ($148/square foot). These prices are comparable to Origin homes for sale in Gowrie, Panora, Conrad and Jefferson, all markets where its active.

Origin spokesperson, Claire Brehmar, interviewed for this article, said, the company’s new homes sell to “first-time buyers, retirees, and everyone in between. We try to build what people are looking for.” She emphasized, “these aren’t cut-rate homes. We have our own standards. For example, you won’t find laminate counters in our homes: we use quartz.”

Speaking of standards, city Development Director Ariel Bertran, said, “Origin must meet all the covenants we have in place for any builder working in Brewer Creek Estates.” This includes homes of at least 1,500 square feet in size, two-car garages, and completion within 18 months of groundbreaking.

Before any work begins, however, Origin and the city must apply for Workforce Housing Tax Credits. Funded by the Iowa Economic Development Agency, these credits, which may be as much as 20% of the value of construction in small cities in Iowa’s 88 non-metropolitan counties, (Hamilton County is one of those), are critical for homebuilders to ensure profitability, while keeping list prices low.

Deadlines to apply for the tax credits are looming. Brehmar said, “our application is due in June, and then we don’t have an answer until fall.”

While aggressive, there is time to complete all steps in the process, she noted.

Three spec homes may seem insignificant to readers, but it’s getting started that counts. The city of Knoxville, population 7,500, and with demographics similar to those of Webster City, offers a good example. Origin built its first homes there in 2023, starting with just three, as it proposes in Webster City.

Today, it has 15 homes in Knoxville, already built or under construction.