Local market for new homes is growing
Fall Parade is a success and housing turnaround expected to continue.
(As seen on WZZM TV 13) Despite the chilly and soggy weather that plagued its last days, it didn’t rain on the Fall Parade of Homes.
The outcome was quite the contrary, in fact. The annual event put on by the Home Builders Association of Greater Grand Rapids continued an encouraging trend.
“We got really positive feedback from our builders, and our traffic numbers were really great,” said Emily Siebert, HBAGGR executive director.
Siebert told the Business Journal the turnout for the 2013 event, which ran Oct. 4-19, easily topped that of the previous Fall Parade of new homes. She said it usually has 700 visits for each home entered, but this year up to 950 visits were made to each of the 36 homes in the parade.
“So that is a nice increase in traffic. We’re still crunching all the final numbers, but everything that has been reported so far tells us we had over 33,000 in tours, which is up from less than 20,000 last year,” said Siebert.
“It was really well received and lots of people were really interested in talking contracts, talking development, setting appointments with builders to review plans and that sort of thing — indicators that they’re really in the market and are seriously looking at new construction,” she added.
Those results indicate to Siebert a housing turnaround has arrived, a movement she said she noticed earlier this year.
“We’re just excited that it has continued through this fall. The spring (parade) was phenomenal, and everybody was hoping that the fall (parade) would kind of have the same result — and we did definitely see that,” she said.
“We’re definitely living in the turnaround, I would say.”
And she expects that trend will continue into next year because Siebert believes there still is a lot of pent-up demand lingering among potential buyers of new homes, who have been patiently waiting for the market to move in their favor.
Siebert said interest rates on mortgages haven’t risen significantly and are still historically low, which is another positive indicator. At the same time, she said, lenders are getting more comfortable with writing construction loans, especially the area’s credit unions.
Another key catalyst for new home construction is the inventory of existing houses on the market has been and still is low. The current inventory remains at the three- to four-month mark, where it has been stuck most of this year. The standard for a healthy market ranges from five to six months.
“That does help push people to new construction just because they may not be finding what they need out there in the marketplace. That definitely is a factor, and I think it’s favorable for new construction,” said Siebert.
“The challenge right now is going to be in finding land. That’s probably going to be challenging, and I’ve heard that from some buyers. They have a desire and the ability to build, but they’re still trying to find the right location for them,” she added.
So far this year, the average size of a newly built home in Kent County is 2,399 square feet, according to HBAGGR records. That square footage matches the national average.
Now more homes need to be built to boost the area’s economy and one of its most vital industries, and Siebert thinks that will happen.
“We’re still a ways away from what is normal building supply and demand in our market. We’ve been working our way back up to what we typically see. We’re projecting increases through the next few years to get more toward the normal level for our market, anyway,” said Siebert.
“So I think the pent-up demand is helping for the short term, but it’s not as though it’s going to drop off again after that kind of has been pushed through. It’s going to steadily increase over the next few years for our market. So we’re expecting a couple of good years,” she added.
The Fall Parade began with a good omen in that 36 homes were entered — 16 percent higher than the 31 that made up the 2012 Fall Parade. The prices of the homes had a broad range: from $150,000 to more than $2 million.
The Fall Parade also recognized a number of builders for their work through the Awards of Excellence Program.
A panel of a dozen experts named Platinum Construction & Associates, Raymar Homes, Muston Construction, New Urban, Falcon Homes, Engelsma Homes, Scott Christopher Homes and Mike Schaap as the winners across the parade’s various price points for interior elements, kitchens, floor plans and curb appeal.
So despite the showers that occurred over the final days of the event, it did not rain on the Fall Parade.
“No, it did not,” said Siebert with a laugh. “It turned out really well and the weather could have been much worse. But weather doesn’t always kill the traffic.”