Real Estate

HBAM: 3Q housing permits increase 4.5 percent

Despite predicted increase, units built remain below historic average.

November 10, 2017
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Housing permits for single-family home construction increased 4.5 percent in Michigan during the first nine months of 2017.

According to the U.S. Census Bureau, there were 12,663 permits issued in the first nine months of 2017, compared to 12,115 for the same period a year ago. The rate of increase is in line with the Home Builders Association of Michigan’s (HBAM) annual housing permit forecast for the state issued in January. The report predicted a full-year increase of 4.2 percent for the home building industry.

“It is great that we are ahead of last year, but we have to balance that with the fact that three months ago, we were running 10.6 percent ahead of 2016,” HBAM CEO Bob Filka said. “Builders are being impacted by a shortage of skilled workers, lot availability, regulatory delays and rising costs.”

Following a series of housing summits held around the state earlier this year, HBAM issued a report that warned of a looming housing shortage in Michigan. The report emphasized the historic decline in the number of single-family homes built in the state over the past decade. According to the report, Michigan has built an average of 28,000 homes every year for the past 50 years.

From a low point in production of just over 6,000 homes built during the housing crash in 2009, HBAM predicted more than 16,000 units would be constructed in 2017. While significantly higher than the 2009 low point, this still remains well below normal. 

In the report, HBAM warned the shortage of housing would result in a long-term impact of constrained economic growth and a shortage of resources needed to support job creation, schools and local governments.

HBAM calculated each new home built equals 3.4 full-time jobs over a 12-month period, as well as 1.2 permanent jobs.

HBAM issued a series of recommendations to address the challenge, including attracting housing investment by identifying local government policies that may impede investment and adopting the best practices, reducing regulatory delays by making clear the state’s authority to interpret code and land development laws, and building a stronger construction workforce by increasing efforts to train and attract individuals to skilled trades.

Industry officials said they were encouraged by the positive reception the report has received from Gov. Rick Snyder, state lawmakers and others at the state and local levels connected to the homebuilding industry. The state soon will commission a study analyzing how local municipalities manage land development, housing and renovation approval processes. Several bills dealing with skilled trades and other issues identified in the report also have been introduced.

“The fact is that new home production is constrained and prices are rising. More and more middle-class consumers are getting priced out of the new home housing market,” Filka said. “This has a ripple effect throughout the housing marketplace, resulting in higher rents and sales prices for existing homes.”

According to the report, 559 households in the Grand Rapids-Wyoming area were priced out of the middle-class market by a $1,000 increase in the price of existing homes in 2016. One hundred and fifty were priced out in the Kalamazoo-Portage area, 132 were priced out in Muskegon and 83 were priced out in Holland.

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