GR home sales trending up
Construction companies are challenged with making good-quality homes affordable.
New home sales in the Grand Rapids area are on the rise.
Since 2013, after the recession, new home sales have been steadily increasing, according to Blair Murray of Builder Track Reports, which lists new residential building starts.
In 2013, there were 1,006 new permits issued to build single-family homes in Kent County. Four years later, in 2017, 1,095 new permits were issued for single-family homes.
That is a far cry from 2009 when 507 permits for home starters were issued for Kent County during the recession. Murray said the peak of new home permits in the Grand Rapids area was in 2004 when there were 2,604 new home permits issued.
Home starter permits issued for the city of Grand Rapids have fluctuated a bit, according to Murray, compared to other cities and townships in Kent County.
For the last five years, starting in 2013, there have been 31, 65, 38, 56 and 42 home starter permits issued for the city of Grand Rapids, respectively.
But according to Andy Lofgren, executive officer of the Home Builders Association of Greater Grand Rapids, 41 new homes were built in the city last year.
The number of new permits issued in other parts of the county has increased substantially, like Byron Township, which issued 172 home starter permits last year, according to Murray.
Karin Kay, the sales manager of Sable Homes, said her company has noticed a 12 percent increase in new home sales.
The low numbers of home starter permits issued in the city of Grand Rapids can be attributed to the high number of apartments and condominiums being built in the city, Murray said.
Although the demands for single-family homes are increasing in Kent County, there are not many new homes on the market, according to Joe Hayes, owner of Maplewood Homes. Hayes has been a homebuilder for 23 years, but during the last three years, he and his company began investing heavily in the city of Grand Rapids.
Hayes said while there are a few lots available, there have not been many subdivisions built since the recession because many of the real estate developers have left the industry.
Bigger companies that would like to build subdivisions encounter many risks, Hayes said, because if they spend millions of dollars constructing roads and building subdivisions and the economy crashes like it did in 2009, they are stuck with the lots and the loans they need to pay back. He said that is why many developers went into bankruptcy during the last downturn.
“Lot prices are making it really hard to build an affordable house,” Hayes said. “Lots are $60,000, $70,000 and $80,000 apiece. Lumber right now is at an all-time high. We are busier than we have ever been, but what happened during the recession, we lost over half of our builders. So, there aren’t as many builders like there used to be. There is a shortage of framers, roofers, siting guys, painters, carpenters and drywallers. So, everyone is really busy, now.”
Murray said the median price for new homes in Kent County is $350,000. However, Maplewood Homes’ price range is slightly lower, although Hayes said the company has increased its home prices twice this year by 2.5 percent, instead of once per year in previous years, to accommodate the high costs of building materials and the labor shortage.
Hayes said Maplegrove’s new homes sell for between $250,000 and $300,000, but he said it is hard to build good-quality homes that are affordable.
“When I started my business 22 years ago, I felt like it was an unmet need,” Hayes said. “No one was doing it, so we (lowered our prices), but it is really hard to do. It is really easy to make homes expensive, but it is hard to make it affordable and nice. If you want to build a real shoddy house, it is easy, but if you want to build a good-quality home at a price that people can afford to own, it is challenging.”
New homes do not stay on the market long. According to Hayes, homes that are built by his company are sold before they are completed.
Lofgren said the median price for homes in Grand Rapids is $149,300, which excludes the lot and construction cost.
New single-family home permits issued in Kent County
Source: Builder Track Reports