New housing stock decreases
Government regulations among reasons for high cost of building.
West Michigan residents who are looking for new homes may have trouble finding one within their price range.
According to Joe Hayes, president of Grand Rapids-based Maplewood Homes, even though inventory might be down a bit, there are new homes on the market, and it is still a good market to build houses because the unemployment rate is low and mortgage rates are good.
“I don’t think we are overbuilding like we did before the recession,” Hayes said. “I think we are about right. Since 2015, we have been in the same range. We have been doing a lot of work in Allendale.”
Despite the market being conducive to builders, Sable Homes President John Bitely said there is a lack of new housing stock in what the building industry calls workforce housing. He described it as housing deemed affordable for middle-class workers within a reasonable commute from their jobs.
According to Bitely, the current new housing stock is:
Homes under $150,000: There is nearly no stock in the immediate surrounding Grand Rapids area.
$150,000-$200,000: There are a few options.
$200,000-$250,000: There is limited supply and builders are not able to supply this price range as needed due to the cost of land development (infrastructure, zoning and other governmental requirements that are adding costs to development).
$350,000-$400,000: There is a reasonable stock of new homes, not oversupplied, but the demand is being supplied. There is a much lower need for homes in this price range.
“Sales of homes in the $200,000-$250,000 and up to $300,000 are down slightly, and that is due primarily to the lack of stock,” Bitely said.
Nevertheless, he said, the cost of new homes is increasing due to a variety of reasons in West Michigan. He said the main reason is government regulations.
“According to the National Association of Home Builders, 25% of new homes’ cost is tied directly to government regulations, and that stat is very similar here in West Michigan,” he said. “If you take a $200,000 home, $50,000 goes toward regulation.”
Along with government regulations, Bitely said the price for new homes also is increasing because of the increase in cost of construction materials and labor cost that stems from the tight workforce in the building industry.
Although lumber has been at a stable price, Hayes said the tariffs have resulted in an increase of some building materials. Lot prices also are increasing. The lack of skilled workers, such as electricians, carpenters, plumbers and framers, among others, are affecting the construction industry and is contributing to a lack of stock on the market.
There is a need for workers with diverse skills as new homes incorporate new features. Hayes said new homes have become more energy efficient than ever before.
“People love art surfaces such as floorings and countertops, built-in fireplaces and vaulted ceilings,” he said. “We are starting to see a lot of finished basements more and more, which is a good way to increase the square footage of a house at a more affordable price point. To have a daylight or walkout basement with additional bedrooms, bathrooms and a family room are more common.”
Hayes said the most common layout of a house his clients look for are houses with three bedrooms, two bathrooms and a garage.
More information about Maplewood Homes is available at maplewoodhomes.com
More information about Sable Homes is available at sablehomes.com