A total of 2,054 single-family permits have been issued in the first five months of this year, creating the best start to a year for new home permits in the four-county area since 2006 (3,248 permits). These findings are based on residential permit data collected by the Home Builders Association of Southeastern Michigan (HBA) reported in their June 2017 New Housing Permit Forecast.
“[The growth in southeastern Michigan’s residential real estate market] has nothing but a positive impact on the overall housing market in southeastern Michigan,” says Michael Stoskopf chief executive officer of HBA. “New homes typically bring a little bit more value to the market. Typically, new homes are anywhere between 12 and 25 percent higher priced than existing homes in a real estate market. If you have new homes that simply helps raise the value of existing homes in their surrounding area. Plus, obviously it employs people.”
A total of 443 single-family permits were issued in Macomb, Oakland, St. Clair, and Wayne counties in May of this year resulting in a 7 percent increase from April’s upward revised result (415 permits).
According to REALCOMP, residential real estate sales for May 2017 continue to accelerate. When combined with available inventory of homes, there is less than a two-month supply at the present May sales rate, thus driving many to consider purchasing a newly constructed home.
“New homes typically have features you may not find in existing homes,” says Stoskopf. “If a family or person is looking to buy a home and their looking at existing homes, and then they happen to look at a new home model or a brand-new inventory home, they’re probably going to see features that they don’t see in the existing features. Then they start thinking that if they buy the existing home they’re probably going to have to remodel it. So now, they ask, do I want to remodel or do I want to just buy the new home.”
Two primary drivers of the growth in southeastern Michigan’s residential real estate market are continued growth in the number of people employed strengthened by a real estate market with a shrinking supply of used homes for sale.
According to the US Bureau of Labor Standards, the number of people employed in the four-county area grew by 58,000 people in the past 12 months and now exceeds 1.860 million for the first time since Nov. 2007 (1.866 million employed).
“New residential construction, just like the residential real estate market in general, is seasonal,” adds Stoskopf. “In the summertime when the weather is nice you’re building homes, in the wintertime construction slows down. As far as our growth this year, we’re going to be getting to the middle of our construction cycle and then it will start slowing down for the year. Overall, the amount of construction that’s going on is already the best start to a year going back to 2006, which is 12 years ago. I believe that this will probably end up being our best year since 2006.
“We’re finally getting back, not to where we were in 2000 when we had two million people with jobs, but at 1.85 million people, we’re as high as we were going way back to 2007,” he says. “That’s an exciting thing and it’s on its way up, as opposed to in 2007 where it was on its way down. This is an exciting time to be in the residential construction business.”