NEW CONSTRUCTION PERMITS DECLINE 16.7% YTD DESPITE GROWING DEMAND FOR HOUSING

New housing construction in Michigan is continuing to decline despite growing demand. Housing permits for single family home construction decreased by 7.2 percent during the month of April. According to the U. S. Census Bureau, there were only 1,687 permits issued in April 2019, compared to 1,817 for the same period a year ago. Year-to-date, there have been 4,270 permits issued in Michigan, compared to 5,121 during the same period in 2018, which represents a significant 16.7 percent decrease.

“There’s more than just bad weather going on with these new housing construction numbers,” said Bob Filka, CEO of the HBA of Michigan. “It’s a continuation of the flattening we saw the second half of last year. We’re seeing sticker shock. The cost of new construction has escalated at a much faster rate than values of existing homes. So many people considering new home construction have been turning to lower cost existing home purchases and then investing significant dollars in remodeling those homes.” Remodeling estimates by the National Association of Home Builders back this up. There were nearly 857,000 homes in Michigan last year that were renovated, equating to nearly $7.8 billion in home improvements. This is up more than $1 billion or 15.5% over 2017 remodeling levels.

A new housing assessment released by the Michigan State Housing Development Authority (MSHDA) earlier this month confirmed that the supply and type of housing being built in Michigan is creating a shortage of homes that are for sale in middle-income price ranges. This lack of inventory is squeezing lower-income housing options. In a statewide poll conducted in mid-April by the MRG, 34% of Michigan residents indicated that their communities had too few housing options. MSHDA’s research showed that the median statewide selling price for a newly constructed single family home had risen to more than $330,000 on a statewide basis. In several communities that median price now exceeds $400,000.

“These trends underscore the looming housing crisis that what we’ve been warning about for nearly two years,” said Filka. “There are many challenges to addressing this crisis including lack of skilled workers, shortage of buildable lots and inconsistent and burdensome government regulations. Now, more than ever, local communities need to evaluate how they might attract the type of housing investment they need.”

HBAM has issued a proposed 13-point action plan to aggressively attack challenges faced by the industry. Copies of the HBAM report, “Housing Challenges Threaten Our Economic Growth—Where Will Ten Million Michiganders Live?” can be downloaded at HBAofMichigan.com.l