Housing slump persists
Decline in new homes worst since '91 recession
Sofia Kosmetatos / The Detroit News
Metro Detroit is facing its worst decline in new home construction since the recession of 1991, and the troubled market might take years to recover.
The number of residential building permits -- for houses, condominiums and apartments -- issued in the first half of 2006 in nine regional counties fell 41 percent, compared to the same period last year, according to Clarkston-based Housing Consultants Inc.
The drop for the first half was 31.8 percent in Wayne County; 28 percent in Macomb; 45 percent in Oakland; and 56.2 percent in Livingston.
For those four counties as a whole, the decline was 37.4 percent.
"We could be on pace to have as bad a year as in '91, or perhaps even worse," said Jim Rogers, data center manager at the Southeast Michigan Council of Governments.
Rogers compared the data for permits issued so far this year to last year's overall numbers, which were the worst since 1993.
Analysts said weak home sales nationwide are partly to blame for the drop in new home construction, but the region's economic woes and oversupply of speculative homes make the situation in southeast Michigan even worse.
"A lot of people in this difficult Michigan economic environment are even more reluctant to make long-term commitments by moving or upgrading their homes," said Dana Johnson, chief economist at Detroit-based Comerica Bank.
While the real estate market is cyclical, in Michigan it is less so than in other parts of the country, said Rogers.
"It's highly related to the downturn in the manufacturing sector, particularly the autos," he said.
Low point in the cycle
The decline in housing permits in the nine counties in southeastern Michigan ranged from 58.4 percent in Genesee to 19.2 percent in Monroe, according to the survey.
Canton Township in Wayne was one of several municipalities to see a sharp downturn from last year, from 403 to 143 permits, or a 64 percent decline.
The township enjoyed two decades as a real estate hot spot. It issued the third-most permits of all municipalities in 2005 and 2003, and the second-most permits in 2004, according to data collected by the council.
The city of Detroit saw a 7 percent decline in permits from 395 to 368, but overall has remained relatively strong, Rogers said, noting redevelopment efforts around the city, from luxury lofts to subsidized housing.
For the building industry, the losses are not unexpected, said James Babcock, president of the Building Industry Association of Southeastern Michigan and of Babcock Building in St. Clair Shores.
"The building industry is a cyclical industry," he said. "We've had unprecedented growth."
But a glut of homes from speculative building and the economic difficulties facing the auto industry lead Babcock to believe the housing market will take some time to recover.
"We'll expect to see more of the same for a while," he said.
Some bright spots
While smaller, inexperienced builders will likely suffer and may even go out of business in the slower market, the outlook is not as grim for all builders and all townships in the greater Detroit area, Babcock said.
In Brownstown Township, permits were up 26.5 percent, from 162 to 205 for the first half of 2006 compared with the same period last year.
Many of those permits were issued to Pulte Homes Inc. The company is planning more than 600 homes for the 55-and-over crowd, under its Del Webb brand, said Charles Earl, building official for the township.
Other municipalities like Macomb Township are nearly level with last year.
Permits in Macomb are down just 3 percent, from 414 to 403. Assistant building official Dennis LeMieux attributes the continued interest in the area to good schools, nearby shopping and the township's proximity to downtown Detroit.
But the township's permits have plummeted from the nearly 2,000 it issued five years ago. And in February, Macomb laid off three building inspectors in township-wide cost-cutting measures.
Decline in new homes worst since '91 recession
Sofia Kosmetatos / The Detroit News
Metro Detroit is facing its worst decline in new home construction since the recession of 1991, and the troubled market might take years to recover.
The number of residential building permits -- for houses, condominiums and apartments -- issued in the first half of 2006 in nine regional counties fell 41 percent, compared to the same period last year, according to Clarkston-based Housing Consultants Inc.
The drop for the first half was 31.8 percent in Wayne County; 28 percent in Macomb; 45 percent in Oakland; and 56.2 percent in Livingston.
For those four counties as a whole, the decline was 37.4 percent.
"We could be on pace to have as bad a year as in '91, or perhaps even worse," said Jim Rogers, data center manager at the Southeast Michigan Council of Governments.
Rogers compared the data for permits issued so far this year to last year's overall numbers, which were the worst since 1993.
Analysts said weak home sales nationwide are partly to blame for the drop in new home construction, but the region's economic woes and oversupply of speculative homes make the situation in southeast Michigan even worse.
"A lot of people in this difficult Michigan economic environment are even more reluctant to make long-term commitments by moving or upgrading their homes," said Dana Johnson, chief economist at Detroit-based Comerica Bank.
While the real estate market is cyclical, in Michigan it is less so than in other parts of the country, said Rogers.
"It's highly related to the downturn in the manufacturing sector, particularly the autos," he said.
Low point in the cycle
The decline in housing permits in the nine counties in southeastern Michigan ranged from 58.4 percent in Genesee to 19.2 percent in Monroe, according to the survey.
Canton Township in Wayne was one of several municipalities to see a sharp downturn from last year, from 403 to 143 permits, or a 64 percent decline.
The township enjoyed two decades as a real estate hot spot. It issued the third-most permits of all municipalities in 2005 and 2003, and the second-most permits in 2004, according to data collected by the council.
The city of Detroit saw a 7 percent decline in permits from 395 to 368, but overall has remained relatively strong, Rogers said, noting redevelopment efforts around the city, from luxury lofts to subsidized housing.
For the building industry, the losses are not unexpected, said James Babcock, president of the Building Industry Association of Southeastern Michigan and of Babcock Building in St. Clair Shores.
"The building industry is a cyclical industry," he said. "We've had unprecedented growth."
But a glut of homes from speculative building and the economic difficulties facing the auto industry lead Babcock to believe the housing market will take some time to recover.
"We'll expect to see more of the same for a while," he said.
Some bright spots
While smaller, inexperienced builders will likely suffer and may even go out of business in the slower market, the outlook is not as grim for all builders and all townships in the greater Detroit area, Babcock said.
In Brownstown Township, permits were up 26.5 percent, from 162 to 205 for the first half of 2006 compared with the same period last year.
Many of those permits were issued to Pulte Homes Inc. The company is planning more than 600 homes for the 55-and-over crowd, under its Del Webb brand, said Charles Earl, building official for the township.
Other municipalities like Macomb Township are nearly level with last year.
Permits in Macomb are down just 3 percent, from 414 to 403. Assistant building official Dennis LeMieux attributes the continued interest in the area to good schools, nearby shopping and the township's proximity to downtown Detroit.
But the township's permits have plummeted from the nearly 2,000 it issued five years ago. And in February, Macomb laid off three building inspectors in township-wide cost-cutting measures.
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