New home building plummets
Metro construction permits drop nearly 50% as stalled subdivisions become common sight.
Louis Aguilar / The Detroit News
Construction of new homes in southeast Michigan -- which reached record levels just two years ago -- fell dramatically in 2006 in the face of harsh economic conditions.
Total housing permits for the nine counties in the region fell to 9,873, a 48 percent decline from 2005 and more than 60 percent off the all-time high in 2004, according to data released Sunday by Housing Consultants Inc. of Clarkston.
Oakland County was down 54 percent, excluding rentals, while Wayne and Macomb fell 49 percent and 36 percent respectively.
The decline in home starts -- a key indicator of an area's economic health -- is part of a larger housing downturn plaguing the region.
Scores of homes are languishing on the market as residents flee the area for jobs in other states or take early retirement and move south. Foreclosures and personal bankruptcies are soaring.
As a result, home values in Metro Detroit are dropping faster than in almost any other part of the country.
Some new and existing homes are being sold at auctions.
In this environment, builders large and small are scaling back on plans for new construction. Incomplete subdivisions, stalled after the completion of a fraction of the homes originally planned, can be found throughout Metro Detroit's suburbs.
"You're clearly seeing a bit of a shakeout in the market," said Lee Schwartz, executive vice president for government relations for the Michigan Association of Home Builders.
"Those builders who haven't been through something like this and built a lot of spec homes are being affected pretty severely."
Schwartz said the housing market is cyclical and declines every decade or so, but this downturn is more severe because of Michigan's economic problems.
Detroit's automakers are in the midst of an epic downsizing that is trickling through almost every corner of Metro Detroit's economy.
Last year, all nine of the counties in the region had a decrease in home building permits from one-third to nearly 60 percent, according to Housing Consultants.
For the first time in nearly two decades, Metro Detroit families are seeing a significant decline in the value of their homes, according to the National Association of Realtors.
The median sales price for a single-family home fell to $154,100 in the third quarter of 2006 from $172,000 in the third quarter of 2005. It was the largest drop in value of any market in the nation.
Home building across the nation has been on the decline, though to a lesser degree. Through November, housing starts across the United States were down 17 percent.
Wesley and Mita Pasqualle recently sold a home in Dearborn after months of trying and after dropping the price by $35,000.
The Pasqualles ran a clothing boutique called the Magic Bus for almost a decade in Dearborn beginning in the mid-1990s.
Business was once so good that the couple bought three homes in the region -- two in Dearborn and one in midtown Detroit.
But in the end, the local economy had soured so much they couldn't survive. They moved to Portland, Ore., a few months ago.
The house they bought in Detroit earned them money. They are still trying to sell their other Dearborn home.
"People used to think we were crazy to buy in the city, but it turned to be our best investment," Wesley Pasqualle said.
The city of Detroit was one of the few bright spots in 2006.
A few years ago, there was virtually no new home construction in the city. Last year, Detroit ranked second in total permits -- 537 -- behind Macomb Township.
Schwartz said the slowdown is prompting home builders to press lawmakers to help ease construction costs.
That includes looking at ways to lower tax and regulatory costs to home builders, he said.
Dan MacLeish, head of MacLeish Building Inc. in Troy, said the decline in home construction can be traced to the economy and an unfavorable state business tax system in Michigan. His company was founded in 1890 by his grandfather and makes homes priced from $1 million to about $4 million.
"It's a tough market," he said. "The economy has a lot to do with it.
"People are unsure they will have a job tomorrow."
Metro construction permits drop nearly 50% as stalled subdivisions become common sight.
Louis Aguilar / The Detroit News
Construction of new homes in southeast Michigan -- which reached record levels just two years ago -- fell dramatically in 2006 in the face of harsh economic conditions.
Total housing permits for the nine counties in the region fell to 9,873, a 48 percent decline from 2005 and more than 60 percent off the all-time high in 2004, according to data released Sunday by Housing Consultants Inc. of Clarkston.
Oakland County was down 54 percent, excluding rentals, while Wayne and Macomb fell 49 percent and 36 percent respectively.
The decline in home starts -- a key indicator of an area's economic health -- is part of a larger housing downturn plaguing the region.
Scores of homes are languishing on the market as residents flee the area for jobs in other states or take early retirement and move south. Foreclosures and personal bankruptcies are soaring.
As a result, home values in Metro Detroit are dropping faster than in almost any other part of the country.
Some new and existing homes are being sold at auctions.
In this environment, builders large and small are scaling back on plans for new construction. Incomplete subdivisions, stalled after the completion of a fraction of the homes originally planned, can be found throughout Metro Detroit's suburbs.
"You're clearly seeing a bit of a shakeout in the market," said Lee Schwartz, executive vice president for government relations for the Michigan Association of Home Builders.
"Those builders who haven't been through something like this and built a lot of spec homes are being affected pretty severely."
Schwartz said the housing market is cyclical and declines every decade or so, but this downturn is more severe because of Michigan's economic problems.
Detroit's automakers are in the midst of an epic downsizing that is trickling through almost every corner of Metro Detroit's economy.
Last year, all nine of the counties in the region had a decrease in home building permits from one-third to nearly 60 percent, according to Housing Consultants.
For the first time in nearly two decades, Metro Detroit families are seeing a significant decline in the value of their homes, according to the National Association of Realtors.
The median sales price for a single-family home fell to $154,100 in the third quarter of 2006 from $172,000 in the third quarter of 2005. It was the largest drop in value of any market in the nation.
Home building across the nation has been on the decline, though to a lesser degree. Through November, housing starts across the United States were down 17 percent.
Wesley and Mita Pasqualle recently sold a home in Dearborn after months of trying and after dropping the price by $35,000.
The Pasqualles ran a clothing boutique called the Magic Bus for almost a decade in Dearborn beginning in the mid-1990s.
Business was once so good that the couple bought three homes in the region -- two in Dearborn and one in midtown Detroit.
But in the end, the local economy had soured so much they couldn't survive. They moved to Portland, Ore., a few months ago.
The house they bought in Detroit earned them money. They are still trying to sell their other Dearborn home.
"People used to think we were crazy to buy in the city, but it turned to be our best investment," Wesley Pasqualle said.
The city of Detroit was one of the few bright spots in 2006.
A few years ago, there was virtually no new home construction in the city. Last year, Detroit ranked second in total permits -- 537 -- behind Macomb Township.
Schwartz said the slowdown is prompting home builders to press lawmakers to help ease construction costs.
That includes looking at ways to lower tax and regulatory costs to home builders, he said.
Dan MacLeish, head of MacLeish Building Inc. in Troy, said the decline in home construction can be traced to the economy and an unfavorable state business tax system in Michigan. His company was founded in 1890 by his grandfather and makes homes priced from $1 million to about $4 million.
"It's a tough market," he said. "The economy has a lot to do with it.
"People are unsure they will have a job tomorrow."
No comments:
Post a Comment