19 February 2010

New Housing Starts on the Rise in SE Michigan

AP

New housing starts in southeastern Michigan showed signs of life in January with the highest number of building permits issued since September, according to data released Wednesday by Housing Consultants Inc.

Building permits for single-family homes and other units in the nine counties of southeastern Michigan rose to 211, compared to 85 during the same month a year ago, an increase of 148.2 percent.

The Clarkston-based Housing Consultants tracked a 234 percent in increase in Wayne County to 117 new building permits from just 35 in the same period a year ago. Macomb saw a 240 percent increase to 34 permits from 10. Oakland had a 50 percent improvement to 27 from 18.

That was welcome news for an industry that has been in a tailspin the last three years.

"It simply couldn't have been as bad as last year," said Michael Stoskopf, CEO of the Building Industry Association of Southeastern Michigan. Housing permits have nose-dived for the past three years and the January numbers are still a third of what they were prior to the housing crash.January is the second consecutive month to show larger-than-expected increases in home building, particularly single-family home permits, according to data provided by the trade association.Further improvement is expected. For the six-month period from January to June 2010, the association forecasts a 32 percent increase in the number of single-family home permits to 458, compared with 347 permits issued during the same six-month period one year ago.

The increase can be attributed, in part, to the extension and expansion of the federal home-buyer tax credit program, Stoskopf said. First-time home buyers can get a credit of as much as $8,000 if they close a deal by April 30; those who already own a home may be eligible for up to $6,500.

Additionally, employment and work force levels have leveled off -- meaning the job loss has slowed in recent months -- and housing inventories are shrinking, especially those of foreclosed homes and lower-priced properties.

"The market has been decimated for two years," said Byrne Benson, president of Housing Consultants. "For houses under $200,000, there is no inventory."

Most permits issued last month were for homes in the below-$200,000 price range, Building Industry Association data shows. The next most active market is the $200,000 to $500,000 range.

Housing starts last month improved nationally as well, with single- and multi-family housing starts up 2.8 percent in January compared with December, and up 21.1 percent from a year earlier, according to the latest monthly report by the Commerce Department's U.S. Census Bureau.

Single-family home starts nationwide rose 1.5 percent in January from December, and jumped 35.6 percent from January 2009.

Still, many area builders said Wednesday the market has far from recovered and at least three smaller builders said they had not yet seen an uptick in business.

"You still have to self-finance" building new homes, said James Clarke, president of Robertson Brothers, a builder in Bloomfield Hills who has seen work improve. Robertson Brothers will likely file more new building permits in the next few months than it did in all of last year, Clarke said. Larry Cohen, president of Cohen Homes LLC, said new federal regulations for appraisals are "a mess" and are hindering a rebound. Many builders complain the use of out-of area appraisals -- as allowed under the new law -- is thwarting a recovery because of the appraiser's lack of knowledge of the market translates into lower appraisals that kills deals. "I wouldn't say the recovery has taken a firm hold," Stoskopf said. "The industry has been decimated by job loss and we do not yet see when there will be many jobs returning."

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