Home Builders Association of Greater Grand Rapids was founded by 18 builders and chartered by the National Association of Home Builders in 1945. Photo via fb.com
A lot of new homes will be built in Michigan in 2016.
The Home Builders Association of Michigan released a forecast this week projecting a 25 percent increase in new homes in 2016. The HBA estimates 16,831 new home permits will be issued in 2016, a significant increase over the 13,467 permits issued this year.
“Our 2015 numbers are not all in yet, and a warm December may increase the final tally,” said Bob Filka, HBA of Michigan CEO, in a press release. “But new home production in our state is increasing at a steady pace and next year will be our best in nearly a decade.”
The projection is attributed to a growth in jobs across the state and a shortage of housing inventory. Additionally, more than two-thirds of existing homes in Michigan were built prior to 1980 and construction of new homes slowed to a trickle beginning in 2008.
“The reality is the forces of supply and demand are finally kicking in,” Filka said. “Existing home prices continue to rise in most markets because fewer and fewer choices are available to homebuyers. This price pressure will push more to look at building new.”
The projections for 2016 might also be on the low end of the spectrum as job growth is also expected to continue for several more years, Filka said. The 2016 estimate is still well below the 33-year average of 27,000 new homes a year in Michigan.
“Construction industry workforce shortages, student loan debt for those who typically would be entering the home-buying market, among other factors such as lot availability, tempered our estimate,” he said. “Some economists have run models showing that our home production will double by 2017. We do not believe that is possible given the workforce issues facing the industry.”