The national housing market is currently up with an easing of a stubbornly tight inventory. National sales of newly constructed homes were up 12.2% in May from April and up 20% from a year ago, according to a joint report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
According to Michigan Live, the home builders association forecast shows new home permit activity normalizing for the remainder of the year with a modest rebound throughout the summer and fall.
If the forecast pans out, Michigan is looking at 15,546 permits this calendar year, which would push the state back into the positive and represent a 6.8% increase over the total for 2022.
The 15,000 permit target is still falling short of what the state needs, though. To keep up with migration, aging housing stock and demographic shifts in the market, Michigan should be aiming for 25,000 to 35,000 homes a year, Filka said.
“We’re 10,000 homes short of that this year and we’ve been that short every year for more than a decade,” he said.
Michigan’s legislature included $5 million in the 2024 budget to provide grants to local governments to cover the costs of updating master plans, zoning changes and other actions that encourage increased housing supply and affordability.
The state legislature also focused in on tax increment financing, including tax revenues captured from blighted properties. These actions will help “make the math work” for builders up against high costs and supply chain delays, Filka said.
“The marketplace is dysfunctional,” he said. “Many people are surprised to hear builders say they can’t make money on a house that’s under $350,000. [It’s] because of all the costs and time and delays before you even break ground.”
Gov. Gretchen Whitmer’s administration and the Michigan Department of Housing Authority have zeroed in on housing as an economic development issue. They set a goal of 75,000 new and rehabilitated homes entering the market over the course of five years.