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Home building and new construction for ann arbor michigan
Have you noticed that economists and housing analysts are often fond of using seasonal analogies when describing a situation? If a market is sluggish then we are in “winter” and if the market is robust they’ll tell us that we’re in “summer.” Looking at the current homebuilding and construction environment, they would likely tell us that winter is over and we’re heading into spring. There are some numbers that may well offer support for the belief that we are moving into a better season.

Recent national statistics have shown the glimmers of upward movement in both construction and valuation, and Washtenaw County would appear to be moving in the same direction. In Ann Arbor and surrounding areas in the region developers are pointing to numbers coming out of the county that indicate a 35% increase in residential building permits over last year. Local builders and real estate experts seem encouraged by the upswing in the numbers.

In order to appreciate the context of such statistics, consider numbers from the National Association of Home Builders: they report that nationally we saw an increase of around 27%, while statewide new homes grew by a little bit more at 28%. In Ann Arbor they report an increase that is significantly higher, aprox. 38%. These statistics can be taken as an indication that new home construction of single-home dwellings is enjoying a fair increase across the country, but that the increase in Michigan and specifically in Ann Arbor are stronger.

How do these statewide single-home statistics stack up against other states during the same period? We find that slightly less than half of the states, twenty-one total, have seen stronger percentage growth of single-home building than Michigan with Kansas and California leading the pack at 55% and 51% respectively. Many of the other states in this group lead Michigan by only a few percentage points, several by only a five or six percent margin.

New housing starts and permits for single family dwellings only tells part of the housing picture, however. A more complete and robust picture emerges when we take the multi-family number into consideration.

Combining single-home dwellings with multi-family new construction numbers is also encouraging. Nationally, new multi-home construction is up by about 30%, roughly 3% higher than the nationwide numbers of single-home construction. Likewise, the statewide numbers in Michigan show an upswing of a stunning 80% in multi-family dwelling construction, a number exceeded only by Kansas, South Dakota, Florida and Wyoming. Only one state, Georgia matches to 80% growth Michigan has enjoyed during the same time period.

In Ann Arbor, subdivisions that have stood idle for the last few years are now starting to see new construction slowly but steadily returning. The relatively low inventory of existing homes available for sale appears to be one of the catalysts as housing demand has increased faster than supply.

Economic news reflecting both statewide conditions and specifically Ann Arbor statistics have seen serious reversals since around 2006, largely due to problems like the Pfizer closure in 2007 and the bursting of the property valuation bubble toward the end of the decade. Of course, the overall national economic climate impacted the Ann Arbor area during this time and the difficult effects were felt for a long time.

An economic upswing like the one that has recently occurred in new home construction is precisely the sort of indicator that both economists and housing analysts anxiously watch for. To return to our seasonal analogy, it has been a long winter, but there is reason to believe that spring has arrived.

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