West Michigan/Grand Rapids Economy

[GRDadof3]

Latest stats are out: 4.3% growth rate in non-farm payroll over this time last year. That's...um...unheard of.

http://www.bls.gov/regions/midwest/mi_grandrapids_msa.htm#eag

 

541,600 employed, nearly 100,000 more than January 2009. 

Charts! For those who like pictures. 

 

 

 

 

 

Edited July 22, 2015 by GRDadof3

[arcturus]

Year to date (though June) residential sales up 9.7% vs 2014.
Sales volume up 20.2%.

http://www.grar.com/docs/media/june_2015.pdf

[GRDadof3]

Year to date (though June) residential sales up 9.7% vs 2014.
Sales volume up 20.2%.

http://www.grar.com/docs/media/june_2015.pdf

The residential single family market is not in the dumps, but the residential single family new construction is not up to where it should/could be. In fact, it was down across the HBA members this second quarter vs last year at this time, I think primarily due to lack of inventory and rising prices.

But builders like Eastbrook Homes locally are up to record highs:

http://www.grbj.com/articles/82873-a-real-confidence-builder

If you have the land/lot inventory, there are buyers out there and moving into the market. 

 

 

[arcturus]

Housing starts from a longer historical perspective.

 

[arcturus]

 

If you have the land/lot inventory, there are buyers out there and moving into the market. 

What's your thinking as to why we haven't seen more land acquisitions in the further outskirts for new single family homes?  Is it the local culture I alluded to earlier where commute times are a bigger factor than elsewhere, constraining purchases to closer and more expensive property, or are developers still not confident to take the risk knowing what happened before?   In light of persistent, chronic shortage of new housing over the past few years I'm surprised we haven't seen more developments either under construction or announced.

 

[GRDadof3]

What's your thinking as to why we haven't seen more land acquisitions in the further outskirts for new single family homes?  Is it the local culture I alluded to earlier where commute times are a bigger factor than elsewhere, constraining purchases to closer and more expensive property, or are developers still not confident to take the risk knowing what happened before?   In light of persistent, chronic shortage of new housing over the past few years I'm surprised we haven't seen more developments either under construction or announced.

 

 

A lot of the suburban developers are getting "old", and aren't all that excited about getting back into the game. Many were farmers that got into development by accident. Some are still on the hook for personal guarantees and calls from the banks during the meltdown. It's not really a field that younger people can get into, unless you're in the family business (like Vissers or Koetjes, for instance).

There is certainly demand though. Any decently priced new development in Forest Hills or Caledonia, the two markets with the lowest amount of lot inventory (by my estimation/looking at the stats), would probably sell out fairly quickly. 

The market that is doing really well is empty nester products, or "detached condominiums." Just drive around Thousand Oaks Golf Club and you'll see a building boom of them, for instance. 

Edited July 22, 2015 by GRDadof3

[arcturus]

Opportune time for a developer with deep pockets.  Wouldn't be surprised to hear about a major national home builder stepping up to the plate, not unlike the interest downtown is getting from out of state apt developers.

[GRDadof3]

Opportune time for a developer with deep pockets.  Wouldn't be surprised to hear about a major national home builder stepping up to the plate, not unlike the interest downtown is getting from out of state apt developers.

 

Might be, but Pulte tried to make a go of it but they needed at least 300 homes a year in any one market for it to make sense. I don't think they ever got there. Maybe 200 - 250.

Mayberry Homes and Allen Edwin are definitely "regional" builders, as close as you can get to a national chain builder.

 

 

Edited July 27, 2015 by GRDadof3

[GRDadof3]

Latest stats are out: 4.3% growth rate in non-farm payroll over this time last year. That's...um...unheard of.

http://www.bls.gov/regions/midwest/mi_grandrapids_msa.htm#eag

 

541,600 employed, nearly 100,000 more than January 2009. 

Charts! For those who like pictures. 

 

 

 

 

 

 

Going back to this, I perused several other heavy job growth markets (over 1 Million in the metro), and Grand Rapids is right up there at the top in growth percentage year-over-year, at 4.3%. Salt Lake City might be the fastest growing metro area right now with 4.4% a year, without doing a full thorough review. San Francisco is tied with GR at 4.3%. Austin has "slowed" to 3.3% annual growth. Denver is at 3.5%. Dallas is at 3.6%. Charlotte is at 3.3%, Raleigh has cooled a bit to 2.8%. The once hot (always hot) Phoenix and Atlanta have dropped into the 2% range. Orlando has moved ahead of the rest of dog-lagging Florida to tie GR at 4.3% annual growth. 

So the only 3 I could find even close to GR were Orlando, Salt Lake City, and San Fran. Cray. 

Edited July 27, 2015 by GRDadof3

[jas49503]

 

 

There's a bunch of reasons the single family market is still in the dumps ... and may be for quite some time.  Without going into detail it's not necessarily a bad thing.  Sustained slow & steady can be a good thing but there's also a bunch of exurbs which are booming once again.  Apparently the W MI culture doesn't favor commutes over 40 miles because I suspect there's plenty of cheap land out there which developers would purchase if they thought there was demand.

you wonder also if it is due to the fact that compared to other markets, real estate is comparatively inexpensive.  I didn't form my commuting beliefs around here but there is no way I'm commuting 40 miles each way. that's time you'll never get back and is worth a lot more than any potential savings on a home.  my current commute is between 2 and 7 minutes depending on where I am driving to. I personally don't think I could take more than about 15 minutes for an extended period.

[arcturus]

 

Might be, but Pulte tried to make a go of it but they needed at least 300 homes a year in any one market for it to make sense. I don't think they ever got there. Maybe 200 - 250.

Mayberry Homes and Allen Edwin are definitely "regional" builders, as close as you can get to a national chain builder.

 

 

If a home builder can't sell 300/yr then I've overestimated the housing recovery in this town.

 

Then again, it's tough to sell a new 250K home when median prices for existing are 180K.

Edited July 27, 2015 by arcturus

[GRDadof3]

If a home builder can't sell 300/yr then I've overestimated the housing recovery in this town.

 

Then again, it's tough to sell a new 250K home when median prices for existing are 180K.

 

There are local builders like Eastbrook and Allen Edwin who do more than 300, but no national has been able to (yet). I don't think West Michiganders like national builders very much. 

Even in the best years, Grand Rapids only has about 1200 - 1500 new home starts a year. Eastbrook controls quite a bit of the market and did 360 last year, I believe their best year ever. 

I don't know what the median price is for new construction, but the median size of a new home in GR has risen to 2527 square feet from 2282 back in 2011. Your $250,000 is at the low end of new home prices. 

Edited July 27, 2015 by GRDadof3

[GRDadof3]

#3 in the country for manufacturing rebound/growth:

http://www.grbj.com/articles/82924-grand-rapids-ranks-as-no-3-manufacturing-boomtown-in-us

I think the manufacturers in this area are pretty savvy. Many have opened up customer base in other countries and diversified away from solely automotive. 

 

 

[joeDowntown]

 

There are local builders like Eastbrook and Allen Edwin who do more than 300, but no national has been able to (yet). I don't think West Michiganders like national builders very much. 

Even in the best years, Grand Rapids only has about 1200 - 1500 new home starts a year. Eastbrook controls quite a bit of the market and did 360 last year, I believe their best year ever. 

I don't know what the median price is for new construction, but the median size of a new home in GR has risen to 2527 square feet from 2282 back in 2011. Your $250,000 is at the low end of new home prices. 

Pulte left the GR market back before the recession as we didn't meet their target for new homes built. I actually see that as a good thing. We don't boom (or bust) as hard as some of the markets they entered like Arizona and Nevada (which didn't sound like it turned out too well). 

Joe

[GRDadof3]

 

Going back to this, I perused several other heavy job growth markets (over 1 Million in the metro), and Grand Rapids is right up there at the top in growth percentage year-over-year, at 4.3%. Salt Lake City might be the fastest growing metro area right now with 4.4% a year, without doing a full thorough review. San Francisco is tied with GR at 4.3%. Austin has "slowed" to 3.3% annual growth. Denver is at 3.5%. Dallas is at 3.6%. Charlotte is at 3.3%, Raleigh has cooled a bit to 2.8%. The once hot (always hot) Phoenix and Atlanta have dropped into the 2% range. Orlando has moved ahead of the rest of dog-lagging Florida to tie GR at 4.3% annual growth. 

So the only 3 I could find even close to GR were Orlando, Salt Lake City, and San Fran. Cray. 

 

Most recent stats are out. Grand Rapids jumped up 4.8% over this time (July) of last year, even better than its 4.3% growth rate I posted about earlier. I'm seeing help wanted signs everywhere now.

http://www.bls.gov/regions/midwest/mi_grandrapids_msa.htm#eag

Edited August 24, 2015 by GRDadof3

[organsnyder]

Grand Rapids saw the largest percent change in brain gain (with a 92.7 percent increase in college educated adults between 2000 and 2013), followed by Winston-Salem (66.2 percent); Chattanooga (42.1 percent); and St. Louis (41.9 percent). This compares to roughly 30 percent for San Francisco and 32.9 percent for San Jose.

Brain Gain in the Rustbelt

[arcturus]

Brain Gain in the Rustbelt

A large number of non brainy people before helps.   Hopefully we don't plateau but one look at Mlive's reader comments gives me concern.

[GRDadof3]

Brain Gain in the Rustbelt

 

I don't quite understand the top chart and the 92% gain (100,000 to 200,000 seems like a leap of logic, not less a leap of stats), unless they're using old and new MSA definitions, but the chart down lower makes sense (25 - 34 population with college degrees went up about 12,000 in the metro)

 

 

Edited September 2, 2015 by GRDadof3

[arcturus]

Not sure if this was posted elsewhere but it's interesting that Tesla is supposedly interested in the area:

http://www.freep.com/story/money/cars/2015/05/06/tesla-motors-acquisition-riviera-tool-grand-rapids/70916758/

So I took a wrong turn yesterday trying to get to the airport visitor's center on Kraft.  52nd St is closed due to construction.  The building at the dead end was no other than Tesla with a big sign and logo.  Couldn't help but think what a positive sign this is to the local economy for Tesla to have a toe hold here.  While not a major employer it's nice to boast about it.

[MJLO]

Haha everybody uses JR    Tesla is our largest customer where I work.

[arcturus]

More on this muddled mess called the housing market.  Grand Rapids is up there with San Francisco as to how many new jobs it takes for every new residential permit.  The reasons may be quite different however.

http://blogs.wsj.com/economics/2015/09/10/why-is-home-building-lagging-job-creation-realtors-builders-disagree/

[x99]

Interesting, although I wouldn't quite describe it as how many jobs it takes to pull a building permit.  It's simply a ratio of new jobs to every building permit pulled. If anecdotal evidence is any indication, Grand Rapids has many of the same reasons for a high ratio:  Demand at the moment greatly outstrips supply.  Unlike many of the other high ratio cities, we have few if any foreclosures and vacant houses to fill.  At the moment, between builders and vacant lots, there are simply not enough to go around.  It's a positive sign.

[GRDadof3]

Interesting, although I wouldn't quite describe it as how many jobs it takes to pull a building permit.  It's simply a ratio of new jobs to every building permit pulled. If anecdotal evidence is any indication, Grand Rapids has many of the same reasons for a high ratio:  Demand at the moment greatly outstrips supply.  Unlike many of the other high ratio cities, we have few if any foreclosures and vacant houses to fill.  At the moment, between builders and vacant lots, there are simply not enough to go around.  It's a positive sign.

 

What the article is saying though, and I can attest to this, is that the pace of new residential construction (single family) should be much higher here in relation to the number of new jobs being created. The builders are saying there's not enough demand though, and realtors are saying the opposite. 

It's a head scratcher for sure. 

 

Edited September 10, 2015 by GRDadof3

[x99]

What the article is saying though, and I can attest to this, is that the pace of new residential construction (single family) should be much higher here in relation to the number of new jobs being created. The builders are saying there's not enough demand though, and realtors are saying the opposite. 

When you talk to builders, though, they are all months out, and can't find enough labor, and material suppliers are stretched.  Another big factor is availability of lots.  When new lots come up for sale, they are being sold in fairly short order.  The big question is where all of these people are living... Maybe there's a big tent city somewhere.  Or maybe they are staying in Kentwood until they can get out.. (oooh... that wasn't nice, was it?   ).  

[joeDowntown]

When you talk to builders, though, they are all months out, and can't find enough labor, and material suppliers are stretched.  Another big factor is availability of lots.  When new lots come up for sale, they are being sold in fairly short order.  The big question is where all of these people are living... Maybe there's a big tent city somewhere.  Or maybe they are staying in Kentwood until they can get out.. (oooh... that wasn't nice, was it?   ).  

Haha X99. Everyone in Kentwood looking for an "out clause?"

Is it that the availability for land is at a premium? One thing I had heard is that Commodities (corn, wheat, etc) are near an all-time high. Does that mean the availability of large parcels of land is low? Or is the appetite for building the infrastructure for a large scale development (a la Eastbrook) low at this point (once bitten, twice shy)?

Joe