GRDadof3

West Michigan/Grand Rapids Economy

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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 by arcturus

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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 by GRDadof3

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#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. 

 

 

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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

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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 by GRDadof3

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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

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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 by GRDadof3

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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.

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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/

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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.

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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 by GRDadof3

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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?  ;) ).  

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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

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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)?

A lot of the new lots over the last couple of years were completions of old projects.  That left an affordable supply for awhile, but it is basically dried up.  It can take a year or more to go through site acquisition, surveying, and municipal approvals and other legal hurdles before a shovel even hits the ground.  The few lots in decent school districts are starting at $60,000, and houses at $300,000.  At least some of the issues for new construction starter homes have to do with the lot width requirements and green space requirements.  Instead of traditional deep, narrow lots, most "modern" codes around here require wide, shallow lots.  This drives infrastructure costs through the roof.  Byron Twp has a minimum 90' lot width, which essentially precludes affordable lots and assures vast amounts of wasted land.  Gaines Twp is 80'.  They also often require 24' wide streets.  Every lot, by law, is a luxury lot, and abuts a street wide enough and built beefy enough to handle 8,000 cars a day.  It's absolute lunacy, and it destroys your ability to accommodate an influx of jobs and people.   If someone could throw up a subdivision with 50' or 60' lots on 16' wide streets with 1600 square foot above graded houses, they would probably do it.  But they can't.  The zoning codes were all designed to preserve "rural character" (and ironically ensure it is completely destroyed).

Edited by x99
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That is true. Those can be amended with a PUD, if done properly, but they usually face a lot of resistance (the new townhomes in Rockford for instance). But I haven't seen a lot of large scale PUD's put forward in WM in a while. 

It's hard to get people to understand that by trying to "preserve rural" they are in essence destroying more rural area. 

 

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Grand Rapids is mentioned in the latest RealtyTrac data as being one of a few metros that have reached a 10 year high in home sales.

http://www.housingwire.com/articles/35138-half-of-major-metros-on-track-to-hit-highest-home-sales-since-2007

The local inventory of homes is anemically low. I've heard of people who had to abandon plans to move here for a job because of lack of housing.

http://www.grar.com/docs/media/august_2015.pdf

(last page)

I think we could use a correction in local land values so that builders can start increasing inventory. 

 

 

 

Edited by GRDadof3

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Local inventory even lower now.  Hard to see it dropping much further.  There's always property out there which for one reason or another hasn't sold including sellers listing at unrealistic prices.  I'm seeing new single family homes recently completed on spec that aren't moving because they're simply priced too high.

Multi-family is booming to no one's surprise.

http://www.grar.com/docs/media/september_2015.pdf

Edited by arcturus

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Local inventory even lower now.  Hard to see it dropping much further.  There's always property out there which for one reason or another hasn't sold including sellers listing at unrealistic prices.  I'm seeing new single family homes recently completed on spec that aren't moving because they're simply priced too high.

Multi-family is booming to no one's surprise.

http://www.grar.com/docs/media/september_2015.pdf

 

Unemployment dropped once again in September, pretty much full employment in the 3% range. My guess is the red hot job growth will slow down a bit (grow rapidly but not as rapidly) now that full employment has been reached. I'm still hearing of a lot of companies growing.

New home construction starts cooled this summer (probably because of the nice July/August/September weather) but rumor on the street that this Fall is like a fire hose in new activity and people wanting to build.

 

Edited by GRDadof3

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These delegations from other cities happen quite a bit now, most of which you don't hear about:

http://www.journalgazette.net/news/local/Idea-mining-in-Michigan-9368356

When it comes to the downtown proper, existing housing is too expensive for most millennials, Adams said. But city officials are working to add housing options across the price spectrum.

Seems like a pretty broad statement coming from someone at the Chamber of Commerce. No?

Edited by GRDadof3

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Grand Rapids made #2 in the country on this list of best places to own rental property. I sometimes cringe at these reports because it will tend to draw outside investors driving up an already hot real estate market. 

http://www.allpropertymanagement.com/search/michigan/grand-rapids-property-management-companies.html#rental-ranking

Good or bad? 

 

Edited by GRDadof3

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Good or bad?

 

Good. I own property in GR metro. Let the prices rise! 

I'm sure nobody is complaining when their 401ks rise because one of their fund invests in rental related companies. 

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Good. I own property in GR metro. Let the prices rise! 

I'm sure nobody is complaining when their 401ks rise because one of their fund invests in rental related companies. 

 

It doesn't do any good if your rental company stock goes up but your buying power for a home goes down. Even if you sell in an up market and make gains on your home, you're also buying in an up market and pay more. Any undue pressure on a housing market from outside investors/flippers is never good for any real estate market. Look at the runups in Miami, Vegas, Phoenix and other hot markets. Those housing markets still have not purged all of the massive number of foreclosures they had, unlike West Michigan. 

Edited by GRDadof3

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