In our last post we discussed new incentives that states are giving to home buyers to stimulate the housing market. Those efforts seem to be helping aid the recovery of home prices and have the added benefit of filling up homes that have gone unoccupied since a foreclosure. As a result, the construction industry has started to gear up for increased activity over the next few years, which may be a good sign for Detroit and the rest of Michigan.
“We are going to turn the corner … ’13, ’14, and ’15 are going to be great years for the United States of America,” a local building company CEO told a crowd at an industry conference.
While home prices here are still about 35 percent below levels at the peak of the housing market, many in Michigan are optimistic about the gradual progress that the state economy is making. Although home prices have fluctuated over the course of the past year, Michigan property values have been steadily improving and are projected to continue to improve at a modest 1 to 2 percent in 2013.
As we discussed in a previous post, existing home inventory has been leveling out, which means that sellers are in a better position and demand for new homes has returned. In southeast Michigan housing starts have increased by 57 percent since the beginning of the year. It is still much lower than pre-recession levels, but represents a significant increase over the past few years.
Last year employment growth in the state was the fifth strongest in the country, which could translate to increased demand for newer or remodeled homes in the future.
Source: Detroit Free Press, “Building industry waits for recovery,” Greta Guest, June 27, 2012.