METRO DETROIT | Development & Projects

[Velvet_Highground]

Popular areas for entry homebuyers like the John R corridor are being swamped leaving stock for buyers that doesn’t fill their needs and or desires. While the national housing crisis is being felt in Metro Detroit with home prices rising at some of the fastest rates in the country some of the greatest increases have come in the most under priced areas.

The region isn’t at the point where buying a home is unaffordable but buying into your first and perhaps second or third choices are. The article mentions that there are still good opportunities for new buyers like the couple mentioned who moved to outer drive and Southfield, they are happy having close access to Dearborn’s downtown areas.

What’s concerning is the trend that economic forces are putting on the market as new home permits fell to pre-Covid and pre-great recession levels as prices rise. While the western Oakland-Livingston & the Ann Arbor area experience fast growth along with northern Macomb County it only serves to highlight the issue.

High demand in desirable areas combined with an and high cost of business is going to lead to loss of potential growth as people will continue to look out of state. A better or should I say real mass transit system is the obvious long term solution but with state and federal politics in flux with the democrats losing the state house and at every level federally hopes for expanding transit have taken a hit.

While I believe using apt hyperbole the ass crack of dawn to describe anything regarding the Duggan’s decision to run as an independent for governor. It’s a very interesting decision that is frankly a bit exciting with politics so hyper polarized.


Detroit’s inner ring suburbs are at a crossroads

*Expensive, aging housing stock

A recent study from the Joint Center for Housing Studies at Harvard University found that nationwide, the median sale prices for homes in 2022 were 5.6 times higher than the median household income, a more than 36% bump from 2019 when it was 4.1 times higher. That’s also the highest rate since at least the early 1970s.

And locally in the Detroit-Warren-Livonia metropolitan statistical area, per the Harvard study, the ratio was 3.8, compared to 3 in 2019 and just 2.1 in 1980.

The stock of existing housing in those suburbs, long seen as an entry point for first-time buyers and others, is in many cases aging and in need of expensive repairs made even more so by increased costs of materials and contractor labor.

Mortgage interest rates ballooned over the last few years to stem nagging inflationary forces, making the cost of homeownership more expensive.

Many of the communities were built out as the region grew, as freeways created in the 1950s made living farther away from where you worked more feasible. And there isn’t very much vacant land available — or land that can be easily assembled into large-enough chunks — to create new housing to lower costs. The land that is available, experts said, was almost always a prior use and requires costly cleanup.


*Sagging new construction

Case in point: According to data from the Southeast Michigan Council of Governments, better known by acronym SEMCOG, new housing permits issued in 2023 were 9% lower than in 2022 — and that’s across all housing types.

Single-family home permits fell 13% from 4,433 in 2022 to 3,876 last year. The decline was even more pronounced in condos, down 20% to 670 from 833 in 2022. And apartments, seemingly sprouting up on every major artery the last several years, fell by 3% last year, dropping to 4,787 from 4,939.

The market traditionally has followed boom and bust cycles leading up to the economic crash of 2008, said Jeff Nutting, SEMCOG’s socioeconomic forecast coordinator. But it hasn’t truly recovered.

“We were seeing building permit numbers of more than 20,000 per year, and we're not remotely close to that now and haven't been for some time,” Nutting said.

Between 1974 and the recession of 1980, the region saw single-family home construction alone averaging almost 15,000 new homes per year. While building petered out around then, starting in 1984, there were approximately 20,000 new permits for single-family homes and apartment construction through 1993, per SEMCOG data. And the building boom continued, with the years between 1994 and 2003 seeing almost 17,000 single-family home permits on average and 22,000 total permits per year.

Of course, the housing bubble took its toll nationally and around metro Detroit, and in 2007-13, the region averaged only 4,600 permits per year.

Fast forward to today, and in some inner-ring suburbs not one new residence received a building permit last year. Those include Grosse Pointe Shores, River Rouge, Ecorse and Royal Oak Township.

And Harper Woods, where Irma Hayes is the deputy economic and community development director. She pointed to issues like a lack of available land and high property tax burdens as key challenges to bringing new housing to the city.

….


*Complicated solutions

A national discussion has emerged about relaxing zoning rules to make it easier to intersperse different types of housing within communities with older housing stock, such as inner-ring suburbs, said Margaret Dewar, professor emerita of urban and regional planning in the Taubman School of Architecture and Urban Planning at the University of Michigan as well as a special adviser with UM’s Poverty Solutions.

For example, how could regulations be modified that would allow the assembly of a couple of small parcels within a single-family neighborhood to create a four-plex or a handful of townhouses, Dewar said.

“But it’s complicated,” Dewar said. “That’s something some cities are trying and having some results.”

But issues like suburban sprawl to areas like Macomb Township, Lyon Township, Washtenaw County, Livingston County and elsewhere remain, Dewar said, in what she described as “a free-for-all at the fringe.”

Outside the city of Detroit, the greatest concentrations of new residential permits last year were in the Ann Arbor suburbs of Pittsfield (652) and Scio (416) townships areas, where building new housing can be easier in some ways due to the broader availability of large, developable sites with little cleanup or remediation needed. Ann Arbor itself also had 477 permits.

“The cost to come in, demolish and build new or rehab, and follow all of the environmental requirements is a lot higher than if you were to go out to Novi and pick a cornfield and build a new subdivision,” said Erik Tungate, the city manager of Oak Park.

One way to combat that could be something Dewar described as tax base sharing, a concept that was floated during Gov. Jennifer Granholm’s administration. In essence, the tax revenue generated by new development would be shared.

“Then all areas benefit from that,” she said. “It means that then slow growth, decline, disinvestment doesn’t lead to as much tax base loss, which then enables those inner-ring suburbs to make investments that could improve their fortunes.”

https://www.crainsdetroit.com/crains-for...-top-concerns-detroits-nearest-neighbors