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Michigan homebuilding remains on an uptick, but a host of issues continues to challenge the landscape.
Recent data from the Homebuilders Association of Michigan trade group based in Lansing shows permits for new home construction around the state continue to make year-over-year gains, but the state as a whole remains well more than 100,000 units short of what housing advocates say is needed.
Meanwhile, everything from labor constraints and inflation to the threat of tariffs continues to leave builders with a sense of uncertainty.
“And when you balance all those factors, I think you really see a stable housing market with tepid growth,” said Seth Herkowitz, COO and partner with Hunter Pasteur.
Oakland and Macomb counties led the state in overall permits issued. The former saw 1,787 permits — up 12% from 2023 — while the latter had 1,120 permits, 23% higher than the year before.
Wayne County had 602 permits, down 3% from 2023.
Macomb Township saw the most permits of any municipality in Michigan, followed by Milford, Independence Township, Troy and Canton Township, according to HBAM figures.
The trade association forecasts homebuilding starts in Michigan to grow 3.9% this year.
While such numbers do show growth in the sector — positive news considering the Michigan State Housing Development Authority estimates the state to be short about 141,000 housing units needed to achieve a more balanced market — they remain far below the inventory that builders in the state used to pump out.
Prior to the 2008 financial crisis and collapse of the housing market, metro Detroit on its own was regularly seeing 20,000 permits or more each year for several years, as Crain’s has previously reported.
In the years that followed, those numbers dropped to around 4,600 permits annually.
Per the HBAM data, the median price of a newly constructed home in Michigan was nearly $450,000, up from just more than $375,000 in 2023. That’s compared to about $245,000 for the median sale price of all homes statewide, according to Zillow.
“It really has to do, in my view, with the pent-up demand and the lack of production in Michigan,” HBAM CEO Bob Filka said of the rise in home construction.
“And the lack of inventory. … The median price on an existing resale price is considerably lower, but that’s if you can find one,” Filka added. “The availability of existing housing stock that’s higher quality has become so difficult that it really pushes people to consider new construction.”
The slowdown in construction a decade and more ago means as many as 60,000 tradespeople left the industry, which has never fully recovered, Filka said. As such, many contractors and the broader industry face capacity constraints.
Herkowitz with Hunter Pasteur — which develops and builds a mix of rental and single-family developments around the region — agreed that labor remains a “serious issue,” but said his company has managed to navigate that based on long-term relationships with subcontractors and minimal disruptions to capacity.
The looming threat of tariffs is also being closely watched by industry executives.
While Filka’s organization forecasts modest growth in permits this year, tariffs on imported goods from Canada and Mexico — currently on hold — and China, which took effect Tuesday, remain a wild card.
“My enthusiasm for our modeling is somewhat dampened” by tariff threats, Filka said.
Leading policymakers around Michigan have made the state’s aging and limited housing stock a key area of focus in recent years. That’s welcome news to Herkowitz, who said that is needed for the state to remain competitive going forward.
“I think good housing policy goes hand in hand with good economic development,” he said.
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