As we turn the page on 2022 and kick off 2023, it’s worth taking a quick look in the rearview mirror at the year that was; 2022 was a bust for new home construction in Metro Detroit.
While the final numbers aren’t in yet, it’s likely that 2022 saw the lowest permit numbers for Metro Detroit in over a decade; back to when we were just starting the recovery from the great recession.
Based on the November permit report, we’re guessing we’ll end up in the 3,500 range for the year; below our (new) normal of 4,000-5,000 permits/year, though not dramatically lower. For context, pre-Great Recession we peaked at around 15,000 permits per year, but by 2008-2009 our totals were in the hundreds, not thousands.
Many of you will likely connect those low permit totals to skyrocketing mortgage rates, but those rate increases didn’t really start to slow the market until Sept/Oct; permit volume was down all year.
Our thoughts? The lack of development has finally caught up with us. Builders, particularly local builders, scared to develop large tracts of land after losing millions during the recession, have been fighting over lots that were developed in the early 2000’s or sooner, and we’ve finally burned through almost all of them.
Sure, national builders like Pulte and Toll Brothers, and regional builders like Lombardo, have still developed lots, because they have the money to do it; outside of Robertson Brothers Homes, there aren’t many other local builders that can/will develop large parcels.
It also doesn’t help that every year, we seem to lose more builders as well.
Our guess is 2023 will see those permit numbers dwindle further downward, but don’t lose sight that 3,500 permits still means 3,500 homes will be built.
Not sure where to start your search? Worried you might not be seeing everything that’s available? That’s where we come in.
Don’t guess; work with an expert and know for certain that you’re seeing everything – connect with us to discuss your new home search!
Update 1.23.23: the final permit reports for 2022 are out and as predicted, Metro Detroit was at 3,511 single-family permits for the year!
Jeff Bortnick & Lou Bitove, owners of The New Home Experts®, have nearly 40 years of combined experience in real estate, much of that with builders like Pulte & Toll Brothers. They also provide market research for area builders, developers, and national firms. If you’re considering a new home, remember: the builders’ rep represents the builder, not you. Work with the only local agents in Metro Detroit to specialize in new homes, and save money in the process – ask us how!