Metro housing boom gives economy boost

[Charles Brown <cbrown@xxxxxxxxxxxxxxxxx>]

Metro housing boom gives economy boost ( Is this part of the housing bubble
?)

Biggest jump since '98 may signal turnaround; Macomb, Canton, Detroit lead
growth in '03

By Gene Schabath and Brad Heath / The Detroit News


MACOMB TOWNSHIP - Construction of new homes in southeastern Michigan jumped
8 percent last year, an increase that experts say has added some spark to
the area's struggling economy.

Communities in seven area counties granted permits to build 23,413 new
housing units last year, the highest level since 1998, according to a report
released this week by the Southeast Michigan Council of Governments.

The increase in home construction, largely driven by low mortgage rates,
offers a rare bright spot in a regional economy hobbled in recent years by
the loss of thousands of manufacturing jobs. And while experts caution it is
hardly a sure sign of good times ahead, it illustrates with new clarity that
at least one corner of the region's economy - the housing market - remains
strong.

"It definitely is helping the economy," said Steve Cassin, executive
director of the Macomb County Planning and Economic Development Department.

Most of the new homes are going up in already-bustling townships: Macomb,
Canton, Northville and Brownstown. But Detroit now also ranks near the top
of the list and registered its highest number of building permits for new
homes in more than two decades.

Detroit still is erasing old houses faster than it's adding new ones, but
because of the new construction, the overall housing loss was the smallest
since the 1960s.

"It means they are doing some goods things in Detroit," said Janet Mocadlo,
planning analyst for SEMCOG.

The regional glut of new construction has been fueled largely by low
mortgage rates - now about 5.8 percent - which have made it increasingly
affordable for families to buy new, bigger homes in more distant suburbs.
SEMCOG analysts say it also reflects more confidence in the economy by home
buyers.

David Grager, 43, moved into Macomb Township two months ago because of the
low taxes and good schools.

"We were going to move to Washington Township, but that was too far for my
wife to drive to Detroit to work," said Grager, who was brushing his newly
poured concrete driveway. "There's no easy way to get down there (to
Detroit)."

His only complaint, he said, is the traffic that's clogged up narrow roads
not built to handle the influx of residents.

Home builders say the growth will continue.

Darshan Gerwal is president of Singh Homes, a development company based in
West Bloomfield that builds about 150 homes and 300 to 400 apartments each
year, mostly in Canton Township, Novi and other fast-growing suburbs.

"People want new houses. It's part of the dream," he said. "It's going to
stay this way. We're expecting another great year."

Doling out permits

Southeastern Michigan doled out 1,671 more permits for new housing last year
than it did in 2002, according to the SEMCOG report.

The biggest increases were in Monroe and Wayne counties, where the number of
building permits increased 37 percent and 20 percent, respectively. The
number of permits issued in Livingston County, which has the region's
fastest population growth, dropped 5 percent; St. Clair County's total
dropped nearly 17 percent.

The figures are based on reports by local building departments and include
construction in Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw
and Wayne counties.

"The residential market remains strong," said Robin Boyle, an urban planning
professor at Wayne State University. "It's been that way for quite a few
years. But it's pushing at the borders of a built-up region."

The strengthened housing market mirrors a national trend: This week, the
U.S. Commerce Department said sales of single-family homes increased 8.9
percent over last year.

For the seventh year in a row, Macomb and Canton townships were the
pacesetters for housing construction in Southeast Michigan, tacking on 1,421
and 1,003 new construction permits, respectively, in 2003.

More surprising, officials said, was the rapid increase in the number of
permits issued in Detroit. The city issued 872 permits last year, mostly for
single-family homes and apartments - the highest number of home-building
permits it has issued since 1982.

"People are getting interested in Detroit with the two new stadiums and the
Super Bowl (in 2006)," Mocadlo said. "Developers now realize there is a
demand for housing in Detroit. People are interested in moving downtown if
there is housing for them."

The economic impact of that increase - both in Detroit and across
southeastern Michigan - is less clear. Economists say such a surge in
housing construction is clear proof that the building industry here remains
in good health, but it does not offer enough clues to diagnose the economy's
overall condition.

"This sector is doing well," said George Fulton, a research professor in the
University of Michigan's Institute of Labor and Industrial Relations. "Does
it foreshadow a more diffuse improvement? I don't know. But things would
definitely be worse if housing wasn't doing this well."

Boom continues

The boom shows few signs of letting up.

Macomb Township Clerk Michael Koehs said accessibility to four major roads
and the choice of four good school districts are other reasons Macomb
Township remains so popular for new home buyers.

"It doesn't look like we're slowing down," Koehs said. "We offer some of the
lowest tax rates in the area, just under 4 mills."

Koehs said there is plenty of vacant land in the township for more growth.

"We're about 55 percent filled, so we have plenty of room," he said.

One of the most dramatic examples of the township growth is the big
population increase, Koehs said. The population has grown from 50,478 in
2000 to an estimated 69,800 at present.

"We're hoping to peak out at 115,000 to 120,000 in about 20 or 25 years,"
Koehs said.

The same is happening in Canton Township.

Gary Stanton, 40, moved there three years ago with his wife, Kim, daughter
Jane, now 10, and grandmother because of a top-rated school district and the
need for a larger house. They bought a four-bedroom Colonial to replace
their ranch house in Dearborn.

"I think Canton is terrific," said Stanton, an electronic technician. "The
neighborhoods are great. They all have common areas where you can take
walks. And the shopping is great. We have shops everywhere."

But, Stanton said, "the traffic is the worst."

The building boom's patterns trace the rest of Metro Detroit's growth, as
more of its population pushes outward from older cities and suburbs into
newer homes in bustling suburbs farther from the region's urban core. That
outward push has come with a hefty price: Townships are racing to improve
water lines and roads to keep up with the rapid growth.

"Sterling Heights and Clinton Township were hot 10 years ago, and now it's
Macomb, Chesterfield and Shelby Township," Macomb County planner Cassin
said.

Detroit News Staff Writer Mike Wowk contributed to this report. You can
reach Gene Schabath at (586) 468-3614 or gschabath@xxxxxxxxxxxx
<mailto:gschabath@xxxxxxxxxxx>