Local homebuilders’ membership is growing nicely

Posted on April 23, 2013

After a few down years, an important — but possibly little known — indicator of the region’s overall economy is up.

Membership at the Home & Building Association of Greater Grand Rapids has grown and is continuing to grow. At the end of last year, the membership was under 400, but in just the first quarter of this year, it jumped to 420 — a 6 percent improvement in only 90 days.

“It was a nice increase in the first quarter,” said Emily Seibert, HBAGGR executive officer.

Seibert said the members that left the association, which turns 65 this year, did so because fees were tied directly to their activity in the trade. When they weren’t building homes, she said, they felt they couldn’t afford a membership. Some not only left the association but also the region. However, a number of those who left the region have come back.

“Now that new-home construction is increasing, they’re more active in the marketplace and want to be part of the trade association again. A lot of people join when the Parade of Homes comes around, and we’ve taken in all the entries for the Spring Parade, and builders come back to be involved in that, too,” she said.

“It’s all been driven by the market volume and it’s been a nice increase to see.”

Seibert said some people think the housing turnaround just got started, but the rebound actually began about two years ago. She said lending has risen since then and the existing home inventory has fallen nicely for the last several years. Both of those factors have helped carve out a need for new-home construction.

The Grand Rapids Association of Realtors reported that year-to-date residential sales through March were up. The number of units sold rose by 17.3 percent, while sales volume grew by 39.6 percent compared to the same three-month period last year. So houses have come off the market and at an average price of $139,534, which is 19 percent higher than a year earlier.

Seibert added that building a new home rather than purchasing has its own built-in attractions: It allows buyers to modernize and customize their living quarters to their personal tastes and do so with lower maintenance costs in the future. “So all of those factors play into the increases,” she said.

The disastrous year for the region’s housing market was 2009, when new-home construction bottomed out. Siebert said the normal level of housing starts is 3,800 annually, a figure that was established from 2000 to 2003. But just over 500 broke ground in 2009 — only 13 percent of normal starts.

“That’s not looking at the peak or the ‘bubble’ that people look at — the over-market number. That’s looking at what is a good level for our area from averages in the early 2000s,” she said.

“At the end of last year, we were at 1,300 units. So we have had a nice increase, but we have a ways to go. That was a 45 percent increase from a year earlier when we were at 900. We’re gaining a lot of ground. By the end of 2014, we’re thinking we’ll be back at two-thirds of normal levels.”

Siebert has data that backs up her forecast. The U.S. Census Bureau recently reported that housing permits in the metro area have had a year-to-year increase of nearly 23 percent. Builder Track, which follows residential starts nationwide, said the year-to-year start-ups in the area for the first quarter were up by 23 percent. Single-family homes and condominiums accounted for slightly more than 14 percent of that gain.

“It will take a year or two to get back to our normal level,” Seibert said.

Once 2009 was put to bed and the turnaround began, Seibert said the climb back to normal has been steady. The growth hasn’t been stalled by a housing hiccup, and for everyone involved that is a good sign. “We’ve had nice increases since 2009,” she said.

HBAGGR’s biggest annual event is just around the corner. The Spring Parade of Homes opens May 24, the Friday before Memorial Day, and runs through June 8. Seventy-four homes are on the tour, up from 71 last year. Sixty-nine of the homes can be checked out in person, while five can be toured virtually.

“We’re expecting to see our tour and sales tickets to increase just because with the (housing) inventory lower, people are looking and they need ideas and they need to see the potential home they could move into,” said Siebert.

Last year’s Spring Parade was a solid success. Entries were up by 25 percent, ticket sales were up by 17 percent, and traffic was up by 42 percent from 2011.

Tickets will be available online at mygrhome.com, at the six area locations of Option One Credit Union — the signatory sponsor of the Spring Parade of Homes, and at any home on the tour. Tickets go on sale May 10.

“Things have been on a steady climb, which has been great to see,” she said. “And we project that could continue through the next couple of years, when we hope to get back to a normal level in this market.”

David Czurak, Grand Rapids Business Journal.