What’s Happening in New Construction

Permits for single family homes are up through April nearly 35% in 2024 over  2023.  We discuss what this means for the supply of new homes, the latest trends - including what appears to be a trend for smaller homes -  and what are the factors homebuilders facing this year.  We also share information about the Parade of Home happening throughout the month of June.

Episode Transcript

(00:00):
You are listening to the Remax realEstate Insights show where you get real talk
by real agents, brought to youby REMAS of Southeastern Michigan. Well,
welcome to the Remax real Estate InsightsPodcast. We're happy you're joining us today.
Today, our topic is going toprimarily focus on new construction and the
parade of Homes that's happening here inSoutheastern Michigan. You might not know it,

(00:24):
but permits for single family homes areup this year nearly thirty five percent
over twenty twenty three. We're goingto discuss what this means for the supply
of new homes coming to the market, as well as what trends are popular
and new construction home these days,and maybe what appears to me maybe a
small trend arising that people are lookingfor a little bit smaller homes. So

(00:45):
we're going to talk about all ofthat and more. Also, June is
Parade of Home month here and we'regetting we're going to discuss what you need
to know about this popular annual eventwith me today is a repeat guest Forrest
Wall who's with Homebuilders Associations of Southeasternmass Michigan. He is the CEO of
the Homebuilder Association, and we're happyto have you back for us, Hygeenett,

(01:06):
thanks so much. I'm happy tobe here. Well, so let's
talk. Let's start maybe about Predeof Homes. It is the event dujur
as we say it is, ifI understand correctly, it is the thirty
fifth annual event. Yes, thisis the thirty fifth. Hard to believe,
but yes, the Parade of Homes. We kicked off on June first,
And for those who may not befamiliar, the Parade of Homes is

(01:26):
an annual event. It's a it'san exhibition of new model and inventory homes
located throughout southeastern Michigan. And soit's it's a free program, which is
great. It's yep, it's it'sscattered site though, so it's not the
homes aren't all contained in one location. It's a scattered site, you know,
showcase of homes, which is reallynice because it gives the home buyer

(01:49):
the opportunity to go out to differentcommunities as well as seeing different types of
housing. This year's program includes thirtytwo you know model or pre construction under
construction homes, and so it's justa really really nice time of year for
people to be able to see what'snew in construction. Well, speaking of
construction, if you're out there readyto brave the roads, like you said,

(02:10):
you can go to all the differentsites that you have. But I
do like that you said it's ascattered site. It's not like it's one
development where you're just seeing a coupleof different models. Within a development.
You can see where there's Oakland County, McComb County, you can kind of
see that. So if you've gotthirty two different models, I'm guessing different
builders are represented. How do youdetermine which homes every year are a part

(02:32):
of this event? Yes, Sothis program is put on by the home
Builders Association in Southeastern Michigan. Sowe are a trade association that represents residential
builders, remodelers, developers, tradecontractors, suppliers of the industry. And
so it's available to all of ourmembers. Any of any of our builder
members who who you have a modelhome, have a construction underway, they're

(02:57):
able to take advantage of it.So that's great because our members ship is
is very diverse too. I meanwe have large production builders. They're cranking
out hundreds of homes a year andthen all the way to you know,
very custom builders and maybe just bedoing a few years. So that's a
really nice feature of this is thatyou're going to get a really a good
cross section of the industry. Now, when we say southeastern Michigan, that

(03:19):
can mean different counties, two differenttwo different organizations or you know how so
when we say southeastern Michigan in yourworld, right does that we primarily for
the association, we cover Wayne,Oakland, MacComb, Saint Clair counties,
but our members traverse southeastern Michigan.Maybe at a little bit broader scale.
Some of them are building up inGenesee County or Lapierre County or over in

(03:40):
washingtaw So our members are are youknow, building throughout the area. But
it's it's what you would consider tobe you know that that four county region
is where we concentrate a lot ofwhat our activities are. That chah.
Now, when we hear the phrasenew construction, it's some people. Not
everybody might think luxury homes, customhomes. Like you mentioned, there's a

(04:00):
few people, you know, foodbuilders that might only do a few a
year, But there's really despite whatI think the news is set of late
that there's no affordable construction homes,you know, or entry level homes.
It really does have a range ofprice points. Absolutely, yes, we
we've we have a real emphasis onthat our this year's parade. The price
points are anywhere from the mid liketwo thirties all the way up well over

(04:23):
nine hundred thousand dollars. So again, there's really something in this parade for
everybody, whether you're a first timehome buyer, whether you're somebody who may
be downsizing, somebody who's moving upto a larger home. There's really going
to be a ton to see.And and you're right, I mean,
so much of the narrative is thatthere there is no you know, entry
level and I'll be honest, itis getting harder harder for our members to

(04:46):
provide that for a lot of reasons. But but there, but through the
parade we try to emphasize the factthat there are homes for foreveryone. Well
kind of like an actual like holidayparade if you like, bas got that
like the cloud we've got that youhave the same thing. You've got price
points to kind of meet anybody's anybody'sneeds. Absolutely, And the other thing
that I always I found interesting andI always want to highlight is when we

(05:10):
when we say, you know,paradi homes, I think a lot of
people think single family residential, butcondos also are also included, are they
not? Condos are a big partof this. There's I think there's five
attached condo products in our parade thisyear. So again it speaks to the
variety. We not only want togive price point variety, but we also
want to give variety in types ofhousing. Certainly, you're right. Sometimes

(05:31):
the thought process as well this isthese are luxury homes, and there are
luxury homes here, but there arealso condominium products, which again when you
talk about first time home buyers,this is a great way to get into
a first time home, you know, people who may be downsizing. So
so there is quite a variety there. Yes, that's always always always good
to have. And we were chattingjust a little bit before we turned the

(05:55):
recording button on because it was justthe first weekend. Ye I was asking
you, first week out of thegate, how did it go? Get
lots of traffic? Yep, firstweekend's great and as you might expect the
weekends, you know, the paraderuns from June first to June thirtieth.
The weekends are there's special emphasis there. It's easier for people to get out
to see some of the homes andstuff. But yeah, we keep track
with our builders of the in personvisits to the sites, as well as

(06:19):
tracking what's happening on our website andthe traffic there, because that's a significant
part of this. You know,even though the physical parade is the month
of June, what's great now isthat our website can provide this information year
round, and so we carefully watchedthe traffic there too. But yeah,
we're off to a great start.Well, speaking of the website where people

(06:39):
can get information, yees, whereshould they go if they want to happen
yep, www dot Parade HbA dotcom is where people can go for all
information and it's it's really nice becausethere we can even go beyond what's in
the print publication with some of thephotos and renderings, as well as some
of the event information that some ofour builders are putting in there. Now,

(07:00):
everybody loves the party, and Iinterstand from going out to the website,
you know that there is some openhouses and other things that may be
part of this event and they cango to that website to find out more.
Absolutely, yes, some of thebuilders like to do open house parties.
There can be We have a seriesof giveaways. Actually each week we're
doing a hundred dollars gift card giveaway. Is a part of the parade.
It's our way of saying thank youto the public for embracing this program which

(07:23):
has been so successful for thirty fiveyears. But the website is the primary
place where you can go to registerfor those giveaways, but the builders will
put all their house party information onthere as well as well. So does
it ever get old planning this event? I know a lot of work goes
into Well you didn't even have tothink about that, did you. Well?
And kudos to our VP of Communication, Susan Adler Shanto. She's really

(07:45):
the one. I'm blessed to havea wonderful staff at the HbA, but
she's really the one that pours herheart and soul into this and we it
never gets tiring. We love doingthis program. It comes out great that
you know, the magazine itself,the physical magazine is beautiful and those are
are available. They came out thisweekend. If you have a Detroit News

(08:05):
or free press subscription that came there. We also have them located at Lake
Michigan Credit Union locations. Lake MichiganCredit Union has been a wonderful partner for
us. They sponsor this parade andso they're available there. So I really
encourage everybody to try and get theirhands on a physical copy. The website
is wonderful too, and it providesa ton of information, but the physical
copy really is is a nice wayto look at it too. In Lake

(08:26):
Michigan Credit Union, they've been asponsor of yours. They have for many
years now. They're just a great, you know, supporter of our association
generally, but they're a great resourcefor the public, for the home buying
public. They do some wonderful workin the space of mortgages, wonderful anything
else about the parade that we shouldbe talking about, just get out and

(08:46):
see it. That's that's the way. I just I think people will be
very, very impressed with, aswe mentioned, the breadth and depth of
this parade and what's the offer inthe new innovations and home building. I
mean, and I think that there'sa lot of people out there, let's
face it, there's a reason realestate related shows do so well. You
know, you know, streaming servicesor TV wherever you you know, you

(09:09):
watch people have an interest in realestate. And even if you're not in
the market, I hope you're inthe market to buy. But even if
you're if you're not, maybe ifyou're just on the shoulder, you're not
quite ready yet, you get ideas, you start to understand what's out there.
You're you're absolutely right. I meanwe stress that too. I mean,
even if you're not quite ready tobuy, get out and look at
the homes, because you're going toget a lot of ideas so that when

(09:30):
you are ready to buy, you'llhave a much better feel, you'll have
a much better comfort level of youknow, the price points, the timelines
that you want, what type ofbuilder you want to work with, some
of the features that you might wantin a home. Because really seeing is
where you stimulate ideas that you mightnot have thought of before. Absolutely,
so it's it's it's a great wayto do that. I mean, I'm

(09:52):
a very vision and I've said beforemany times, I'm a very visual person.
I mean, and I think itfrushed my husband frustrates my husband in
that time because he can picture itin his mind real easy, and I'll
just kind of be looking at giedme to draw this for you. Yes,
that is exactly what I need.And so somebody like me, you
go in and it's you know,three D and I can kind of really
see what something looks like. Itmakes a big It makes a huge difference

(10:13):
to be able to see it inperson. You know, the touch and
the field aspect of it, andit's just it's it's an exciting time when
you think about something like this that'syour biggest investment, right, you know,
it really is a a It canbe a very fun It can also
be overwhelming if you're not careful,but it can be a very very fun
thing to be able to go andjust see what's new in building. Well.

(10:35):
I mean and if you are,like I said, kind of on
the cusp of you know, consideringmaking a move, upside downsizing, first
timing, whatever you're at, andyou're in the process of saving the money
for it, I mean that thatthat can get to be old hat after
a while because you're typically if you'resaving for something, you're having to give
up on something else. And ifyou can kind of get in and get
excited again about why am I doingthis? Oh, this is this is

(10:58):
what I'm working for. That Ithink also helps. And being able to
get out and see those different communities. You know, we have some phenomenal
places to live in southeastern Michigan,and so being able to get out and
visualize the community that you might beinterested in is a great way, you
know, to think about the buildingprocess and think about, you know,

(11:18):
what you want in a home too. You couldn't be more right, I
mean, and my husband and Imoved earlier this year, and we only
moved about let's say twenty twenty totwenty five minutes. I mean, so
it wasn't like we moved across thestate, right, But what a difference.
I feel like we're living in anentirely different area. It just because
of the change in just what theneighborhood looks like. It's a little more

(11:41):
rural overall, and we just kindof keep pinching ourselves. I can't believe
this is literally twenty minutes from wherewe used to live. But I feel
like I'm on vacation every day.Absolutely, yeah, yep, that's a
great thing. Makes sense to getout there. So we're talking with Forest
Wall, CEO of the home BuildersAssociation of Southeastern Michigan. We're going to
start to pivot and kind of turnthe corner a little bit away from the

(12:03):
parade of homes, or we'll kindof get back to that at the very
end again with where people can goto learn more about that. But wanted
to get your thoughts on some ofthe bigger, you know, new construction
arena news. And one of thethings I want to start with is single
family housing permits are up thirty fivepercent this year over twenty twenty three.
That is not something typically talked abouton the news. It's not something that

(12:26):
I think most of us would haverecognized as a fact for sure. Kind
of what's behind those numbers? Doyou? Yeah? So, the Homebuilders
Association provides a monthly new Housing Permitreport that we put out so locally,
Yes, for the first part ofthe year, we're up thirty five percent,
which is great news, and it'sI think it speaks to the obviously

(12:46):
the strength of the marketplace, andespecially in a time frame or a time
period where there is such a lackof existing inventory, usually you find home
building will will help to fill alot of that gap, and so that's
some of what we're seeing happening isjust I think of, you know,
the strength of the marketplace, butalso maybe a realization that we're you know,

(13:09):
we're not going back to three percentor four percent rates, and so
it's it's the marketplace has been strongerthis year over last, although I still
think we have a little ways togo. I mean, we're when you
look at it historically the last youknow, ten years or so, we're
still not back to probably where weshould be. And you know, as

(13:30):
you know, there's you know,the Michigan State Housing Development Authority has continued
to provise their numbers about the housingshortage in the state, and it's and
it's absolutely true. We're well shortand we need to be building more.
It's i mean, the numbers arestark. I don't care where you get
it from. I was reading avariety of different housing related stories today this

(13:50):
morning, and one of them itwas more on a national level, but
they were saying in the seventy inthe nineteen seventies, roughly you know,
four hundred thousand entry level new constructionhomes were being built here. By the
early you know, two thousands,it was down to one hundred and fifty
thousand. By twenty twenty it wasdown to sixty five thousand. When you
when you start to just put thatinto you know, into your head and

(14:11):
go, okay, every one ofthose numbers are represents a family absolutely that
needs a home. Yes, ohmy goodness, there is a shortage.
There's absolutely a shortage, especially inthat you know that that first time home
buyer, you know, space,and you know, I think it also
speaks to the importance of what ourpolicy makers are trying to do. You

(14:35):
know, there needs to really bean emphasis on economic development, on bringing
jobs to this state. And housingand economic development go hand in hand,
right, I mean, without astrong housing market, businesses decide not to
not to remain here or to comehere from other places. And so we
really do need to have a focuson the attainability of housing, making sure

(15:00):
our public policy aligns with that.But it's just so fundamentally important to our
economy too, it is. Andprobably jumping ahead a little bit, but
since we're kind of on you know, what could be done from a public
policy, we've got elections this smallwe're from national, you know, down
to local. What should we belooking for in candidates that would speak to
what you're talking about. Yeah,I think. I mean, on a

(15:20):
local level, we really need tohave more conversations around zoning, We need
to have more conversations around housing impactsas it relates to all the things that
local governments do, you know,the ordinances they pass, the you know,
the different things that they're doing intheir local community. And so looking
at candidates who have an eye towardsthat is I think is important. On

(15:41):
a state level. You know,as I mentioned, economic development is a
huge piece to this, and rightnow that a lot of news was coming
out of the Macanaw conference related tosome of the economic development incentives that the
state's looking at. The SORE program, the higher program. These are all
important things, and it's important theway that they're structured so that they not

(16:02):
only foster, you know, reinvestmentfrom the existing businesses that are here,
but we're hopefully attracting businesses from otherstates and bringing jobs that are good paying
jobs because housing is expensive and soand it's not getting cheaper. I mean,
there's a variety of issues behind that, but it needs to our economic
development policy has to be structured insuch a way that we're bringing good paying

(16:26):
jobs to the state and providing arange of housing, you know, opportunities.
It's just as important for us tobe building you know, housing at
two hundred and fifty thousand dollars fora home as it is to build nine
hundred thousand dollars a year homes,because you need a wide range of housing
so that people can move up,you need a healthy housing market. And

(16:48):
so those are a couple of things. On a macro level, I think
that we need to really have,you know, more conversations on I think
the good thing is in the statelegislature. You know, they now have
housing committee that are set up,and so there are some of those conversations
that are happening well, I mean, and it is interesting because this has
started to come out, you know, over the last several months, you
know, and again kind of typicallymore on a national level, but talking

(17:11):
about you know, it now takesover one hundred thousand dollars salary to afford
the median price you know home.Now, I would say, you know,
Michigan, we are in southeastern Michigan, for sure, we're a little
less than what the national median priceis for a home. So Detroit area
still has better affordability than a lotof other major metropolitan areas, but our
own prices keep going up to rightright, And I mean, and so

(17:33):
when you start to say, youknow, okay, somebody needs to make
the latest figure I saw was onehundred and fourteen thousand dollars you know,
annual salary to be able to afforda median price home. That starts to
put in perspective what a struggle itcan be for people. It absolutely is,
and I think you know that's that'sone of the ways that we always
try to frame it is not onlyin terms of what it takes to afford

(17:53):
you know, an average home,what average home, but also when you
add regulations that increase the cost ofhousing, how many people that knocks out
of the housing market, Because thosefigures are just as startling when you start
to see even something as you know, as minimal. I don't mean to

(18:15):
take it lightly, but as athousand dollars increase in the price of a
house, you know, knocks outa whole air of people from being able
to afford. I mean, there'sa real impact there. And so from
a from a policy perspective, youknow, the regulatory side of this are
the National Associational Homebuilders estimates that it'sthe in terms of an overall price of
a house, twenty five percent ofthat is in regulation. And so we

(18:38):
really need to be very very carefulabout you know, and some of these
things are are absolutely important. Youknow, we need we need good code
enforcement. You know, we needto have our homes, new homes inspected,
those types of things. But thereare also a lot of regulatory hurdles
that can hurt, you know,the housing market. So we need to

(19:00):
just be very very careful about thosetypes of things. When I be putting
you on the spot to give acouple of examples of things that people may
not realize fall into the regulation basket, they add, we will certainly yea
codes. You know, that's oneof the I think one of the things
that we're really keeping our eyes onnow. So here in Michigan, our
law basically says that every three yearswe're updating our residential building codes every three

(19:26):
or six years. The state hassome flexibility there, but we have an
eye right now towards the energy code. That is to say, the portion
of the building code that deals withinsulation and the things that affect the comfort
level of your home and the energyefficiency of the home. The State of
Michigan right now is proposing a controversialchange to our energy code that our studies

(19:51):
show would add upwards of twenty thousanddollars to the price of a very modest,
couple thousand square foot home. Sothe problem with this code is that
it does not many parts of itdo not meet another part of our state
law that says that code upgrades asit relates to energy efficiency need to have

(20:12):
a seven year payback. That's aconsumer protection provision in our law. So
if I'm going to pay the moneyup front over seven years, I have
to basically you're going to recoup thatin energy savings. There are some provisions
within this code that have ninety toone hundred year payback perduce. That's not
sensible, and so we need tobe again, very very careful. We're

(20:34):
as an organization, we're very muchfor code updates and making sure the safety
of the house is primary and numberone, but we also need to be
sensible, especially in an environment wherewe've got increased material costs and labor costs
and interest rates, and where wehave a complete lack of supply. This

(20:57):
is one of the things. Andso that's a that's probably the number one
policy issue that we're looking at rightnow as far as of you know,
a regulatory change that could could reallyhave a negative impact on our marketplace.
And ook I think, and Ithink most logical people would agree, is
you know, there whether it's newtechnologies or just new information that you can

(21:18):
help guide some decisions for moving forward. And you don't want to bury your
head in the sand. You wantto take a look at everything that's out
there, but at some point somethinghas to be the priority, and it
would seem to me right now thepriority is more housing stock availability to put
people who want to be in ahome in a home. It should trump
some of these other I guess Iwould look nice to have, but not
need to have as well. Andwhen you especially when you look at energy

(21:41):
efficiency, you know homes now arebeing built to a much higher standard goodness
than they were in the nineties,especially in the eighties, seventies, sixties.
So if you really want to havean impact, you really need to
look at the existing housing stock fromthirty, forty fifty years ago and provide
incentives that will help people to upgradethe energy efficiency of those homes. That's

(22:03):
where you can really make a difference. The new housing stocks already being built
to a very high standard. Andso when you have these little small gains
in energy efficiency, but the upfrontcost of those is so significant, that's
where you have to say, Okay, wait, let's let's stop. Take
a look at this a little bitfurther. Well, and before we sold
the house that we were in,and that one was built in ninety so,
I mean, I don't think itwas a poorly built house by any

(22:26):
stretch of the imagination, but ithad original windows. So we paid and
I chuggled because you know, theywere don't forget the tax credit. So
when the tax are come, like, wow, that three hundred bucks is
really going to go really going togo far based on what I spent to
put new windows in the entire house. Well, and that's it's it's one
of the areas where I think,you know, our state policy makers,
you know, have some decisions tomake. It's it's it's it's more regulation,

(22:51):
putting more on the backs of thebuilders, in on the home buyers.
Or is it a way that thatgovernment can be a partner in that
process. I think, you know, mis State Housing Development Authority, the
new director, Amy Hovey, hasdone some fantastic things in you know,
realigning what the needs are of thestate with the direction of the housing agency.
And so that's a good example rightof where we can be deploying some

(23:15):
money in a positive manner to helppeople versus just you know, regulatory schemes
that don't necessarily have have a realpositive impact. Well in regulations on in
any industry. I mean, italways comes back to the to the consumer
in the end. I mean realistically, that's always where it's going to land.

(23:36):
And the last thing, you know, in our industries are you know
kind of sister and brother the lastthing your industry needs and the new construction
are you know, typically we're moreexisting home sales needs. Is a fewer
things standing in the way of puttingpeople in home. That's the last thing
we need right now. We're alreadydealing. You know, you've alluded to
it. Higher interest rates. Everybodythought about this time of the year they
were going to start to head down. Inflation hasn't played out that way and

(24:00):
doesn't move in anything, and thatball seems to be getting kicked further down,
further down the field, and soI mean, I don't see that
change in any time soon, No, I think, I mean, for
the reason you just mentioned that,you know, inflationary numbers are still consistent
with with you know, the Fedkeeping things where they are. I think,
you know, the important thing wetry to talk about is that a
seven percent interest rate is still historicallyspeaking, you know good, it's it's

(24:26):
still good. We are not goingback to the days of three and four
percent. I don't know how manytimes we can I don't know how many
times we have to say that,but but really, when you look at
it, it's still it's still afairly favorable rate. But I do think
that's still having an impact. Andyeah, we don't we don't necessarily foresee
there being much of a change thisyear. Hopefully next year we'll see some

(24:47):
moderation, maybe down into the sixpercent. Psychologically, I think even that
would would help a little bit.We were lucky enough and we bought very
early in the year that we gota rate that started with the sex,
you know, and it was shortlyafter we close they bounced, you know,
back up. And I agree,the first house we bought had a
rate closer to nine percent. Imean, so this is still well and
when you look at it, it'sit's it's sort of like stock market too.

(25:11):
You know, you don't try tobeat the stock market right most but
told right, you can't. It'sit's that's it's impossible to predict right,
right, And so the same goesfor this. I think, you know,
trying to predict, okay, whenwhen will rates fall just below seven
percent or when will they continue?It's it's that's a very difficult thing to
do. And so we tell peopleit's just you know, if if you've

(25:32):
got the proper product with the rightbuilder, you feel good about it,
your your job can support that,it's still a very good time for you
to to, you know, jumpinto the thousands. Well, and I'm
going to assume that you're going tohave your the new the new build side
of things would have the same dynamics, is I feel the existing residential side
does. Which is if in wheninterest rates do you you know, kind

(25:52):
of take a little bit of aof a step back, maybe they do
go under seven and they get intothat sixth range. There are buyers sitting
on the fence waiting for that tohappen, and so now you're going to
be competing with the bigger with evenbigger pool of people than you've already got
out there. So I don't knowthat waiting helps you from that perspective.
I think that's a very very goodpoint and we absolutely would agree with that,

(26:14):
there's no question. Well, let'stalk a little bit. One of
the other things I caught off ofone of your your updates, and it
changed a little bit from one monthto the other, but it seems as
though there was a little bit ofa trend going towards the average size of
a home shrinking ever so ever somuch is that in your I mean,
due to people trying to cut cost. Is it that people realizing they don't
need a big mansion. Yeah,so it is an interesting dynamic. You

(26:37):
know, what we saw at thebeginning of the pandemic was you know,
actually a little bump up in thesize of a home, and which is
as you as you might expect,was was directly related to people being at
home more and deciding, okay,I needed the home office and I'm going
to yeah, I'm going to dothat. The last couple of years,
though, we've we've we've definitely seenthat flip. They're they're the average size

(27:02):
of the new home is is isdecreasing, and you put your your finger
on on the big part of that, which is cost. You know,
we're faced the builders are faced with, you know, increased material costs,
labor costs. Obviously interest rates arein that mix. So you know,
what's the best way to deal withthat? Make the home a little bit
smaller. But I think that there'sa second part to this that that is

(27:23):
important as well, and that's that'sbuy our preference. We've seen the buyers
out there start to look at featuresover size, okay, to a to
a greater extent too, And soI think both of those things are impacting,
you know, home size. I'mnot sure you know going forward,

(27:44):
you know, it's again, thisis a difficult thing to predict, but
I would I would suspect as longas interest rates are kind of where they're
at, we'll continue to see somedownward pressure on the size of the of
the home in people making those choicesto maybe look at features over size.
Okay, So you're leading me tothe next obvious question, what are the
features that people are interested in.You know, there's there's a few definitely

(28:04):
that that I hear from some ofour architects and designer members. You know,
Number one is space that has multiplefunctions. You know, if you
have a have a bedroom that thatyou're using as an office, you know,
having part of that space be availablefor the kids for crafting for example.
You know, having those those typesof multifunctional spaces. What goes along

(28:27):
with that is in open floor plans, we're starting to see people that are
using space a little more wisely whereit might have been just open space before.
If you got a little alcohol thatoff the kitchen that maybe you're you're
you're utilizing that space for a laptopand you want to drop your mail there
rather than cluttering the kitchen countertop.So having some spaces like that where where

(28:48):
you where you have the ability tohave multiple functions. We definitely have seen
the rise obviously, and this waspandemic related to the attention to outdoors,
but the transitions between the indoor andoutdoor spaces and thinking a little more intentionally
about more light coming in some ofthose exterior design features would and so forth

(29:11):
being brought to the inside, andjust thinking more intentionally about that, and
then I think I think third oneof the things I've heard is is just
a a bolder use of color,which is sort of an interesting People are
personalizing more so, they're using morecolor, not only in paint, but
but you know, kitchen features andthings like that. They're not afraid to

(29:32):
make their space they are there,which you know goes against that kind of
traditional use neutral and controls. Andbut but that's one of the things that
we've started to see too. Wellthat's kind of exciting because it'll usher in,
it'll date my house then because becausewe just bought was very neutralized.
I'm more of a neutral guy too. But but no, I think it
is an interesting, you know,dynamic in the space right And I can

(29:56):
see, like you said, gettingmore effective because just about anybody you talked
to, whether we're talking to himin our life or you listen to any
real estate related show on TV,everybody wants the open floor I haven't heard
anybody say, you know, Iwant the kitchen to be its own room.
That doesn't it doesn't go into anythingelse. Everybody wants an open floor
plan. But to you know,to your point say, people are finding

(30:18):
more creative ways to within the openness, find little niches or nooks and stuff
like that and make them usable spacefunctional. And I actually we have heard
from a couple of our folks thatthe truly full open floor plans people are
now are now questioning that a littlebit. You still want a great room
feel right with an open kitchen,but some segmentation, and I think that's

(30:41):
probably sprung from the pandemic, youknow, having some space to yourself,
and so I think that, youknow, unfortunately, the pandemic was a
difficult time, but it's it's it'scontinued to shape, you know, some
of the trends that we see inhousing well and understandably so when it was
so many people continue to work fromhome, at least to some degree,

(31:03):
you know, and you're spending somany hours, and usually with other family
members because I'll laugh. Our previoushouse had what I would consider to be
a fairly open floor plan, butnot as much as the new house has.
The new house very much family roomor the kind of our more kitchenee
type table you know, sits andthen the kitchen is all just one big
open space, right And for themost part, I love it because it's

(31:26):
got a lot of windows and lightcoming in. I love that part of
it. The part that I justchuckle is like our routine is if I'm
watching something on TV and husband comesin to get his lunch and stuff ready
for the next day, I literallyhave to pause because all the noise.
I'm like, well, I mightas well just sit here. I'm wait
five minutes, you'll be done.But it is kind of interesting exactly that

(31:47):
now. You had mentioned obviously interestrates are having an impact on the cost
to build a home. Goods andlabor are the other pieces of it.
So I wanted to go a littlebit into the good side of it.
Any particular thing driving up right now, there's really really well since twenty twenty,
the you know, the prices ofmaterials have been up nationally like thirty

(32:07):
eight percent, and so we wecertainly saw a huge spike in lumber during
that time. Lumber has actually comeback down to a more you know,
historically reasonable range. But we've seencontinued price increases, you know, on
everything from you know, concrete toreally any any building product that you can

(32:29):
you would think of, and sothat's that's continued to be problematic. I
mean it's it's it's difficult for thebuilding industry, for the builders to try
and price their homes given that,but it's also I think it you know,
it just speaks to this issue ofthe challenge of housing containability and so
hopefully that'll start to moderate. Oneof the I guess one of the key

(32:51):
challenges we see this year is transformers. There's a there's a national shortage on
transformers. Not only has the priceskyrocketed because of that, but it's also
causing delays, development delays. Ifyou can't you can't energize your house,
you know, your house, Yeah, you can't turn that house over to

(33:12):
a to a customer. This iswhy I always like having here every years
something new. Yeah, it's andthis one's unfortunate. I wish I weren't
talking about this, but we've we'veworked with DT and consumers, you know,
they're their folks are trying to sourcetransformers and other places now from overseas,
et cetera. But that's a that'sa huge challenge because it it's it's

(33:36):
extending that time frame for a lotof our builders. It's introduced a you
know, a question mark in theirequation. Sure as to Okay, I'm
putting in my order now for atransformer and it should be here in a
in a couple of months, butit might not be. So that's that's
been a real cause of concern andunderstandable, I mean, and it seems
like that's not an easy and easysupply issue to fix that it's not.

(34:00):
And we actually got a little bitof help so to compound compound the problem
of just a shortage in transformers,the federal government, the DOE, was
looking at a new regulation, anew rule which would increase the required efficiency
of those transformers, and it wasa very small change in terms of the

(34:22):
efficiency, but it would have hada huge impact on that supply chain and
those companies that build transformers to haveto pivot. Thankfully, the DOE pulled
back from that said we're going todelay it for a little while. That
should help the supply chain a littlebit. But in here and now,
it's still just a really difficult thingthat we're all trying to get through.

(34:42):
And I mean, correct me ifI'm wrong on this, but we're just
now heading into hurricane season and sowe're going to not that doesn't typically impact
Michigan directly, but if you havelike a big storm that takes out a
lot of energy grid right down south, now you're competing with trying to get
there people that need that, therecan be repercussions for us. Yes,
on that as well. And weeven see it on I mean you mentioned,

(35:04):
you know, natural disaster side.I mean you see it on insurance.
Insurance rates have have skyrocketed because ofa lot of the problems we're seeing
in other parts of the country,but it impacts people here as well,
and that that strikes it housing affordabilitytoo. I mean, if you you
go to buy a house and youhave, you know, increasing home insurance
rates, that's another you know,pressure that the household has. Oh yeah,

(35:25):
I mean every year you open upthat the new premium, right,
I kind of like, oh,what's it gonna what's it going to be
this year? So, and Ijokingly will say, is if I'm not
living in a state with the palmtrees in the sun most of the year,
I don't know why I'm getting penalizeduff here in Michigan to pay for
the That's right, that are becauseI like the sun too, and you
know we don't get it so manydays. Certain months of the year here.

(35:49):
One of the things I was goingto ask you about is, you
know, we kind of you're startingto see a little bit of a of
an uptick. You know. Someof the permits we've talked about is this
across the board and the counties thatyou servers their pockets of areas where you're
really seeing an optic in this activity. Yeah, there there are. There
are definitely pockets and some of themare are some traditional strong areas. For

(36:09):
example, you know in McCombe County, Macomb Township, you know, continues
to be strong, it has beenfor many years. But Chesterfield, for
example, we've we've definitely seen anincrease there development increase in Oakland County again
the traditional stronghold of of you know, Lion Township. They continue to to

(36:30):
kind of roll along. But we'vealso seen an increase in Oakland County in
Independence Township. Milford area has hasdone very well last year or so.
Don and Wayne County again the traditionalstronghold of Canton and they continue to produce,
but Van Buren Township has done veryvery well. So so it really
is is pretty widespread. And thenyou know in the city obviously you've got

(36:53):
still some some pretty strong development ofmultifamily rental properties, and and we see
that continuing as well. And Iknow that there's been some coverage recently detroited,
you know, of a new singlefamily residential and you know, that's
getting a lot of eyeballs. Ithink watching how that goes, and could
this be the start of you knows, and we certainly hope that it is.

(37:15):
No, Absolutely, we all do. I think that would be agree
that would be a great story tohave told. And we're seeing it not
just necessarily in the in the cityof Detroit, but in a number of
the urban ring communities where we havea number of our members that are building
on old school sites that are beingrepurposed now into you know, single family
or condo developments. And so thereare some really some great stories there too

(37:38):
of repurposing some of those those spaces, and I have a feeling that's the
beginning of that work. Given theway shopping and retail and a lot of
things are changing in that side ofthings, I have to believe there's going
to be a lot more redevelopment opportunitiescoming down the road. Yeah, absolutely,
I think there will be too.So we talked about costs, we

(37:59):
talked about interest to talk just alittle bit about labor force because I know
you said, you know, havinga skilled labor forces. Yeah, part
of the three leg a stool thatyou guys rely on. And how's that
going. It's it's it's getting alittle bit better. You know. I
think I mentioned to you when wesat here last year. You know,
I've said for some time that thisis a this is a generational issue for
us. This is going to bea twenty five year and we we're long

(38:22):
chusk. Yeah, we're ten yearsinto it now. You know. Ever
since the we came out of theGreat Recession, you know, twenty twelve
area there, and we started tohave a need for a greater workforce is
when we started to immediately see thepinch. I think that's going to continue.
We're you know, we're we're workingvery hard as an organization to try

(38:45):
and help young people understand the careersthat are available in the industry. Are
On the Homebolders Association side, wehave a foundation, a five and one
C three organization. One of thekey things that we do there is we
try to provide skottarships to young peopleand we try to meet them where their
needs are. So for example,they may need tuition, or they may

(39:06):
need transportation, or they may needtools, and so we're trying to support
young people, you know, eighteento twenty five years old that are in
a trade school with scholarships and actuallyany listeners that are out there were our
scholarship program is taking applications right nowthrough June thirteenth. They can go to
our website at www dot builders dotorg and they'll see our foundational link there.

(39:30):
But that's you know, we're reallyworking on this over the long haul
to try and build awareness. Andour state Homebuilders Association also has a foundation.
They focus more on the educational sideat an early level, even second
third grade, with some of theirpublications where you can go in and read
the kids about careers in the buildingindustry. They just came out with a

(39:53):
Career Trades book that's going to gointo the hands of all seventh and eighth
graders across the state. They're workingbecause really, if you wait until high
school, it's almost too late.You really need to build that awareness early.
So we're doing a number of thingsto try and help the children as
well as their parents understand the careersthat are available in the residential construction industry.

(40:17):
What's been really, really nice,I think has been over the last
you know, five six years isthe response and the understanding from the schools,
especially at the high school level,the counselors where it used to be.
Before it was it was all theconversation was about college, which is
a fantastic pursuit and very worthy,but for some kids it's you know,

(40:40):
it's not the right fit and andso we try to explain to them,
listen, you can you know,get out into the workforce start making a
very good, you know, careerchoice from a wage perspective, and you
know, you're not settled with that, and so that that's that. I
think that argument is now resonating andpeople are seeing that, and so yes,

(41:00):
we're you know, labor. Laboris a huge challenge for our members
and will continue to be not onlyfrom the shortage of people, but also
because of that shortage the price topay for the labor. So well,
it's interesting because it's not necessarily Imean, it's my nephew is just in
the next week finishing a welding certificateprogram. Great got out of high school

(41:22):
and you know, and he's he'ssmart. I know he could he could
go to college and pick a lotof different avenues if he wanted to.
But he doesn't love sitting at adesk, doesn't. That's not it,
just I think, not him.And he likes to be working with his
hands, you know, and doingstuff, and he decided, you know,
that's what he was going to do. And ironically, his sister is

(41:43):
in college, you know, goingto be a teacher, and she's going
to leave with debt. And he'ssaying, you know, it's just interesting
talking to both of them, sothey both have found the path that works
for them. You know, she'sgoing to love what she does, and
she's not overly worried about the debt. She'll figure it out, right,
That's her take things his take it. I ain't leaving school with debt,
you know. And I'm not goingto sit for a dusk any longer than

(42:06):
I have to. I'm going tobe done in a year and I'm going
to be making money, you know, hopefully, because he's passed what is
pipe and as I forget, Ishould know because he's told me. But
he's passed the two different tests andso, you know, and I'm thinking,
and other kids in his class,you know, chose more trade skill
things, and I'm like, well, maybe the messaging is getting through and
there are now you know, themany of the public schools are are putting

(42:30):
more money into the trade programs.But you know, the industry has stepped
forward to if you're interested in gettinginto the industry, we'll train you.
We will train you. People willyou know, our members will invest in
individuals who just want to learn.And so I think it's I think it's
good. I think we're making progress, so long ways to go. Well,

(42:52):
I mean, I just wanted tocheck in on that because I'm just
like my unscientific test of my nephew'sclass. You know, it's like,
well, it seems as though I'mhearing more people doing this so well.
And we work with Southeastern Michigan ConstructionAcademy. They do a wonderful job.
They have multiple locations. You know, they just started a new location down
in Westland, and I think they'realready almost filled. So it shows that

(43:13):
the the you know, the programsare there and people are filling them now,
which is a really encouraging. It'sa positive, yeah, positive we'll
take that positive where we've got it. We're talking with Forest Wall he is
the CEO of the HbA of SoutheasternMichigan. And a few more questions for
you while I've got you here.We've probably touched a little bit on some
of these, but we know,you know, real estate is a very

(43:34):
local issue. Employment in our neckof the woods, what the automotive companies
are doing, There's a lot ofdifferent things that factor into this. Gas
prices and I know that you tracksome of this. What are you tracking
right now from what you look atas the economy as a whole and how
it impacts Southeastern Michigan. Are therepositives? Are their negatives? Kind of
where are you seeing the opportunities andchallenges? So we with our permit for

(44:00):
casting that we do that goes outa few months. We we we primarily
look at at employment. We lookat North American vehicle production, oil prices
because that goes into that. Imean, we look at mortgage interest rates.
I think for us, you know, the the some of the positives
ours is that you know, employmentis still remaining strong, the number of

(44:22):
employed, you know, and wedon't just look at the unemployment rate.
We look at the number of peoplewho are employed in southeastern Michigan, and
so we're still we still see positivesigns there. I think, you know,
obviously, interest rates as we aswe we touched on, continue to
be a bit of a concern,although I don't I think the positive side

(44:43):
of that story is that I don'tthink interest rates are are going to be
accelerating anytime soon, lest I hopenot surround a little. But hasn't most
of the economists agree we're not.You know, we're not We're not going
to be in a you know,a change there. If anything, it
will probably come down a little bit. And so I think those are those
are the things we look at.And then, as we mentioned, you

(45:06):
know, from a policy perspective,you know, making sure a state is
looking at those economic development policies thatare going to stimulate you know, stimulate
business overall. And and you know, housing is such a key component because
when somebody's looking at the state ofMichigan that's a you know, that's a
job creator. They want to seethat there's housing there. Yeah, but

(45:27):
there's housing that's available for their workforceand at a variety of price points.
And so so those are the thingsthat are probably most concerned and the codes.
So if we had somebody that waslistening and they they've heard a little
bit about the preay to homes andthey're maybe going to go check some stuff
out. Now we've talked a littlebit about the industry as as a whole.
What advice do you have somebody that'sconsidering new construction if they're on the

(45:50):
fence, like I'm not sure togo to an existing home or something that's
brand new, what was your adviceto them? Well, first of all,
check out parade of home. That'smy my number one one. That's
that's number one. You know,I think first of all is to look
at your timeline, you know,look at it what it is that that

(46:13):
how quickly do you want this tohappen? Because you know there's a variety
of product that's available to you,whether it's existing or whether it's new.
But but within the new space,you know that can be a production home,
which can be done quite a bitfaster, you know, six month
timetrame if everything goes according to plan, or you can go a custom route

(46:34):
which usually takes quite a bit longer. But there's there's there's different routes that
you can take. So so it'sreally deciding on you know, what type
of product that you want. Obviouslyyou go the existing route, we can
also help you with a remodel ortwo. So so our membership is is
there unavailable, they're desperately needed,they are desperately needed, they're very they're
very busy. But but we canhelp along those lines too. But I

(46:58):
think whether it's a builder, aremodel, or then really digging in and
doing your due diligence on those companies, those those individuals that you're working with,
to look at their track record,look at the product that they provide,
you know, sitting down and meetingwith them and talking talking through those
issues. I mean, as Imentioned earlier, you know, this is
your largest investment that you're going tomake. Take the time to really jump

(47:22):
into this and and and look atthe builders, look at you know,
check on their referrals that they provideyou the references, you know, look
at the product that they've they've youknow that they've don't before, and and
and just take take a good hardlook at those types of things. And
then obviously, you know, justjust take a very thorough look at what

(47:45):
this is going to cost you,just to make sure that you're not price
burdened. That's you know, that'sa real important part of that equation too.
I mean, we want you tolook at all the wonderful features that
are available, but work with yourbuilder to make sure you stay with them
with in that budget. No.I mean, and it is interesting,
I I you know, we've jokinglysaid a few times, you know,

(48:06):
doing these shows is I think sometimesI think people put much more work into
figuring out what they're going to goout to dinner yep than they do and
they're considering all like you get onyell and you're checking out reviews and you're
doing all of this, which isfine, I get it. I Hey,
I check stuff out too before Ibuy stuff. But when it comes
to a decision like this, Ijokingly said, with the house that we

(48:27):
bought earlier this year, And ofcourse, you know, I'm a little
older now than the first time Ibought a house. I've been through buying
a few houses, and every time, I believe you learn something from every
process that you go through. Ifeel like I knew the house I bought
better than any house I've ever ownedbefore. I you know, from the
inspection, and when anything came upin the inspection, we had people out
there. What's it going to costto fix it? How did this happen?
You know, is this preventable?You know? He had all these

(48:50):
questions they ask, and I'm like, I honestly feel like I know more
about the house I haven't even spenta night in, you know, than
the one I've been living. Yeah, but but I think it's great advice.
I mean, you do want toyou want to check reviews if you
know, obviously, go into youknow, some different models that the builder
would have, you know, thingsof that nature, because it is a
big it is a big investment,and we want you to be happy with

(49:12):
it. Yeah, and there's there'ssome phenomenal things happening in the building industry
in southeastern Michigan. We are veryvery fortunate to have really a wide array
of builders from production builders to youknow, custom builders, and and so
there is a lot to see.But take that time to to look and
really find find what it is thatyou want. Can you just kind of

(49:34):
clarify the nuance between a production buildand a custom mm hmm. So production
builders are typically they they may bea builder developer where they have a subdivision
that they're developing and they have thecapability. They'll have a few model homes
that you can choose from and youcan certainly customize from there. They have
different features that are available to you, whereas a custom builder, you're probably
going to find a lot and startfrom scratch yep, and they're going to

(49:59):
be able to do everything for you. They're going to be able to provide
you maybe with some insight on onhome plans. They may have an architect
that they work with, they maybe a design build firm, or you
may go out and get your ownarchitect. But it's really everything is is
from scratch. Okay, thank you. Just to just make sure that we
were if somebody that I'm not quitesure what the difference what the difference is,

(50:22):
So let's just wrap up. Justgiven one more plug for the preate
of home June is pread of Homeand where can they go to get information
on so they can go to ourwebsite which is www. Parade HbA dot
com and that runs for the entiremonth of June. Entire month of June,
so June first through the thirtieth andas I mentioned everything is free,
so whether it's the booklet it thatyou can find a like Michigan Credit Union,

(50:45):
or just utilizing the website, whichwhich you know, even though this
June first through thirtieth timeframe is wherethe you know, the home parties and
the you know, the capability togo out and see the sites and stuff,
but the website will be functional forthe rest of the year, so
you don't have to worry about that. That'll still be there too. Awesome,
And I'm going to piggyback, butfirst, I mean, get out

(51:05):
there, you know, take alook at some of the product that's out
there, get to, you know, meet some of these builders, you
know, kind of get familiar withwhat they have to offer, and you
maybe do you kind of drive crosstown, so to speak, to check
out a completely different area of town. And maybe while you're out there,
you can go to a local coffeeshop and you can visit a local business.
I'm sure they'd appreciate that as well. Absolutely, I would agree.
Well, for ust, thank youso much for being a guest here.

(51:27):
I really appreciate your spending the timewith us. Thank you so much for
having me. I appreciate it.No it's always a great conversation and for
our listeners, we hope you certainlyenjoyed this update on what's going on on
the new build, the new constructionside of things, and again encourage you
one last time to get out thereand take advantage of the Parade of Homes
running throughout the entire month of June, a free event with over thirty two
different models of homes that you cango see and you can go to Parade

(51:51):
HbA dot com for more information.Thanks again for listening today and we'll be
chatting with you again soon. Wehope you enjoy today's episode. Don't forget
to subscribe, write a review,or rate the show, as it helps
us reach more people. You canalso follow us on Facebook and Instagram.