While the number of permits issued for construction including new homes in Leelanau County has slipped from a year ago, two long-time builders don’t associate the change with a downturn in demand for housing.
Backing their thoughts is the latest report from the regional multi-listing agency, which puts Leelanau on pace for the second- biggest year on record for existing home sales.
In fact, the difference in construction figures might be better associated with an inability to keep up.
“Nothing has slowed down for us,” said Skip Harriger, owner of Harriger Construction in Empire. “We have a lot of projects in the Glen Arbor area right now, mostly commercial stuff, and two new-builds. I get a lot of phone calls but I’m so busy now that I have to turn down a lot of projects.”
It’s a story similar to one told by Bob Evatt, owner of Seeco Construction in Suttons Bay.
“I have one in progress right now and another that’s going to start the week, and I have another one on the drawing table,” Evatt said. “I don’t see it slowing down.”
According to figures compiled weekly for the Leelanau Enterprise, construction work as permitted by the Leelanau County Department of Building Safety has not kept up with the pace of a year ago. Permits totaling $55.7 million had been issued during the first 11 months of 2023, compared to $62.9 million during the same period in 2022 and $67.9 million in 2021.
One-hundred, thirty-one permits were issued totaling $31.4 million for new-builds, down from the 149 permits valued at $38.1 million authorized the previous year.
Sales of existing homes, however, were brisk last month with 31 selling for $22.9 million. In November 2022, only 19 homes changed hands for a total volume of $15.1 million.
The November home sales record was set three years ago with the “work at home” and flight from cities mantras at their peak. Fifty-eight homes sold for $32.7 million in November 2020.
Through November, 353 homes had sold in 2023 for $261.4 million, the second-highest amount on record. The volume record for the time period was set in 2020 with $282.6 million generated by 492 home sales.
Since then, the median price per sale has increased from $375,000 to $575,000. The median price for homes sold in only November, $685,000, was higher than the year-to-date average, according to figures provided by Aspire North Association of Realtors.
Also reinforcing the notion that housing demand remains sky-high, the average days on the market (ADM) per home sold in November sank to 56 days last month. That compares to 65 days in November 2022 and 69 in November 2021. The ADM for Leelanau home sales topped 100 in prior years and reached 173 days in 2016.
While crews employed by Evatt and Harriger are working to balance out an acute housing shortage on the Leelanau Peninsula, high interest rates continue to crowd out first-time homeowners requiring a mortgage to buy a home. According to a Wall Street Journal story published this week titled, “The math for buying a home no longer works, ”Homeownership has become a pipe dream for more Americans, even those who could afford to buy just a few years ago.”
Per the coverage: “It is now less affordable than any time in recent history to buy a home, and the math isn’t changing anytime soon … (High interest rates) mean users get a lot less home for their dollar. Before the Fed started raising rates, a person with a monthly housing budget of $2,000 could have bought a home valued at more than $400,000. Today that same buyer would need to find a home valued at $295,000 or less.”
Young and first-time home buyers aren’t typical customers for Evatt or Harriger.
The owners of those three new homes being built by Seeco all plan to pay cash for modest homes by today’s standards in the $500,000 range. One couple is building a home for their son, another sold a big home and wants to live in a smaller version, and the third is looking for a new-build so their children can live in their present home.
“There has been no worries about COVID, no talk about politics, no talk about recession. These people have saved up money, and a lot of folks in that position don’t feel the sky is falling,” Evatt said.
Harriger recently tried to help a friend who qualified for a mortgage to buy a house in the county. “She made offers, but every time she was trumped by someone who made a cash offer, waived inspections, those things. Ten years ago in Leelanau County that was not the case,” he said.
If the housing market is tight in Leelanau County — and it is — than only the labor market could be tighter. Evatt started in construction while in high school working alongside his father in Genesee County, and moved Seeco Contracting to Suttons Bay in 1992. He may have forgone taking on three major projects at once had he not recently started working with a subcontractor, which means he won’t have to hire a bigger work crew to keep up.
Harriger, a native of Empire who graduated from Glen Lake, started in the business in 1993. He would like to expand his construction crew — if he could find knowledgeable workers.
“If someone walked in the door with skills, I’d look at them. I’ve put in ads and gotten no response,” he said.
