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Sunday, 11 November 2012 16:58

Homebuilders backlogged as buyers return

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GRAND RAPIDS — It wasn’t that long ago when homebuilders wondered when their next project would come along.

Now that buyers are coming back to the market at a healthy clip, those same companies are running backlogs.

Just ask Eastbrook Homes Inc., a high-end homebuilder in Grand Rapids, which has more than 100 homes in various stages of development.

“The amount of work we’re doing is a dramatic change from four years ago,” said Bob Sorensen, vice president of sales and marketing for Eastbrook Homes. “We were doing about half the work we’re doing today. … There has been some pent-up demand.”

There are a variety of reasons for the new pace of business, not the least of which is the continuation of low interest rates hovering around 3.5 percent compared to a historically low rate of about 5 percent, Sorensen said. With such low rates, people are able to buy more home for the money, he added.

“We sell homes when people have confidence in the market,” Sorensen said. “We’re seeing a continual upward trend.”

At the end of October, the U.S. Commerce Department reported construction spending inched up 0.6 percent, bringing outlays to $851.6 billion, the most since October 2009.

The economy performed better than expected last month as companies added 158,000 new jobs, according to the U.S. Bureau of Labor Statistics. With more people working, the pool of potential homebuyers has grown.

The Michigan Housing Index for September saw a dramatic upswing of 21 points from the same time last year, according the Home Builders Association of Michigan. The index combines results of a monthly survey of Michigan builders and remodelers along with a series of economic statistics, including single-family home building permits, crude oil prices, automobile production and unemployment.

Home sales in the greater Grand Rapids area for September, the most recent month for which data are available, were up almost 6 percent over last year to 819 homes, according to a report from the Michigan Association of Realtors. Home sales year-to-date for September were up nearly 15 percent to 9,139, the same report showed. Sales were up nearly 10 percent in the Kalamazoo area for the month, while home sales year to date increased more than 20 percent as of September to 2,888, up from 2,402 last year.

“We’ve absolutely been blessed for business, considering the market,” said Eastbrook’s Sorensen.

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