U.S. Pending Home Sales Decline

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Limited home inventory is restricting the real estate market, causing U.S. pending home sales to fall 4.1 percent in February for a fourth straight month. With a limited number of properties for sale, home price tags remain elevated. When combined with 30-year fixed mortgage rates at a three-year high, homes are less affordable. The increase in home prices and rising mortgage rates can add up to another $200 to $300 in mortgage payments per month.  According to the NAR,  these factors have pushed up mortgage payments by 28 percent from February of last year.

 

Skilled Labor Shortage Complicates Construction Projects

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Prior to the COVID-19 pandemic, there was not enough skilled labor to meet construction demands. That’s even more true now that development has almost returned to pre-pandemic levels in metro Detroit.  According to metro Detroit’s largest general contractors, that means less skill on job sites.  That, along with continuing supply chain and inflation issues, is causing project managers to scramble to meet demands. The number of Michigan construction workers has rebounded to pre-pandemic levels, but it’s still down almost 20% from 20 years ago. The number is not growing fast enough to meet the increasing demand. It’s anticipated that skill trades will account for 47,000 annual job openings through 2026.

 

 

 

First Merchants Corp. Closes On Level One Bank Acquisition

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The Indiana-based lender First Merchants Bank acquired Level One Bank in November. The acquisition has cleared its legal hurdles, and First Merchants Corp.  closed on the $323.5 million purchase. The full integration of Level One into First Merchants is expected later this year. The combined bank is one of the 10 largest banks operating in Michigan. Patrick Fehring, Level One CEO, is expected to retire after the completion of the merger, but will join First Merchants’ board of directors next month. The combined bank will have 126 banking offices in Michigan, Indiana, Ohio and Illinois.

Mortgage Companies Expecting Leaner Year in 2022

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The year 2022 promises to be a leaner year from mortgage companies. The mortgage industry rebounded in 2020 and 2021, propelled by rock-bottom interest rates and consumer demand. In 2022, things are changing. Mortgage rates increased to a level not seen since December 2018. The average 30-year-loan increased from 4.42 percent last week to 4.67 percent on Thursday. Rates have increased more than a percentage point and a half since the new year.  Fewer consumers in the refinance pool and the limited housing inventory are contributing to the rate increase.

Downtown Royal Oak Main Art Theatre’s Days May Be Numbered

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The 80-year-old Main Art Theatre in downtown Royal Oak could soon be demolished. An A.F. Jonna Development LLC affiliate has submitted plans to tear down the theater and replace it with a 5-story mixed-use building. The developer will appear before the Planning Commission on April 12 to present plans for a new 71-foot building that would include 9,200 square feet of commercial space. A restaurant and a retailer would split the space. The 2nd floor would accommodate 31,000 square feet of office space. The third through fifth floors would include 54 new residential units.

 

Utility Companies Seek Land For Solar Farms

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Michigan utility companies are securing real estate to expand their solar energy generation capabilities as consumer demand accelerates. DTE Energy Co. needs 20,000 to 35,000 acres of southern-facing flat land to erect solar arrays over the next 10-15 years. Consumers Energy Co. currently generates 40 megawatts of electricity from solar and plans to be at 8,000 megawatts by 2040. That will require between 40,000-56,000 acres of land. Customer demand and land usage is a balancing act that Lansing policymakers haven’t yet addressed. Industry leaders anticipate some community resistance.

 

 

The Mall at Partridge Creek Faces Receivership Sale

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The Mall at Partridge Creek in Clinton Township is facing new ownership. Its current owner, Florida-based Starwood Capital Groups, is struggling to make debt payments. The timeframe for the sale is unknown, and the company has declined comment. Starwood bought both Fairlane and the Mall at Partridge Creek in 2014. They’ve fallen into receivership and under new management in the past several months due to unpaid CMBS loans. The current balance is about $120.7 million as of last month, up from $89 million in August.

Downtown Detroit’s Office Workers Slow To Return

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Although downtown Detroit’s housing market and visitors bounced back from the COVID slump of 2020, Detroit still has a ways to go to reach pre-pandemic activity. According to the Downtown Detroit Partnership, the number of downtown office workers is still drastically reduced as a result of the pandemic.  In 2019, the median number of workers during the week stood at 70,629. In 2021, that number was down 75%.  Some employers are gradually bringing employees back to the office.

 

 

Spring Homebuying Season Accelerates

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The metro Detroit housing market is off and running in the spring homebuying season. Redfin is reporting that almost 3/4 of homes on the market in metro Detroit are receiving multiple offers. Buyers are offering well above list price, free occupancy for sellers who are waiting for their next home purchase, and appraisal guarantees. Some are even paying closing costs. First-time home buyers and those financed with government-backed loans are at a disadvantage.

 

Metro Detroit Celebrates It First New Department Store In a Decade

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Bucking the trend of department store closings, the first department store grand opening was celebrated this weekend. It is the first in more than a decade. Von Maur’s new store at The Village of Rochester Hills officially opened this weekend. It is the retailer’s first new store since 2008. The new Von Maur store is located at 400 N. Adams Road.