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Apartment Construction Gets A Boost Due To Mortgage Rates

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New construction of multifamily properties jumped 28 percent in August. bringing the market’s multifamily segment to its highest level since 1986. The jump is due to rising mortgage rates. Single-family home construction also increased slightly in August after a two-year low. Borrowing costs have doubled since late 2020 due to interest-rate hikes designed to tame high inflation. Last week, the average rate on a 30-year fixed mortgage surpassed 6 percent. The continued low apartment vacancy rates and low single-family inventory have given multifamily construction a boost.

 

Metro Detroit Rents Begin to Soften Amidst All-Time High

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Although metro Detroit’s average rent growth is 5.14% annually, and metro Ann Arbor’s is 7.14%, metro Detroit’s rent market is beginning to soften.  According to CoStar Group Inc., asking rents are $1,214 a month in the metro area. In Ann Arbor, the average asking rents are up to $1,443 a month. The largest annual increase between both areas was in Saline, with rents up 26.56% which equates to $1,311 a month. Birmingham/Bloomfield area averages $1,815 a month, which is down from $1,857. Detroit’s west side has the most affordable rent at $726 a month. According to CoStar’s director, inflation, rising interest rates and home sales prices, increasing maintenance costs and a rush of renters wanting t lock in rates contributed to increasing rents.

 

Metro Detroit’s Fair Market Rents Increase

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The U.S. Department of Housing and Urban Development is predicting rent hikes for the 2023 fiscal year in metro Detroit. It published fair market rents at a 11.9 percent increase for a two-bedroom apartment. The rate is increasing from $1,084 to $1,213, beginning October 1. This increase is higher than the Michigan and national averages which hover around 10.3 to 10.4 percent. Metro Ann Arbor rates are 9.7 percent higher. Kalamazoo County wins the prize for the highest fair market rent increase at 19.3 percent. Private sector data was used to estimate changes. The figures are used to determine rent ceilings for certain low-income and emergency grants, as well as the worth of housing vouchers and the maximum award amounts for Continuums of Care.

 

Jefferson Chalmsers’ Apartment Building Revived

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The renovated Marlborough Apartments in the Jefferson Chalmers neighborhood have opened. Jefferson East Inc. and its subsidiary, East Jefferson Development Corporation are responsible for the renovation of the 1927 building that houses. 8 unit apartments. They are also renovating another circa 1929 property on the north side of Jefferson. It will have 15 units. According to Mayor Mike Duggan, the second property has stood vacant for 50 years.  The two properties will reserve a total of 13 units for tenants with incomes between 50% and 60% of the area median income. The two and three bedroom units will range from $848 to $914 a month.

 

 

New Report Offers Insight into Detroit’s Rental Housing

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Information on the number of rental properties in Detroit is limited and creates issues concerning improvements to housing conditions and reduction of lead exposure. Most landlords in Detroit own one or two properties, making up about 50% of the units in the city.  Of that number, only 2% have registered properties within the city’s formal rental system. The think tank, Detroit Future City, released an analysis on Wednesday that breaks down landlords into categories using the assessed value of the property, corporate ownership, blight violations, taxpayer’s location, property acquisitions and the number of units they own. Tenant advocates continue to raise concerns about evictions and unaffordable housing. The goal is to support landlords and enable them to become compliant with healthier housing conditions.

 

Rent And Occupancy Rates Are on The Rise in Metro Detroit

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Apartments are a hot commodity in Detroit with supply falling short of demand. Rent costs and occupancy rates in the metro area are increasing. According to the Detroit Multifamily Real Estate Figures, occupancy rate is at 96 percent for multifamily residences in Detroit.  The asking rental rate per square foot has increased from $1.64 to $1.72 over the last six quarters. Supply and demand issues, as well as new developments and redevelopment of existing property, are impacting rental rates. Suburban rental rates follow a similar pattern.

 

Ann Arbor Planning Commission To Hold Hearings On New Proposals

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The Ann Arbor Planning Commission will hold public hearings on three new development proposals on Wednesday, August 3 at 7:00 p.m. The projects include a four-story residential building with 185 new housing units, the reimagining of The George mixed-use apartment and retail complex, and a special-exception use proposal for a childcare center. The new housing units would redevelop the University Inn site. The reimagining of The George would convert 23,462 square feet of ground floor retail space to 42 residential units. The proposal for the childcare center would repurpose an existing building at 1301 Morningside Drive in northwest Ann Arbor.

 

 

 

Harper Woods Developer Buys Cleveland Apartment Project.

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Harper Woods-based developer American Community Developers Inc. purchased and has renovation plans for a 484-unit apartment project in Cleveland.  The company specializes in the buying and rehabilitating affordable housing. Cleveland’s Rainbow Terrace was built in the 1950s and sits on 31 acres. The units are a mix of garden-style apartments and townhouses for low-income families. The company paid $8.55 million and expects to spend about $18 million on upgrades and deferred maintenance.

 

 

Entrepreneur Nurse Set To Transform Detroit Block

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Nurse Sonya Greene’s redevelopment project is transforming a Detroit block into a business district. The project is called The Shift and  will include a fresh food market, barbershop, hair salon, nonprofit office space and a 4-unit newly renovated apartment complex. The  food market is an 1,800-square-foot property at 12752 Linwood St. The market, the barbershop and 1 or 2 of the apartments are expected to be open in late August.  Greene purchased the market space in December 2017. Although she wanted the whole development to open at one time, funding dictated a different approach.

 

Site Cleared For Ann Arbor Residential Development As Law Suit Continues

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A development planned for 91 acres of farmland north of Ann Arbor is moving forward, even though neighbors are suing the developer over a disputed piece of property. Chestnut Development LLC has plans for a 264-unit development south of Whitmore Lake. Builders are currently installing water, sewer and storm water infrastructure on the property. The plans include 56 single-family homes on individual lots and 208 multi-family attached units on 79 acres of property. The remaining acreage is slated for future commercial development. A neighboring couple has filed complaints that the developer has trespassed and destroyed their property. The lawsuit aims to determine ownership of the property that is partially on the developers lot. The residents are requesting the judge award title of the piece of property under adverse possession.