Veritas

With Oakland, Washtenaw and Genesee Counties in decline through the first 5 months of 2000, home building activity in the 8 county region of Southeast Michigan is down 2.6 percent from January through May, according to Housing Consultants, the Clarkston based firm that monitors local building authorities.
Housing Consultants’ survey found that 8,872 permits were issued across the region, with Macomb finding itself as the actual leader with 2,206, representing a 5.2% rise over the same period last year. Oakland County, at 2,176, fell to second as it experiences a 14% decline from ‘99.
Genesee County’s drop of 83 units from last year’s period, represents a decline of 10.7%. However, at this point, the numbers don’t tell us much about the local market because, if we add the number of units in Holly Township’s section of a local subdivision, we find the single family and condominium data is nearly identical to 1999’s.
One county where there may be real evidence for concern is Lapeer, which experienced a year to date decline of 53 units representing a drop of 16.9%. Since Lapeer is so closely tied to Genesee, it will be the focus of considerable attention during the next few months.
After showing growth for the first quarter, Housing Consultants has now reported two consecutive months of slower growth as higher interest rates may finally be taking affect from a local perspective. However, since rates have fallen during the past month, and the public appeared to be undeterred during the Spring Parade, it’s way too early to tell if the apparent region wide slowdown is anything more than a temporary response to higher borrowing costs.

Housing starts across the United States fell 3.9% last month to an annual rate of 1.59 million units, the lowest monthly number since June of ‘99, while building permits fell to a 1.49 million rate, their lowest level in thirty months. The drop, however, was not necessarily related to any national condition, since two regions of the nation, South and Northeast, experienced gains.
However, despite the fact that starts (at least for single family) have now declined 2 consecutive months, the actual data remains strong.
For example, single family starts may have fallen 5.4%, to a rate of 1.25 million units (their lowest level since April ‘99), but that’s still higher than for any year end total prior to 1998. Furthermore, multi-family starts are on the rise, and were near their highest level in more than a decade.

NAHB’s Housing Market Index (HMI) fell four points in June, hitting its lowest level since November 1997, as builders continue to show their concern about higher interest rates and slowing housing activity. “The HMI has now dropped 13 points since the beginning of the year, and is down 20 points from its peak in December of 1998,” said President Bob Mitchell. All components of the HMI fell this month, led by a 5 point decline in sentiment regarding present single family home sales.

Stair Geometry: Remember how you built stairs from ‘97 to 00 ... you’ll be doing it that way again, as 7 3/4 X 10 stair geometry will return in 2001.

Back To Top

Past two weeks said much about the area’s future

Despite the continued evaporation of General Motors jobs, “Flint” was a thriving metropolitan area during the 1990s. But as we begin the 21st Century, there seems to be a critical debate developing regarding the area’s future.
Though few dispute the value of growth experienced in recent years, some segments of the community are displaying grave concerns about the nature of that growth, by expressing fears that “Flint’s” losing its identity and becoming nothing more than a bedroom community to Oakland Co.
This concern was evident in remarks made by Todd Brian, the President of the Flint/Genesee Growth Alliance, to the Genesee County Board of Commissioners last Wednesday.
The Growth Alliance was developed to serve as a joint public/private sector coalition to bring economic development to the region. However, with unemployment at an historic low, and prosperity seemingly high, there appears to be little urgency for support of the “Alliance’s” programs.
So Brian concluded his presentation by providing the board with many of the distortions and lies that are frequently used in anti-sprawl arguments, including the claim that taxes on housing fail to support the services the new residents require.
The problem with Brian’s argument is that it was directed to an entity that’s in its best fiscal condition in nearly 3 decades, based, almost solely, on the value of new housing development. But it also indicates a clear division in the leadership of the community formerly identified as “Flint.”
The division is very similar to philosophic differences evident in the nation during recent debates on trade. On one side you have those that believe in a regional concept where governmental borders are merely political lines which remain invisible to those making economic decisions. They cheer the growth suburban Genesee County’s been experiencing as they trumpet the fact that some 30,000 residents choose to live in county despite the fact that they work outside its borders.
In the other camp are those who feel Flint is the center of the community, fear the loss of community identity, and believe it’s imperative that the local economy be rebuilt from within.
The local debate has been going on for some time, but it seems to be intensifying since the beginning of the year with the seemingly endless barrage of meetings, debates and editorials. But when one looks at the area’s long term history, and then consider a couple of stories during the past week, one could easily question as to whether or not the “debate’s” even legitimate.
Tuesday’s Headline
For more than a year we’ve referred to the employment opportunities for auto workers in Lansing, so it was no surprise when the lead Journal article opened “General Motors’ love affair with Lansing is growing ever more torrid.” The article suggested that GM was raising new investment in the capitol to more than $1.5 billion for three new plants and hit on the often mentioned positive relationship between the UAW in Lansing and management.
But, what about the relationship between the UAW and the city itself? It’s a critical question because of an interview in Sunday’s Journal with Cal Rapson, Director of the Regional office that serves Flint and Lansing. Rapson noted that he meets with Lansing Mayor David Hollister every month, but he doesn't meet with Flint Mayor Stanley ... a statement that takes on particular relevance considering a quote that was highlighted in Tuesday's article stating: "Flint appears to be the forgotten city," regarding its future with GM.
Rapson's comment may be indicative of the real problem Flint faces in reestablishing itself as the area's economic engine. And, whatever term one wants to use to describe it aside, it boils down to one; Incompetent Government.

More Nails in the Coffin
The "Downtown redevelopment" efforts took two more heavy hits as the sale of the hotel to a religious group was finalized, then the Governor's budget had no money for a baseball stadium, arena or convention center. Of course, the combination sure makes that Hill Road property look viable.
Though Flint may no longer be viable as an economic entity, the growth surrounding Genesee County is more than adequate to support a growing population of Flint area residents. That is, as long as the housing industry can continue to provide reasonable access to those opportunities.
Realistically, "Flint's" economy is going to remain tied to surrounding counties. It's fortunate that at least some of the community's leaders accept that inevitability, and continue to cultivate its benefits.

Back To Top

Attacking the goose who lays golden eggs

As anyone who’s been reading the Flint Journal or watching local television news knows, the home building industry has been receiving considerable media attention throughout most of this year. And, most of it’s been extremely favorable, focusing on the value of housing construction to the community as a whole.
What’s most fascinating about the attention is that much of it has been generated by Genesee County officials, particularly Treasurer Dan Kildee and 2000 Board Chairman Rick Hammel, who continuously credit housing’s growth for the County’s exceptionally strong fiscal condition. Unfortunately, however, not everyone seems so impressed.
In the past two weeks, the Flint area’s growth in home building has come under attack from a couple of sources. First, there was Burton Councilman Bob Centilli calling for a moratorium on building permits as a means of stopping sewage spills. This “attack” was purely political as Centilli, a noted supporter of Jeff Wright’s candidacy for the Drain Commissioner’s post, was simply seizing an opportunity to draw attention to the upcoming primary. And, besides, Monday night the Burton board approved an 80 unit condo project.
What was more troubling was a subtle attack last Wednesday morning at the County Board of Commissioners’ meeting by, of all people, Todd Brian, President of the Flint-Growth Alliance, the allegedly “high-impact” economic development agency put together in the late 1990s.
Brian presented the organization’s ‘99 annual report to the board and attempted to impress them with the absolute importance of his mission. But to show an “urgency” for economic development in an area that’s virtually booming, he apparently found it necessary to attack the industry that’s responsible for the Flint area’s renaissance. So, he fired the usual barrage of lies and distortions about housing that came right out of the Urban Coalition’s ‘99 handbook.
Brian told the commissioners that “we” don’t want to be a commuter community; the people moving in from Oakland Co. don’t want to be part of this community; and, housing is a drain on the area because it doesn’t pay for the additional services it consumes.
Obviously, Mr. Brian isn’t all too familiar with his community or his audience. Prior to housing’s rebirth in the ‘90s, all the previous economic development efforts, combined, left his community with double digit unemployment. And, prior to those times, County boards found themselves with thirteen years of deficit budgets and inferior bond ratings.
But what’s most indicative of Brian’s lack of awareness comes directly from his own organization’s annual report. The growth alliance, with its staff of 12 and $1 million plus budget, takes claim (which is very debatable) for aiding in the creation and retention of 478 jobs and roughly $69 million in investment in 1999. By comparison, the single family housing industry, by it-self, had the direct impact of adding 650 jobs, retaining 4,450, and adding $425 million in new investment.
What’s amazing is the fact that 35% of the investors in the Growth Alliance are primary beneficiaries of local housing’s growth. Perhaps Mr. Brian should also develop an awareness of the sources of Alliance funding.

Barry

Back To Top

State still tops in appreciation but Colorado’s gaining on five year rate

The value of existing homes in Michigan rose 1.1% in the first quarter of 2000, equal to the national average, according to the House Price Index (HPI) of the Office of Federal Housing Enterprise Oversight (OFHEO). Although its lead over Colorado narrowed a bit, Michigan maintained its number one national ranking over a five year period, as its home values rose 43.6% since the first quarter of 1995, a full 60 percent faster than the U.S. average rate of 27.3%.
The HPI is the index that best represents the actual appreciation of real estate because it measures the growth in value of the same properties since 1980. Unlike other indexes, which use median or average sales prices, the HPI isn’t distorted by high rates of activity in one segment of a particular market.
Over the past year, Michigan home values grew 8.7%, sharing the 7th rank nationally with California. The national average for the twelve month period was 6.5%.
Michigan’s surge over the past five years is a continuation of the trend begun subsequent to the passage of Proposal “A” in 1994. For the thirteen years prior to ‘94, Michigan’s HPI had risen just 66%, nearly twenty-one percent slower than the nation’s as a whole. Currently, the state’s homes have a cumulative HPI (since 1980) of 158.9 percent, over fifteen percent above the nation’s 137.8%.
In other words, Michigan’s residential real estate has appreciated 56% since the end of 1993. During the same period, from a national perspective, real estate values are up 28 percent, just half of Michigan’s rate of growth.
Now, at Michigan’s rate of appreciation, that home worth $50,000 in 1980 (that we’ve used in previous illustrations) is now worth $129,450. If it had grown at the national rate it would bring just $117,250 today. So, despite a dismal showing from 1980 to 1993, Michigan home values have grown 10.4% faster than the nation as a whole over the past 20 years.
During the 20 years the HPI has been calculated, Massachusetts has had the highest rate of appreciation at 310 percent. New York (255%) is second, followed by New Jersey (181%), Rhode Island (181%) and Washington (173). Michigan ranks 13th, just behind California.
In all, nine of the top ten run up the east coast, from Dela-ware to Maine, as only west coast Washington breaking the Atlantic’s hold.

Back to top

It’s still about "Nothing" in particular

Since the Golf Outing has filled up for the third consecutive year, it’s back to the three ring circus equivalent that normally occupies this space ...

Under the eye of the national media, Congress was in vintage form last Tuesday (6/13) as it dealt with the most critical issues on the public’s agenda. First, the media focus was directed at Bob Barker and friends, providing testimony for a bill (with 50 sponsors no less) to outlaw the use of elephants in Circuses (or is it circi?), because the “cruelty” of trainers makes elephants “dangerous.” Now we don’t take this threat too seriously since the majority party believes elephants at the circus put a positive light on the GOP symbol, and helps indoctrinate kids at an early age ...
But the real “Circus” was taking place in another ring under the D.C. Big Top, as former Notre Dame (and current S. Carolina) football coach Lou Holtz was testifying on a bill to outlaw “legal” betting on college sports, which amounts to an estimated 1% of all college sports wagering. Mr. Holtz who, like his colleagues all across the country, recruits kids who read at an elementary school level, signs multi-million dollar contracts with athletic equipment companies and has made personal millions off the abilities of his recruits, is concerned about the “integrity” of college athletics ... and, amazingly, a few Congressmen actually bought into this facade.
Now, America holds its collective breath in anticipation of the outcome of these issues.

Since the nominating process for the major parties’ presidential candidates was virtually over by March, media pundits have been filling air time and humoring themselves with endless speculation about prospective Vice Presidential nominees ... and the speculation is quite interesting as supporters of potential veeps “drop names,” hoping that no one is turned off by the suggestion.
Two of the names being bantered about are really quite fascinating: Last week Gore went on a “prosperity” tour with the architect of Clinton economic policy, Bob Rubin. A cautious business community may find a Gore/Rubin ticket far more “traditionally” conservative, and attractive, than a fiscally erratic Bush with a congressional Republican.
On the other side, Bush’s apparent fascination with former Sen. John Danforth has a certain allure. Conservatives remember him as the backer of Clarence Thomas, but some of us remember him as the only Republican smart enough to vote against the Tax Bill of '86.

Back to top

Association News and Events
Golf Outing Update; Fall Parade Request