I’m working from Lansing, Michigan, this week, the capital, next to the home of Sparty and host of the 2017 Odyssey of the Mind World Championships where my son’s team is competing. For being a capital city, Lansing is relatively small and very charming, filled with old brick buildings and split by the Grand River.
I drew the short straw and while everyone else flew up here, I drove the Penske truck filled with the team’s set props for the competition. After driving 14 hours and drinking five or so Starbuck’s coffees, I was in no shape to go to the opening ceremonies, nor was I able to go to sleep. So I walked over to the bar across from the hotel and ended up having drinks with what seemed like half of Michigan’s House or Representatives. This bar is right across the street from the Capitol building. They were a very lively and very nice bunch. And you know what? They love Georgia. When I told them where I was from, they all nodded in tones that showed envy of what we have in our state.
“Atlanta has it going on,” one told me. “There’s so much activity, so many colleges….oh, and jobs! So many jobs!”
It seemed almost every one of them had a cousin, or aunt, or nephew who lives in Atlanta. They all had some kind of a connection here. And they all seemed to look up to Georgia and Atlanta. It was kind of a shock to me. Growing up here, it always seemed like New York, California, Texas, and, yes, Michigan, were the big ones. They were the blue-bloods. And we, Georgia, were always the underdogs.
After this conversation though, my attitude is totally different. In this case, Georgia is what Michigan now wants to be.
The recent economic demise of Michigan, particularly Detroit, is very well documented. It was a city so heavily reliant on one industry that when the main auto manufactures sputtered to the point of near bankruptcy, the city itself filed bankruptcy. While we in Atlanta have seen a huge influx of new residents over the last five years, they have seen a huge decline. While we in Atlanta are running out of housing in certain markets, they are flush with them. I was told Detroit’s city limits are built to house over one million residents, but less than 700,000 actually live there. They are actually razing entire city blocks of homes to plant urban farms.
In Atlanta, we cannot build houses fast enough. In the under $400,000 market in Atlanta, we only have two to three months of supply. If you do not know, that is incredibly low. A healthy market is six months of supply.
And this problem doesn’t look like it will go away any time too soon. According to Smart Real Estate Data, in several metro counties there were actually fewer building permits issued in the first quarter of this year than last year. Clayton, Cobb, Fayette, Gwinnett and Forsyth counties each saw more than a 6.8 percent drop in building permits issued. There are some serious headwinds blowing against the homebuilding industry in Atlanta. Buildable land is becoming scarce and land prices are rising quickly. But perhaps one of the biggest issues is finding skilled labor. The good news about our economy is that we are finally near full employment. The bad news is that we need more skilled workers to build homes. Where are we going to get them? If we are at full employment, they will have to come from other industries.
None of these problems will go away quickly. We can expect inventory levels to stay low for some time. That said, our problems could be a lot worse.
I’m going to head back to the Michigan State campus. When I left my boys this morning, they were going nuts trying to find the Italian Odyssey team. They heard the Italians are the best pin-traders.