New-build homes in Detroit are rare, but that may change soon

New construction of single-family homes is exceedingly rare in Detroit, but a recent project could be an indicator of whether that's about to change.

The big picture: Detroit issued only 18 permits for new house construction last year. Among those testing the waters of new-build demand is developer Greatwater Homes , which recently completed three homes in East Village.

• It has two more nearing completion and plans 18 additional homes in the area.

State of play: Mayor Mike Duggan called Greatwater's development "the beginning of a trend over the next couple years … I think you will see more and more people building market-rate houses in neighborhoods."

By the numbers: Greatwater's homes are priced at $339,000, $439,000 and $459,000, advertising amenities including garages and air conditioning. The developer aims to give buyers an option who don't want to undertake the difficulty and unpredictability of a fixer-upper, Greatwater co-founder Matt Temkin tells Axios.

• "[The project] was a risk, but our goal was to deal with that risk by just making a great product, and leave it out there for the market to respond, and it did," Temkin says.
• Two of the first three homes have sold, and a made-to-order home has been presold.

Some real estate professionals in Detroit are monitoring this development closely.

What they're saying: If successful, it could "drastically change the investment landscape in the city" by creating a rush of similar projects, says Sami Abdallah, a Detroit real estate investor and owner of Re/Max City Centre in Southfield.

• On the flip side, though, Greatwater's homes aren't "very affordable," which could present challenges, Abdallah tells Axios.

Context: Preserving old homes by rehabbing them is an essential part of retaining neighborhoods' culture.

• New construction is also a "necessary component" of community development to fill in vacant land, says Angela Carlberg, senior director of community development ecosystem building for Community Development Advocates of Detroit .
• Yet, affordability and other factors remain major concerns . "It's a really big leap to presume that what's being built, as far as new construction, is going to serve who's here," Carlberg tells Axios.
• Developers can hire contractors from communities to ensure more economic benefit for the neighborhoods they enter.

Flashback: While Detroit is known mostly for its historic housing stock, a decade-long trend that started in the 1990s left scattered subdivisions of vinyl-sided suburban-style homes, Outlier reported .

• While new housing is a logical solution for filling up the city's large swaths of vacant land, "the cost of the taxes on a single-family home makes it impossible" to build new ones, Duggan told the Detroit News last year. Plus construction costs and the state of the housing market.