Grand Rapids - Kent County Housing Shortage

[GRDadof3]

This topic is going to become louder and louder this year. Thought we could start a thread on the different aspects of what's going on and possible solutions that are being looked at. 

From Housing Next, here are some stats for Kent County:

So cumulatively 9760 new owner-occupied housing units and 3581 new rental units needed by 2025 (3 years)

At around 2500 owner occupied permits per year, we're going to be a couple thousand short. 

 

In the meantime, 540 rental units coming to the old English Hills GC:

https://www.mlive.com/news/grand-rapids/2022/02/liquidation-sale-planned-as-walker-country-club-sold-to-housing-developer.html

The Grand Rapids Chamber and the Right Place have made this quite a high priority this year. They're hearing from their employer members that housing has started to affect hiring, as people moving here are turning down jobs after searching the market for months for housing, and finding nothing suitable. 

[Guest]

Are there any large scale national builders in the area?  If not, what is keeping them away?  I feel like the biggest in town are Eastbrook and aAllen Edwin.

Toll Bro and Pulte are in MI, but only in Metro Detroit.  Are the margins higher over there?

It's not for lack of developable land.  Yes there are swaths of it south of GR, but there also is west of GR.  North of GR there is a lot in Cannon and Algoma Townships and surrounding areas.  Utilities could be extended there.  I'm not sure about the water system surrounding the Lowell area, but there is a ton of land there as well.  Is lack of water/sewer really a major deterrent for development?

[GRDadof3]

6 hours ago, Floyd_Z said:

Are there any large scale national builders in the area?  If not, what is keeping them away?  I feel like the biggest in town are Eastbrook and aAllen Edwin.

Toll Bro and Pulte are in MI, but only in Metro Detroit.  Are the margins higher over there?

It's not for lack of developable land.  Yes there are swaths of it south of GR, but there also is west of GR.  North of GR there is a lot in Cannon and Algoma Townships and surrounding areas.  Utilities could be extended there.  I'm not sure about the water system surrounding the Lowell area, but there is a ton of land there as well.  Is lack of water/sewer really a major deterrent for development?

No national builders locally. Pulte gave it a try but could never reach their 500 homes/year goal to make it viable for them to be here. I think large scale national builders want to just plug in to a master planned community where they can build hundreds of homes in one spot, even if it means competing with other builders in the same neighborhood. Those opportunities don't exist here right now. 

Yes, water and sewer is a major deterrent if it's not available. On well and septic, you have to build on larger lots (2 acre minimum in Ada Twp) which is prohibitive for doing large scale communities. 

There is a lot of open farmland to the South and West, but infrastructure has to be extended. And townships don't really make any money off of new residential developments. i.e. the water and sewer fees alone don't pay for the system extensions. 

There is a very large infrastructure bill coming out of Washington D.C.. Could that be tapped into to upgrade and extend water and sewer? Also, there is a ton of commercial property on already existing water and sewer lines. Can the zoning be switched to high density single family homes/townhouses.  They do it out West all the time due to water constraints. 

Here's one in Denver called Midtown that was previously commercial/industrial land.  It's pretty commonplace out west to build single family, townhouses, and midrises all in the same vicinity of each other (pretty rare here). 

These kinds of projects could be done by commercial construction companies vs residential builders, or a partnership between a commercial and residential builder. Of which there are not a lot of residential builders locally with capacity to do large scale projects. 

 

 

Here's one in Spokane Washington I just read about called Kendall Yards. Was on an old rail yard. 

 

[cstonesparty]

This discussion is amazing for this forum

 

a few years ago I had dinner in the home of a resident in Norton Commons, outside Louisville. https://goo.gl/maps/6yi9vJ6ohgDECir29  

 

in 1999, Dan DeVos was proposing something similar along Pettis north of Ada.  Is anyone still looking at these kind of large-scale, new urbanist developments anymore?  Or has Eastbrook’s experience in Kentwood and DanDeVos’ reception in Ada effectively killed this for West Michigan? I also wonder how spiraling construction costs impact the economics of new large-scale development as part of the solution for housing needs.  
 

Someone commented recently about the missing middle for housing.  How do new developments fit in that dialogue?

Edited February 26, 2022 by cstonesparty

[GRDadof3]

5 hours ago, cstonesparty said:

This discussion is amazing for this forum

 

a few years ago I had dinner in the home of a resident in Norton Commons, outside Louisville. https://goo.gl/maps/6yi9vJ6ohgDECir29  

 

in 1999, Dan DeVos was proposing something similar along Pettis north of Ada.  Is anyone still looking at these kind of large-scale, new urbanist developments anymore?  Or has Eastbrook’s experience in Kentwood and DanDeVos’ reception in Ada effectively killed this for West Michigan? I also wonder how spiraling construction costs impact the economics of new large-scale development as part of the solution for housing needs.  
 

Someone commented recently about the missing middle for housing.  How do new developments fit in that dialogue?

There is housing needed at all buying levels. People who would normally "move up" homes due to growing families or for status, they would open up their current home for a first or second time buyer. If the move-up buyer can't go anywhere because nothing's available, they cause a logjam. In essence, I'm saying that adding higher end housing stock creates more inventory in the "affordable" category. That seems to get missed in these discussions, because a lot of people just scream for more affordable housing. 

There are a few "new urbanist" developments around. There's one up at Myers Lake Rd and Belding Road by the Ric's grocery store called Town Square. It sat for a long time with no activity, and now it's going gang-busters with new homes being built.  Eastbrook also has Lowing Woods in Jenison which has SF homes, townhomes and detached villas in close proximity to each other. They're becoming more acceptable to buyers because at that density, it cuts down on your lot costs and you can hypothetically build smaller homes that will cost less. The Ravines in Kentwood is another, that I think is built out. 

20 years ago you couldn't sell townhouses to save your life (I worked for a builder that built townhomes for sale and nobody wanted them). Now they're very desirable because they're usually less expensive than homes and you can buy one as your first home. There are exceptions like the expensive townhomes going up in downtown Ada. 

I like that Louisville project but those tend to get pricey. These development don't have to be fancy (with little downtowns and brick brownstone buildings) they just have to be DENSE.  Way more dense than we're used to around here, at least with new construction. 

 

 

[GRDadof3]

I borrowed this chart from @whitemice for multi-family dwelling permits in the CITY of Grand Rapids. As we all know, there was a spike of new projects about 5 years ago. That has dropped quite a bit.  

[GRDadof3]

More resources, if interested. Here's a presentation the Chamber gave just this past year:

https://www.grandrapids.org/wp-content/uploads/2020/08/Housing-Kent-County.pdf

And some stats from GRAR for 2021. 3 months of inventory has historically been considered a "healthy market" 

 

[whitemice]

19 hours ago, GRDadof3 said:

There is housing needed at all buying levels.

THIS!  "Affordable" housing is important, and we just need for g.d. housing.

19 hours ago, GRDadof3 said:

People who would normally "move up" homes due to growing families or for status, they would open up their current home for a first or second time buyer. If the move-up buyer

I know that's always been the Realtor's Narrative.  I'm skeptical how much it was ever true for a majority of households - yet that aside - given how clogged the Housing Market is, and has been for a decade, plus the later formation of households by Millennials due to all kinds of things both voluntary and not; it is seems very unlikely this is the narrative of the future Housing Market.

19 hours ago, GRDadof3 said:

adding higher end housing stock creates more inventory in the "affordable" category

I doubt anyone who cares to look at the data doubts that anymore.  Sadly, a lot of people are more about the feels than the data.  And feels create more passion than data;  color me skeptical for any Housing Policy changes in the near future.  The lack of leadership is deafening.

19 hours ago, GRDadof3 said:

There are a few "new urbanist" developments around. ...

Again, completely agree.  Sadly "new urbanist" is often just crappy urbanism.  At the end of the day happy for more housing.  Wish we could just do "real urbanism".

19 hours ago, GRDadof3 said:

20 years ago you couldn't sell townhouses to save your life

Yep.  This is both cost - and a shift in attitudes.   I've talked to so many people my age and your who are "I don't want to own a yard", and watched some of those people be yelled at at Housing NOW meetings while City Staff sat there like useless lumps.

Edited February 27, 2022 by whitemice

[discgrab21]

I've been curious for a while now to what extent Pop A plays in the housing stock.   I mean, looking at 10,000 units over 3 years, I guess not much, but allegorically, I know a lot of empty nester boomers who are staying in their large homes.  They are paid off, and having been in the house for 20+ years, the taxes are capped at a low level.  Instead of downsizing and they are staying.  I would think if there was incentive to downsize that could 1) induce demand for homes attractive to empty nester retirees, and 2) open supply for those "move up" homes.   I would think that having the demand from those with means (retirees with a healthy nest-egg and significant home equity), would make mitigate risk from the developers' standpoint.  If incentivizing downsizing would have a real impact on housing supply and not just nibble at the margins, then it would be worth looking into.  However, I suspect with the size of the demand, this really would only have impact at the margins, and things like infrastructure is really a bigger barrier as discussed above. 

[cstonesparty]

1 hour ago, discgrab21 said:

I've been curious for a while now to what extent Pop A plays in the housing stock.   I mean, looking at 10,000 units over 3 years, I guess not much, but allegorically, I know a lot of empty nester boomers who are staying in their large homes.  They are paid off, and having been in the house for 20+ years, the taxes are capped at a low level.  Instead of downsizing and they are staying.  I would think if there was incentive to downsize that could 1) induce demand for homes attractive to empty nester retirees, and 2) open supply for those "move up" homes.   I would think that having the demand from those with means (retirees with a healthy nest-egg and significant home equity), would make mitigate risk from the developers' standpoint.  If incentivizing downsizing would have a real impact on housing supply and not just nibble at the margins, then it would be worth looking into.  However, I suspect with the size of the demand, this really would only have impact at the margins, and things like infrastructure is really a bigger barrier as discussed above. 

anecdotally, I know half a dozen couples in suburbs who, after becoming empty nesters, sold the family house and moved into condos in the city.  I don't know what the stats say, but it is happening...

[Khorasaurus1]

4 hours ago, discgrab21 said:

I've been curious for a while now to what extent Pop A plays in the housing stock.   I mean, looking at 10,000 units over 3 years, I guess not much, but allegorically, I know a lot of empty nester boomers who are staying in their large homes.  They are paid off, and having been in the house for 20+ years, the taxes are capped at a low level.  Instead of downsizing and they are staying.  I would think if there was incentive to downsize that could 1) induce demand for homes attractive to empty nester retirees, and 2) open supply for those "move up" homes.   I would think that having the demand from those with means (retirees with a healthy nest-egg and significant home equity), would make mitigate risk from the developers' standpoint.  If incentivizing downsizing would have a real impact on housing supply and not just nibble at the margins, then it would be worth looking into.  However, I suspect with the size of the demand, this really would only have impact at the margins, and things like infrastructure is really a bigger barrier as discussed above. 

I'm not sure it's possible to get rid of Proposal A, because it was a referendum. You'd either need another referendum, or 75% of each house of the legislature, plus the Governor. Neither seems possible for something that would increase taxes on homeowners. 

[discgrab21]

3 hours ago, cstonesparty said:

anecdotally, I know half a dozen couples in suburbs who, after becoming empty nesters, sold the family house and moved into condos in the city.  I don't know what the stats say, but it is happening...

Oh, I do not doubt this at all. Like I said, just something I've wondered about, and thought more discussion might lend some insight from people who know more about these issues that I do. 

 

11 minutes ago, Khorasaurus1 said:

I'm not sure it's possible to get rid of Proposal A, because it was a referendum. You'd either need another referendum, or 75% of each house of the legislature, plus the Governor. Neither seems possible for something that would increase taxes on homeowners. 

 

Right, getting rid of Prop A would be a heavy lift, but there could be other ways to incentive downsizing through the tax code. 

[whitemice]

17 hours ago, Khorasaurus1 said:

I'm not sure it's possible to get rid of Proposal A

Agree; that's effectively impossible.

22 hours ago, discgrab21 said:

I've been curious for a while now to what extent Pop A plays in the housing stock.   I mean, looking at 10,000 units over 3 years, I guess not much, but allegorically, I know a lot of empty nester boomers who are staying in their large homes.

Likely a significant but not overwhelming effect.  It is like California - which has very similar tax regulations - it will predispose people who want to grow old in place (in their own communities) to do so exactly where there are, in the same unit, however inappropriate it is to their life-phase.  Those who want to move to age elsewhere, at least in Michigan, have a reasonable probability of leaving the state entirely.  But for the second group you run into the next barrier of if they can afford to migrate as the housing shortage is everywhere and Michigan property values are still lagging those of the most desirable retirement migration destinations.

22 hours ago, discgrab21 said:

If incentivizing downsizing would have a real impact on housing supply and not just nibble at the margins

Nibbling at multiple edges seems like a good strategy to me; there aren't really any power tools in the toolbox.  Especially targeting stay-in-place retirees - of which we have a lot - is something we should do.  Allow duplexing, lot splits, and ADUs (internal, attached, and detached).  Retirees could retain ownership, retain the majority of the benefits of Prop A, gain equity and income, and produce housing units.   Adaptive in-place aging.   This idea might have some traction in some of the townships based on conversations I've heard here and there;  the best place would be in The City, but the Grand Rapids City Commission has made it very clear they are going to do nothing.

22 hours ago, discgrab21 said:

1) induce demand for homes attractive to empty nester retirees, and 2) open supply for those "move up" homes

(3) housing can change form

[Khorasaurus1]

2 hours ago, whitemice said:

Nibbling at multiple edges seems like a good strategy to me; there aren't really any power tools in the toolbox.  Especially targeting stay-in-place retirees - of which we have a lot - is something we should do.  Allow duplexing, lot splits, and ADUs (internal, attached, and detached).  Retirees could retain ownership, retain the majority of the benefits of Prop A, gain equity and income, and produce housing units.   Adaptive in-place aging.   This idea might have some traction in some of the townships based on conversations I've heard here and there;  the best place would be in The City, but the Grand Rapids City Commission has made it very clear they are going to do nothing.

 

This idea is great in theory, but in practice runs into NIMBYism and cost issues. Last year, Holland had to drastically scale back plans to allow duplexes and ADUs due to widespread opposition (though they did still expand opportunities, just not to the extent originally planned). In the process, they conducted a study of their previously existing ADU options, and found out that the number of ADUs built in the City since they were enacted was vanishingly small - less than 10. And nearly all of them were basically glorified man caves built by rich people and not on the market. 

Even with housing costs through the roof, it's not profitable in West Michigan to build a single ADU and rent it out. 

I don't personally have an issue with trying to densify existing neighborhoods, but I think a more effective strategy is opening the door for density on infill sites, aging commercial corridors, and greenfield parcels that have sufficient infrastructure and do not have irreplaceable natural or agricultural features. . 

 

[whitemice]

3 hours ago, Khorasaurus1 said:

it's not profitable in West Michigan to build a single ADU and rent it out.

No, that's nonsense.  I did it - https://urbangr.org/BuildingADU535Shirley - and only a few years later it is already cash flow neutral.  Of course people build a few when the rules remain onerous and there is extremely little local knowledge on how to finance such an build.  My person I worked with at the bank didn't even understand what I was doing, had no way to code for it.  The underwriters had to go back and forth about how to classify it . . . in the end they decided the property was multi-family which provided a nearly $40K bump.  So for the bank my property is multi-family, for the city it is still single-family (but with a weird deed restriction) and for the insurance company it is two single family units.  So weird.  But all of that could be cleared up, if we had any competent leadership.

The limitations on ADUs  - even if they are technically permissable - on size, location, roof pitch, height.... yes, very few get built.  There's no business opportunity there for contracts to get into the space - as has begun to flourish in places with non-asinine zoning.

A new housing unit near the center for an urban area for $150-200K?  That's maths out pretty easy.  Payment ~$1,100-$1,300 * 1.2 = rent $1,320 - $1,560, for a detached unit with off-street parking and in-unit laundry?  That will rent.

Especially with surging home values and the equity available to home owners.

3 hours ago, Khorasaurus1 said:

This idea is great in theory, but in practice runs into NIMBYism

This is the limitation.  And that is the barrier for every possible solution.  It is unavoidable. We need state-level reform, the rollback the overreach of "local control" governments.

3 hours ago, Khorasaurus1 said:

I think a more effective strategy is opening the door for density on infill sites

Yes, we should do that.  I doubt that avoids the core problem: NIMBYism vs. lack of political will.   Speaking of affordability - there's also if sites are available.  There are numerous long derelict sites around my 'hood, these could be developed pretty significantly, but they just sit there.  These sites are very cheap to just sit on.   I wish there was a way to penalty tax vacant land.

[GRDadof3]

On 2/27/2022 at 12:07 PM, whitemice said:

THIS!  "Affordable" housing is important, and we just need for g.d. housing.

I know that's always been the Realtor's Narrative.  I'm skeptical how much it was ever true for a majority of households - yet that aside - given how clogged the Housing Market is, and has been for a decade, plus the later formation of households by Millennials due to all kinds of things both voluntary and not; it is seems very unlikely this is the narrative of the future Housing Market.

 

This is not a "Realtor's Narrative" lol. Every household changes their living situation at least once. Some 4 or 5 times. Unless I'm misunderstanding what you mean by realtors narrative. 

[GRDadof3]

On 3/1/2022 at 10:02 AM, Khorasaurus1 said:

 

I don't personally have an issue with trying to densify existing neighborhoods, but I think a more effective strategy is opening the door for density on infill sites, aging commercial corridors, and greenfield parcels that have sufficient infrastructure and do not have irreplaceable natural or agricultural features. . 

 

I'm down in St Petersburg area right now and the number of new apartment/condo developments along traditional suburban retail corridors is astonishing. I mean, back home it's hard to think of who would want to live in an expensive apartment RIGHT on 28th Street, but these complexes down here are on much larger 6 and 8 lane commercial boulevards. 

[arcturus]

If you've been to Las Vegas or Phoenix lately you would swear virtually every home that was in Michigan are in those 2 metro areas now.

[RegalTDP]

51 minutes ago, GRDadof3 said:

I'm down in St Petersburg area right now and the number of new apartment/condo developments along traditional suburban retail corridors is astonishing. I mean, back home it's hard to think of who would want to live in an expensive apartment RIGHT on 28th Street, but these complexes down here are on much larger 6 and 8 lane commercial boulevards. 

You see that in LA as well.  Giant complexes are going up along the wide boulevards that criss-cross the San Fernando Valley, over what used to be retail corridors.  The buildings go right up to the street with parking underground.  It makes sense, brick & mortar retail isn't as viable as it used to be outside of a few really thriving areas, and the city needs housing more.  Kinda the same situation in suburban GR?  Properties along 28th Street waste so much space on big surface lots, long driveways, and landscaping; you could fit a lot of new buildings along that corridor and still have enough green space to make it livable.  44th Street too in some places too.

 

Edited March 2, 2022 by RegalTDP

[GRDadof3]

Just got an email from GRAR (because I do have my real estate license) and they're stepping up their efforts on this front and have officially partnered with Housing Next. 

I told you guys this was going to be a big deal this year.

[GRDadof3]

Looks like this Redhawk Multifamily out of Illinois is turning several of the golf courses into apartment complexes:

https://www.woodtv.com/news/kent-county/owners-to-sell-the-pines-golf-course-in-wyoming-to-developer/

I think I mentioned I thought the Pines would be next to go. 

They're also the ones developing English Hills. 

[Guest]

On 2/26/2022 at 11:47 AM, cstonesparty said:

This discussion is amazing for this forum

 

a few years ago I had dinner in the home of a resident in Norton Commons, outside Louisville. https://goo.gl/maps/6yi9vJ6ohgDECir29  

 

in 1999, Dan DeVos was proposing something similar along Pettis north of Ada.  Is anyone still looking at these kind of large-scale, new urbanist developments anymore?  Or has Eastbrook’s experience in Kentwood and DanDeVos’ reception in Ada effectively killed this for West Michigan? I also wonder how spiraling construction costs impact the economics of new large-scale development as part of the solution for housing needs.  
 

Someone commented recently about the missing middle for housing.  How do new developments fit in that dialogue?

There's a really cool development in Edwards, CO, just west of Vail, called Miller Ranch.  It has some nice density and is sanwhiched between a middle school and high school with playing fields to the west and the Eagle River to the south.  There's also a walking path that stretches the whole Vail Valley.  East, there is another development with a more small downtown feel - parking underground and streets with shops and restaurants on the ground floor and condos and apartments above.

 

More info: https://www.marcinengineering.com/projects/32-miller-ranch

Riverwalk - Edwards, CO:

 

Housing in Colorado is a whole different animal.  I'm not sure if this would work here.  Buildable, flat land is scarce in the mountains, especially in a valley.

[CalderCity946]

The issue is that every municipality is extremely sensitive to development projects and it's very difficult to get approvals to get lots in the ground to build the houses.

Edited March 10, 2022 by CalderCity946

[grandrollerz]

This is an intriguing article: https://fullstackeconomics.com/the-strongest-case-for-urban-density-isnt-aesthetics-its-math/  Preaching to the choir here, but still good content.

Side Note: I subscribe to this guys newsletter.  Do you all subscribe to anyone elses? On Substack, or Medium or whatever??

[MJLO]

Population estimates for counties came out yesterday.  Unfortunately I’m down here in Clearwater without access to my normal resources to process the data.  At first glance it appears that the suburban counties may have actually grown faster than Kent County for like the first time ever.  I need to process the numbers to confirm.  If true it bolsters the argument that Kent County, and the metro’s growth as a whole is being hindered by this housing crunch.   More data coming soon.