GRAND RAPIDS, MI — In July 2020, a study commissioned by the city of Grand Rapids showed nearly 8,888 housing units — apartments, condos, single-family homes — were needed by 2025 to meet demand and avoid displacing residents.
Two years later, is the city on track to meet that goal?
In short, no.
Data provided by the city shows there has been 1,045 new housing units added in Grand Rapids since 2020, with at least another 1,000 units reserved for low- to moderate-income residents in the pipeline.
“Based on our current construction numbers, we are not on track to meet those goals,” said Ryan Kilpatrick, executive director of Housing Next, an organization that works with the city of Grand Rapids on housing issues. “More production is needed not only in the city of Grand Rapids but also across all of Kent County and across all of West Michigan. The entire region is falling short of its numbers.”
More than half the 1,045 units created since 2020 are “affordable,” meaning they have been subsidized using public funds and are reserved for low- to moderate-income residents, according to the city.
One factor in the city not being further on track to hitting the goal of 8,888 new units by 2025: rising construction costs.
Kilpatrick said construction costs have jumped 30% to 40% over the last two years, and while wage growth has remained far below that level. That has left developers worried that the cost of new market rate apartments would far exceed what could be charged for rent.
“If we could still build housing at the 2019 cost of construction, I think you would see lots more cranes in the sky right now,” he said. “As we look at the mismatch between the growth in construction pricing and the growth in wages, that’s really the major barrier.”
The July 2020 study that determined there is demand for 8,888 housing units by 2025 was conducted by Bowen National Research, an Ohio-based real estate market analysis firm. The study was primarily funded by the city of Grand Rapids and the Frey Foundation.
In Grand Rapids, the goal of 8,888 housing units was broken into two parts: 5,340 apartments, and 3,548 owner-occupied condos, townhomes or single-family homes.
The study also estimated Kent County, excluding the city of Grand Rapids, would need 3,581 rental units and 9,760 owner-occupied units.
Officials say meeting the goal is important as Kent County and the city of Grand Rapids continues to grow, attracting new residents and employers to the area.
Population growth has put pressures on housing prices, and community leaders say they want to ensure there’s quality, housing available to residents at all income levels.
“Stuff moves fast, and stuff is pricey,” Elianna Bootzin, executive director of Neighbors of Belknap Lookout, said on a recent afternoon as she described demand for housing in her neighborhood on the city’s Northeast Side.
She was among several community leaders who attended a groundbreaking hosted by Orion Construction for a$12.2 million, 52-unit income restricted apartment development, known as Union Suites, being built on the 600 block of Coit Avenue NE.
Bootzin said the development will help meet a big demand for affordable housing in her neighborhood, located just north of I-196 from the city’s burgeoning Medical Mile. She said the neighborhood has seen a host of higher-end market rate developments, but little new housing restricted for low- to moderate-income residents.
“It’s going to bring more affordable housing and we know that we need that so desperately,” she said. “We’ve seen a lot of great projects come in; a lot of large projects come in. But so far, they’ve been market rate, and we know that people need something under that to be able to stay here, to be able to move here.”
The Union Suites apartments will be reserved for residents whose annual income is up to 80% of Kent County’s area median income. For example, that translates, for a one-person household, to $50,160, and $64,480 for a three-person household.
Of the 1,045 new housing units added in Grand Rapids since 2020, 690 of those are apartments.
The remaining 355 are townhomes, condominiums, duplexes or single-family homes, according to the city. Fifty-seven percent of those are likely owner-occupied while the remainder are rentals.
Looking forward, one challenge Kilpatrick sees is the availability of more market-rate apartments, rather than income-restricted units, in Grand Rapids. There are 1,000 units of income-restricted units at various stages in the development process, according to the city.
“The value of market rate housing is really to support households at all incomes,” he said. “We have to acknowledge that we’ve got higher income households that want to live in the city of Grand Rapids, and when we don’t provide new housing for those households they’re competing for our older, typically more affordable housing stock.”
Challenges in bringing more market rate housing to the city include rising constructions costs and availability of construction workers, Kilpatrick said.
“We’ve got some really outstanding construction firms in the West Michigan community, and many of them have commitments to big healthcare facilities or educational institutions,” he said. “And so, we’re not only competing for labor force among housing developers. We’re also competing for labor force with our job creators. So, we’ve also got to be thinking about how we grow our skilled trades.”
There’s no centralized data source for how much housing has been added in Kent County since 2020. So, it’s difficult to say how close the county is to reaching the estimated 13,341 units needed by 2025.
But officials from two municipalities, Grand Rapids Township and Caledonia Township, say there is significant demand for new housing in their communities.
Grand Rapids Township Supervisor Michael DeVries said about 800 new housing units have been added in his community since 2020.
A significant portion of those were in multi-family rental units along East Beltline Avenue, he said, including the 320-unit The Grove by Watermark across the street from Robinette’s Apple Haus & Winery.
Looking forward, though, he doesn’t see room in his community for significantly more multi-family housing developments.
“There’s not much property left in Grand Rapids Township that doesn’t have houses on it already,” said DeVries, who estimates 90% of the housing in his community is owner-occupied.
In Caledonia Township, there has been 273 building permits issued since 2020, and there “continues to be rooftops added where there used to be cornfields,” said Township Supervisor Bryan Harrison.
Of the 273 building permits, 194 were for single-family homes, and the remainder were for multi-family residential developments. The largest of the multi-family developments has nine residential units, he said.
While the township has seen rapid growth over the past 30 years, community leaders want to strike a balance between accommodating new residents and businesses while maintaining the area’s rural character, Harrison said.
“Everyone moves to Caledonia and wants to slam the door behind them to maintain that rural, quiet atmosphere,” he said, adding that the township is more focused on being “responsive to demand rather than defining demand.”
Back in Grand Rapids, Mayor Rosalynn Bliss said she’s hopeful the city can get “closer” to meeting the goal of 8,888 housing units by 2025.
“I want it to move more quickly, knowing that the need is so great,” she said, noting she would like to see 5,000 to 6,000 units completed or in the pipeline by 2025.
“But I also want it to be high-quality housing … we need to have high standards across the board whether it’s low-income, affordable or market rate housing.”
Looking forward, Bliss said there’s an opportunity to add thousands of rental units at areas being targeted for development in downtown Grand Rapids. That includes surface-parking lots on the city’s West Side and a 31-acre stretch of property along the Grand River between Fulton and Wealthy streets that’s being eyed for a 12,000-seat amphitheater and other development.