As developers have largely focused on apartment projects around Grand Rapids in recent years, many housing advocates say the demand for single-family homes and ownership options have gone unmet.
While housing starts have inched upward in the years coming out of the recession, the new supply has not been enough to keep up, according to industry experts. The situation in Grand Rapids even became a poster child for the national housing crisis in a late-March report in The Wall Street Journal about residential demand far outweighing the supply.
It’s an issue real estate professionals have struggled with over the last couple of years and one that’s become particularly acute in recent months.
“There’s a severe shortage of homes,” said Jeff Hill, a marketing and sales consultant with Third Coast Real Estate LLC, a residential brokerage with offices in Grand Rapids and West Olive.
He’s even heard stories of people interested in moving to West Michigan for new jobs who ultimately turned down the offers because they couldn’t find housing.
“The job market is the hottest it’s been in a really long time. The job market drives homes, so it’s really pushing demand on a really limited supply,” Hill said.
Single-family home listings in Kent County in March were down 8 percent from the same time last year, while average sale prices grew 3.6 percent over the same period, according to a report from the Grand Rapids Association of Realtors.
That convergence of limited supply and escalating pricing has brokers and other housing advocates calling for the addition of housing stock around the region.
To that end, Hill’s firm is in the early stages of marketing and selling Blackhawk, a proposed single-family housing development on Michigan Street NE, just west of Crahen Avenue in Grand Rapids Charter Township.
The project’s developers have received needed approvals from the township Planning Commission and currently are working on site preparation, Hill said.
Plans call for the development of 75 lots on the site over three phases, with sale prices starting around $450,000, including the lot.
Hill described the planned development as consisting of “executive homes,” intended for professionals seeking single-family residences. He noted that very few homes of that type are currently on the market in attractive suburbs around the region.
Other companies also are working to bring single-family developments to market.
Orion Real Estate Solutions LLC, the development arm of general contractor Orion Construction Co. Inc., along with development parter Cusp Group LLC, last month unveiled plans for the Knoll Townhomes of Ada on Spaulding Drive.
Orion spokesperson Jason Wheeler told MiBiz that while the 72-unit development is currently a rental project, the developers have received enough preliminary customer inquiries about purchasing the units that they’re now exploring that as an option.
Hill noted that he’s marketed and sold single-family homes in several developments in suburbs like Allendale, Byron Center and Hudsonville.
Moreover, several housing developments are at various stages of planning and construction in Plainfield Township north of Grand Rapids.
All told, home building in Kent County has slowly picked up to 1,095 last year, up from 1,006 single-family housing starts in 2013, according to data from the Home Builders Association of West Michigan.
However, rising land and construction costs ultimately make construction of new housing unfeasible in many instances, according to real estate sources.
“It’s like a perfect storm — not in a good way,” Hill said.
THINKING SMALL
While Hill’s work largely focuses on the suburbs, there’s renewed interest in tackling housing issues in the urbanized areas of Grand Rapids as well, as MiBiz previously reported.
For its part, Urbaneer LLC hopes to be one part of the solution when it comes to adding to the housing supply and creating greater density.
The company, which spun out of Grand Rapids-based Rockford Construction Co. Inc. last month after raising $500,000 in seed funding, designs and installs movable walls, wall beds and storage predominately for multifamily family developments.
Bruce Thompson, principal with Urbaneer, believes that those products can easily be deployed in single-family homes as well, noting that his own family recently downsized to an Urbaneer-designed bungalow with four bedrooms and three bathrooms, all within about 1,400 square feet.
“People want walkability, (to live) with less,” Thompson said, noting that he believes consumers are willing to make certain trade-offs in their living space for the right design.
“As you get into some of these infill neighborhoods where we can increase density, size is a very relative thing,” he said.
The company expects to start licensing its products to builders locally and nationally in the coming months.
Urbaneer’s components would be pre-assembled and then shipped to the construction site, which can cut down significantly on time and therefore lower the overall cost to build, Thompson said.
To ramp up Urbaneer’s entrance into the single-family housing market, the company tapped Grand Rapids-based architecture firm Lott3Metz Architecture LLC to come up with a handful of designs.
The designs focus on houses of around 1,200 square feet that feature movable walls and kitchen islands, as well as bedrooms that can turn into dining rooms when needed and vice versa.
Given that construction costs and materials have been on the rise, housing advocates say cutting down on size while working to offer more livable spaces is key to affecting the overall cost to consumers.
“We’re always trying to design things smaller because square footage costs money,” said Ted Lott, a principal with Lott3Metz. “When it comes to what a livable home costs for somebody, there are very few ways to affect that cost. It’s really a commodity at the end of the day.”
