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West Michigan/Grand Rapids Economy


GRDadof3

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28 minutes ago, x99 said:

$70k is tight for one of those "starter" new homes.  $70k in household income can only afford a $215,000 house, assuming about $500 in other monthly debt payments (car loan, student loans..)  But there are a lot of people with that income level doing a streeeeeetch up to a $280,000 house which is where it starts for something that isn't a joke of a new house. If you actually want to be realistic, throw in daycare costs for that young family with two college grads making $50,000 each with a $100,000 household income.  They can just barely scrape into a $270,000 house with no student loan debt.  Throw in a couple student loan or car payments, and you're back at $200,000 for a house even on a $100,000 household income.   

That's why you don't see a lot of new home buyers who are in their 20's. Most are in their mid 30's. 20 somethings and early 30 somethings are looking at existing homes, although the market is really tight for those decent $150 - $200K homes. And a lot of those buyers think they're too cool for areas like Wyoming. Suck it up buttercups. :)  We all made sacrifices and lived in places we didn't like. I built a "starter home" in Hudsonville back in the late 90's, a place where we really felt like a fish out of water. Sold it 3 years after moving in and made almost a 30% profit. I put up with jerky neighbors and then capitalized on it. :)

I couldn't walk to a brewery or book store but who the f**k cares. Two wise home investments and I can now pretty much buy anywhere I want in GR (within reason, lol). 

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3 hours ago, temporary.name said:

This type of attitude helps nothing.

I can't believe that this whole forum is dedicated to hyping up downtown and downtown living and you're shocked that people want to live there? That disconnect helps no one and just encourages persons to view your input as stagnant noise. You're better than that, GRDadof3."I suffered so others have to suffer too." is just a tired argument. 

LOL wut?

 

if you want to talk about living in Wyoming or Kentwood start a thread.  If you don't like what's in other threads you don't have to read it

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6 hours ago, GRDadof3 said:

That's why you don't see a lot of new home buyers who are in their 20's. Most are in their mid 30's. 20 somethings and early 30 somethings are looking at existing homes, although the market is really tight for those decent $150 - $200K homes. And a lot of those buyers think they're too cool for areas like Wyoming. Suck it up buttercups. :)  We all made sacrifices and lived in places we didn't like. I built a "starter home" in Hudsonville back in the late 90's, a place where we really felt like a fish out of water. Sold it 3 years after moving in and made almost a 30% profit. I put up with jerky neighbors and then capitalized on it. :)

I couldn't walk to a brewery or book store but who the f**k cares. Two wise home investments and I can now pretty much buy anywhere I want in GR (within reason, lol). 

And I bet you never once ate a piece of avocado toast that whole time. :P

Edited by RegalTDP
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On 5/23/2017 at 9:18 AM, GRDadof3 said:

Cities are still sprawling. Only the largest cities in the US are seeing any kind of increased density in the city core. 

 

Jeff, it is going to be interesting to see Grand Rapids population numbers over the next several years.  We have literally several thousands of new units (mostly rental) coming on line.  Here is the rub and why we need to watch the population closely: the City has basically "mortgaged" the property tax increases on these new developments for the next 28 years through various tax credit mechanisms.  The City does this because the theory is that these new units will bring in new residents and thus more income tax revenue which is a HUGE part of the City budget.  However, if someone moves from somewhere here in the City into one of these new units there is no income tax gains.

There is one theory whereby no increase in population still brings the income tax gains.  That is when a college grad already living in GR gets a job in GR and moves into an apartment downtown.

Nevertheless, it is worth watching closely...at least I am for sure...

On 5/23/2017 at 9:36 AM, GRLaker said:

However, rent is going up at the same rate as housing costs and it has gone from a viable way to put a roof over your head to a gigantic waste of money. 

Actually if you look at the cost of a mortgage on a $225K house and compare it to rent for a 3 bedroom unit, rent has gone up exponentially faster and higher than the cost of owning a home.  Problem is, it is almost impossible for a new home buyer to find a home in the City.

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6 hours ago, temporary.name said:

This type of attitude helps nothing.

I can't believe that this whole forum is dedicated to hyping up downtown and downtown living and you're shocked that people want to live there? That disconnect helps no one and just encourages persons to view your input as stagnant noise. You're better than that, GRDadof3."I suffered so others have to suffer too." is just a tired argument. 

If you don't like my tone then don't readmy comments. :) If you have a better answer, idea or solution I assume you would've shared it already. My comments are actually meant to help people who want to be helped, and aren't directed at any specific person here or otherwise.

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53 minutes ago, KCLBADave said:

Hate to say this, but I agree with X99.  My concern is not necessarily with the rise of prices, it is with the stagnant area median income.  Check it out, between 2005 and 2014 the AMI for families in GR went from $45,897 (2005) to $47,269 (2014).  When inflation is considered there is an actual loss of $8,300 annually per family.  Here is the real rub the national average for the same time period with inflation considered, the loss annual lost revenue per family is only $1,768. 

Point is, we have a major wage issue in our City and our region.

Hey--even I rarely like my own analysis, so don't feel bad. ;)   What's really interesting is when you take your information and put it in a blender with everything else.  You have increasing housing costs in real terms.  You have decreasing wages in real terms.  You have easy, low-cost financing with minimal money down.  You have incredibly low interest rates that are making the increasing housing costs affordable.  You have (arguably) an oversupply of apartments coming online.  You have people buying single family and smaller rentals at negative to 5% returns.  This is not a system that is at a good equilibrium.  If you take out the glut of subprime mortgages, it's 2007 all over again.  Tons of people that are barely making the payments, and loads of rental properties that make little or no money.  All of this leads to an interesting question:  Why was supply so tight in 2007 and why is it so tight now?  In 2007 it was the junk loans.  Now the loans aren't junk, but the interest rates are.  If those rates go up to reasonable levels, the wheels fall off of this thing because most buyers don't actually "buy" a house.  They buy a mortgage.  The only way to afford the mortgage based on the income?  Sellers will have to cut the housing price. But if you cut the housing price, that puts all of those 3% and 5% loans in an underwater scenario.  That is what caused the real housing problems.  Not subprime.  That is why it was never a good idea to get away from 20% down.  That is also why cheap mortgages are bad juju.  They leave little room for error.

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1 hour ago, temporary.name said:

I appreciate all views even when they're not-productive. 

 

I haven't offered a solution because there is none. The bulk of homeowners have to start dying off or moving into apartments to free up homes/land. That's just going to take time. No magic bullet, no sarcasm, no negative attitude needed; just time. I wish there was a better option but it's literally a gigantic generation (the Boomers) versus an even larger gigantic generation (the Millennials) in the housing market and the Boomers (rightfully so) are holding steady in their homes. 

Also, keep in mind, the late 90s were twenty years ago. Not very relevant. 

"There is no solution." I'm going to go out on a limb and guess you're a millennial. :) 

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5 hours ago, KCLBADave said:

Hate to say this, but I agree with X99.  My concern is not necessarily with the rise of prices, it is with the stagnant area median income.  Check it out, between 2005 and 2014 the AMI for families in GR went from $45,897 (2005) to $47,269 (2014).  When inflation is considered there is an actual loss of $8,300 annually per family.  Here is the real rub the national average for the same time period with inflation considered, the loss annual lost revenue per family is only $1,768. 

Point is, we have a major wage issue in our City and our region.

Boom, exactly. 

By the way Dave, 196,445:

http://www.mlive.com/news/index.ssf/2017/05/detroit_population_drops_again.html

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8 hours ago, GRDadof3 said:

Interesting to see EGR is one of the fastest growing cities in Kent County. You wouldn't think EGR would have the capacity for that kind of growth, being and older, established city. 

Joe

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8 hours ago, GRDadof3 said:

Most people know i'm a pretty big pop stats nerd, I'm confident this is an under estimate. The last 2 official census counts show the CB to be off by 6-10k people.  I've been waiting for these numbers to be released for a couple months.  Yesterday I did a quick study I took the estimate growth from 2010-2015 (7057) and divided by 5 (1,411) I added this number to the 2015 estimate and guessed the CB would estimate the 2016 pop to be 196,506.  I was 51 people to high.  If you look at their year over year estimates for GR they have basically been adding 1500 people per year since 2010.  A good indicator they are not looking real deep at municipalities and following a formula.  They especially struggle when it comes to estimating Michigan population stats because they always weight the previous decades economic cycle into the count and not the current cycle.  For instance in 2000 they under estimated Grand Rapids by over 10,000 (the economy in the 1990s was red hot).  While in 2010 they OVER estimated the city by 7,000 (Michigan's decade recession).  Unless there is a major economic slow down I wouldn't be surprised to see the city of Grand Rapids official 2020 count to show 10% or more growth.  2017 numbers should show a larger increase since over 1000 housing units went online in the city AFTER this estimate period concluded. 

Does anyone have access to how many housing units have been introduced to the city since 2010?

11 minutes ago, joeDowntown said:

Interesting to see EGR is one of the fastest growing cities in Kent County. You wouldn't think EGR would have the capacity for that kind of growth, being and older, established city. 

Joe

A couple things going on in EGR.  Even with the city being built out, there is still a surprising amount of infill taking place.  Also I see a lot of existing homes being torn down with new ones being built on top of them.  East Grand Rapids is one of the highest rated cities in the state for families.  I suspect a lot of the old blood in the city is retiring/down sizing/passing away.  This is opening up housing stock for younger upper middle class families and a chunk of that population increase is a growing average house size. 

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21 minutes ago, MJLO said:

Does anyone have access to how many housing units have been introduced to the city since 2010?

This is a very rough estimate between 2012 and 2015 there have been about 426 market rate units and 622 low income housing tax credit units.  The estimate for units to actually come on line (this does not mean under construction) in 2016 and 2017 is 2,663 market rate units and 511 LIHTC units.  This does not include the potential abandoned homes renovated, or new single family home construction.  

Edited by KCLBADave
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25 minutes ago, MJLO said:

Most people know i'm a pretty big pop stats nerd, I'm confident this is an under estimate. The last 2 official census counts show the CB to be off by 6-10k people.  I've been waiting for these numbers to be released for a couple months.  Yesterday I did a quick study I took the estimate growth from 2010-2015 (7057) and divided by 5 (1,411) I added this number to the 2015 estimate and guessed the CB would estimate the 2016 pop to be 196,506.  I was 51 people to high.  If you look at their year over year estimates for GR they have basically been adding 1500 people per year since 2010.  A good indicator they are not looking real deep at municipalities and following a formula.  They especially struggle when it comes to estimating Michigan population stats because they always weight the previous decades economic cycle into the count and not the current cycle.  For instance in 2000 they under estimated Grand Rapids by over 10,000 (the economy in the 1990s was red hot).  While in 2010 they OVER estimated the city by 7,000 (Michigan's decade recession).  Unless there is a major economic slow down I wouldn't be surprised to see the city of Grand Rapids official 2020 count to show 10% or more growth.  2017 numbers should show a larger increase since over 1000 housing units went online in the city AFTER this estimate period concluded. 

Does anyone have access to how many housing units have been introduced to the city since 2010?

A couple things going on in EGR.  Even with the city being built out, there is still a surprising amount of infill taking place.  Also I see a lot of existing homes being torn down with new ones being built on top of them.  East Grand Rapids is one of the highest rated cities in the state for families.  I suspect a lot of the old blood in the city is retiring/down sizing/passing away.  This is opening up housing stock for younger upper middle class families and a chunk of that population increase is a growing average house size. 

EGR isn't being built out that much. It says that EGR has grown (estimated to have grown) by 9% or about 1000 people, since 2010. At 2.5 people per household, which is the average, there would be 400 new homes in EGR since 2010. I'd be surprised if there were 50 new homes since 2010. 

My guess is your second postulation is more accurate, the housing in EGR is turning over and baby boomers/empty nesters are being replaced by young families. 

Is the same thing happening in Grand Rapids? For a while, young families were moving out of the city, so even new housing units downtown weren't keeping up with family flight. If 1 family of 4 leaves, you need two apartments/condos essentially to replace them, population wise. But to Dave's point, not necessarily do you lose as much income tax (kids don't pay income tax obviously). :)

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19 minutes ago, GRDadof3 said:

 Is the same thing happening in Grand Rapids? For a while, young families were moving out of the city, so even new housing units downtown weren't keeping up with family flight. If 1 family of 4 leaves, you need two apartments/condos essentially to replace them, population wise. But to Dave's point, not necessarily do you lose as much income tax (kids don't pay income tax obviously). :)

I can only offer conjecture at best.  I imagine it's a neighborhood to neighborhood situation.  My impression is that family flight from GR is stabalizing.  But this is based on the enrollment at the City Public Schools stabalizing or showing tepid gains after decades of declines.  I'd be curious to know the enrollment at the private and charter schools.  If the city is still experiencing thinning household numbers it's at it's lowest decline since the 70s.

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15 hours ago, KCLBADave said:

Hate to say this, but I agree with X99.  My concern is not necessarily with the rise of prices, it is with the stagnant area median income.  Check it out, between 2005 and 2014 the AMI for families in GR went from $45,897 (2005) to $47,269 (2014).  When inflation is considered there is an actual loss of $8,300 annually per family.  Here is the real rub the national average for the same time period with inflation considered, the loss annual lost revenue per family is only $1,768. 

Point is, we have a major wage issue in our City and our region.

Bridge Magazine agrees with your assessment.

"Wages are low in Grand Rapids. The region had an overall average wage of $43,801 in 2014, compared with $54,168 in Detroit, $56,337 in Minneapolis and $69,427 in Boston. The Grand Rapids area ranked 49th of 52 U.S. metropolitan areas with a population of at least 1 million, and last when factoring for knowledge-based jobs’ share of total wages, data show."

http://www.bridgemi.com/business-bridge/report-michigan-held-down-low-income-education

The knowledge based jobs statistic is damning. How can we expect to attract and retain talent if other similar sized or larger regions are paying significantly more? We can no longer tout a significantly lower cost of living when both rent and home values are skyrocketing. Combine that with the highest auto insurance and one of the highest gas prices in the country. Being trendy only gets you so far. 

Edited by GRLaker
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45 minutes ago, KCLBADave said:

This is a very rough estimate between 2012 and 2015 there have been about 426 market rate units and 622 low income housing tax credit units.  The estimate for units to actually come on line (this does not mean under construction) in 2016 and 2017 is 2,663 market rate units and 511 LIHTC units.  This does not include the potential abandoned homes renovated, or new single family home construction.  

Wow.  2600 units in two years?  That's a huge number of market rate apartments to absorb.  It will be interesting to see how that plays out. The city has some other statistics that say 4,050 residential units have been added since 2011, going by units permitted.  http://grcity.us/design-and-development-services/Planning-Department/Documents/2016-17 Development Projects FINAL 1000am.pdf.  It's not clear if "permitted" means "certificate of occupancy" or "building permit" so the 2016 and 2017 figures could include a lot of vaporware.

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  • 2 weeks later...
On 5/19/2017 at 10:02 AM, GRDadof3 said:

We're due for a slow-down. Prices can only go up so far before the air needs to be let out a bit. We've had 9 straight years of expansion. 

New home construction however is still only about 60% of what it was at the previous peak. I don't foresee a bubble bursting, maybe just a balloon with the air being let out slowly next year before things pick back up again. Job growth is still strong nationally. 

The apartment market nationally may see some severe correction next year though. Just a hunch. 

Watch U.S. auto sales nationally, that's the "canary in the coalmine" for an economic slowdown. Not one quarter, but how they go through the summer and into the Fall. 

Well auto sales are slowing and dealers are slowly cutting away from their inventory. Possible "first annual sales decline since 2009".

http://abcnews.go.com/Business/wireStory/nissan-us-sales-pct-bring-1st-gain-year-47767074

The news of 616 and others surprised me since I didn't expect that much of a slowdown in our development (if that's even the case).

This analysis from Moody's isn't assuring either.

https://www.economy.com/mark-zandi/documents/2016-06-17-Trumps-Economic-Policies.pdf

IMG_5450.thumb.PNG.3dc7d7fb7108b9641e402d5e087fa807.PNG

Not trying to fearmonger either, just wanted to share and get opinions.

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  • 2 weeks later...

Interesting article about Grand Rapids area manufacturing from the LA TIMES;

manufacturing-stronghold-grandrapids

While factual, I don't agree with the spin of this article.  As much as I wish that we still had a lot of high pay union manufacturing jobs at GM etc., lower wage jobs are still better than the alternative, no jobs at all.  It's not like all the people making $13 an hour would be working as professionals if there were no factory jobs. 

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On 6/17/2017 at 9:45 AM, walker said:

Interesting article about Grand Rapids area manufacturing from the LA TIMES;

manufacturing-stronghold-grandrapids

While factual, I don't agree with the spin of this article.  As much as I wish that we still had a lot of high pay union manufacturing jobs at GM etc., lower wage jobs are still better than the alternative, no jobs at all.  It's not like all the people making $13 an hour would be working as professionals if there were no factory jobs. 

I read that article too and felt like it was close but there's always something missing from these articles about West Michigan manufacturing and I just can't put my finger on it. 

But I completely agree walker. Lou Glazer seems to be believe that you can just move everyone from the factory floor to a cubicle. 4 year degree to what, answer phones at a call center? 

Manufacturing here locally certainly has made a comeback. One of the reasons why industrial space is at a low 2 or 3% vacancy rate (or some extremely low rate). 

 

 


5946889f36c62_Mfgemployment.JPG.e4a68a6657a1a2544b7a9e6aa2dba59b.JPG 

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18 minutes ago, GVSUChris said:

I really wasn't sure where to put this. I know we've been having this conversation in other threads (Wealthy Street, etc.) but I found it very interesting. 

https://mibiz.com/news/real-estate/item/24898-gr-nonprofit-housing-group-in-talks-to-acquire-177-property-portfolio

This could be a really good step toward improving access to affordable housing. If ICCF did the bare minimum with this acquisition—continue operating the properties in a similar manner to how they've been managed, but with an eye toward community development and keeping rents low—that would be a good thing.

But they could go further: Set a goal of transitioning those rentals to owner-occupied whenever possible. They could identify which renters are good candidates for ownership (based on credit score, timeliness of rent payments, how they've treated the rental property, etc.), and offer to convert their rental agreement to a (relatively low-interest) land contract.

Not sure if ICCF has any plans to do this, but it seems to me that such a strategy could do an immense amount of good for the community by increasing homeownership, and long-term would be cashflow-neutral—or perhaps even a source of revenue—for the nonprofit.

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3 hours ago, organsnyder said:

This could be a really good step toward improving access to affordable housing. If ICCF did the bare minimum with this acquisition—continue operating the properties in a similar manner to how they've been managed, but with an eye toward community development and keeping rents low—that would be a good thing.

But they could go further: Set a goal of transitioning those rentals to owner-occupied whenever possible. They could identify which renters are good candidates for ownership (based on credit score, timeliness of rent payments, how they've treated the rental property, etc.), and offer to convert their rental agreement to a (relatively low-interest) land contract.

Not sure if ICCF has any plans to do this, but it seems to me that such a strategy could do an immense amount of good for the community by increasing homeownership, and long-term would be cashflow-neutral—or perhaps even a source of revenue—for the nonprofit.

This is actually a team effort that includes ICCF, the City of GR, Kent County Land Bank, Habitat, LINC, and Amplify GR.  This is a very large complex project.  Not sure what role each agency is going to play yet...the devil is in the details.  Yes the ultimate goal is to move the families living in these units to home ownership. In case anyone is wondering about the state of the housing market in GR, the owners received 12 offers form different entities originating from 9 states.  

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20 minutes ago, KCLBADave said:

This is actually a team effort that includes ICCF, the City of GR, Kent County Land Bank, Habitat, LINC, and Amplify GR.  This is a very large complex project.  Not sure what role each agency is going to play yet...the devil is in the details.  Yes the ultimate goal is to move the families living in these units to home ownership. In case anyone is wondering about the state of the housing market in GR, the owners received 12 offers form different entities originating from 9 states.  

This is amazing news (dare I say "game-changing"?)! Congratulations on this effort—really looking forward to where this leads.

http://www.mlive.com/business/west-michigan/index.ssf/2017/06/177_homes_sold_to_west_michiga.html

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