West Michigan's housing crunch is causing a growth shift to CSA counties.

[MJLO]

For those of you who follow population stats the census bureau released the 2017 county population estimates on Thursday.    As someone who has hobbies that are categorically un-enjoyable to a normal human being I analyze them every year.    Since M-live doesn't seem interested in following it this year (not that they are particularly competent and posting accurate facts about trends) I am posting my analysis below.  A break down of the regions data suggests a trend that  people are moving to the rural metro counties at faster rates than I've seen since I've been watching them. (If you find this stuff boring feel free to disengage at this point :D)

I'll start with the big ones.  Together Kent and Ottawa Counties contain 934,977 enough on their own to be the 59th largest metro area in the country.  They have also added more than 60,000 people since 2010.  Over the past couple of years their growth has started to slow.

Kent County  added:

1.  6,095 in 2015,
2. 6,401 in 2016, 
3. 5,685 in 2017  . (The lowest number of added residents since 2011.)

Ottawa County was a bit more consistent:

1. 3,136 in 2015,
2. 2,803 in 2016, (slowest growth in over a decade) 
3. 3,141 in 2017.

Over these three years the housing inventory crunch has really intensified leading to one of the most cut throat real estate markets nationwide.  From what I can tell these 2 counties have been bearing the brunt of it.  I believe it is choking their ability to effectively add more residents.  Conversely several rural counties that are part of the MSA, or greater CSA region have started to show a surge of growth in that same period.  

Barry County long has been a slow but steady gainer:

1. 115 in 2015
2. 323 in 2016
3. 874 in 2017 (second fastest growth rate in the state)

Montcalm County seems an odd addition to the Grand Rapids MSA, and has historically oscillated between population stagnation and decline:

1. -44 in 2015
2. 235 in 2016
3. 587 in 2017 (top ten state growth rate)

Allegan County is considered statistically separate from Grand Rapids MSA, but still part of it's CSA.  It is typically consistently stronger than average in growth:

1. 795 in 2015
2. 870 in 2016
3. 1,492 in 2017 (3rd fastest growing in the state)

Muskegon County which shares more in common with post industrial counties on the eastern side of Michigan also appears to be benefiting:

1. 202 in 2015
2. 729 in 2016
3. 591 in 2017

Ionia County is the only county that doesn't seem to be affected by the trend of people moving further out.

1. -178 in 2015
2. 131 in 2016
3. 109 in 2017

Even further out Newaygo(added 454 residents in 2017  9th fastest in the state)  and Mecosta Counties are seeing a steady increase in numbers.  Now part of this could be attributed to a larger trend within the state as a whole.  Several rural and remote counties are showing a reversal of decades of decline over the last three years.   Specifically when I look at population numbers in the counties that border Kent and Ottawa Counties, I believe they are immediately being impacted by the housing situation in the core counties.   Growth in the core counties has started to slow, while Barry, Montcalm, and Allegan are starting to surge.   To me this indicates new families being attracted or recruited to the area are more easily able to find housing further out,  or people within the core counties that are looking to move up in housing brackets are choosing longer commutes in order to do so(more likely a combination of both).   It's also an indication that W. Michigan is not achieving it's full potential in gaining new residents.   I don't have the means to assess how many people are being recruited to the area, or are potentially interested in relocation but choose not to, due to a lack of housing.

Over the past several years we've seen the apartment/rental market react to demand for housing.   However single family housing has lagged.  The residential construction industry in the area is producing beyond it's capacity.   On top of that there continues to be a talent shortage in skilled trades.  The area has never recovered after several major home builders exited the region during Michigan's 10 year recession.  None of them seem to have taken note that there's hundreds of millions of dollars being left on the table these days.  Additionally the township lobby adds to this with prohibitive and expensive regulations that remove even more incentive for big builders to take a chance on the region.  In my opinion housing is the most important issue this region faces at the moment.  If we cannot accommodate those who wish to move here, we are losing opportunity.  I challenge anyone who would argue growth is a bad thing.  This region isn't experiencing anything near the level of growth that compromises quality of life and may never see it.   If the region is unable to supply an inventory to meet the demands, the demand will go elsewhere.  

Let me be clear I am not trying to over dramatize the situation, and I think almost all other metrics of the area are quite healthy.  We live in an area of transition, in order to complete that transition we need the resident base to support it.  If you do not grow you decline.   Decline only creates more decline, as municipalities receive less revenue, and in turn reduce services, which in turn makes the region even less attractive.   What can be done to remedy some of these issues?   I can't imagine W. Mich will ever see the return of Pulte or the like,  nor am I certain anything can be done about the growth prohibitive township lobby.   Could major construction players like Rockford and Orion enter the residential market instead of just building urban monstrosities?   I know all kinds of things about population statistics,  I know almost nothing about the dynamics of the construction industry, let alone commercial vs. residential.   Are any of the many economic development engines within the region working toward solutions on this front?

                                      

[GRDadof3]

1 hour ago, MJLO said:

For those of you who follow population stats the census bureau released the 2017 county population estimates on Thursday.    As someone who has hobbies that are categorically un-enjoyable to a normal human being I analyze them every year.    Since M-live doesn't seem interested in following it this year (not that they are particularly competent and posting accurate facts about trends) I am posting my analysis below.  A break down of the regions data suggests a trend that  people are moving to the rural metro counties at faster rates than I've seen since I've been watching them. (If you find this stuff boring feel free to disengage at this point :D)

I'll start with the big ones.  Together Kent and Ottawa Counties contain 934,977 enough on their own to be the 59th largest metro area in the country.  They have also added more than 60,000 people since 2010.  Over the past couple of years their growth has started to slow.

Kent County  added:

1.  6,095 in 2015,
2. 6,401 in 2016, 
3. 5,685 in 2017  . (The lowest number of added residents since 2011.)

Ottawa County was a bit more consistent:

1. 3,136 in 2015,
2. 2,803 in 2016, (slowest growth in over a decade) 
3. 3,141 in 2017.

Over these three years the housing inventory crunch has really intensified leading to one of the most cut throat real estate markets nationwide.  From what I can tell these 2 counties have been bearing the brunt of it.  I believe it is choking their ability to effectively add more residents.  Conversely several rural counties that are part of the MSA, or greater CSA region have started to show a surge of growth in that same period.  

Barry County long has been a slow but steady gainer:

1. 115 in 2015
2. 323 in 2016
3. 874 in 2017 (second fastest growth rate in the state)

Montcalm County seems an odd addition to the Grand Rapids MSA, and has historically oscillated between population stagnation and decline:

1. -44 in 2015
2. 235 in 2016
3. 587 in 2017 (top ten state growth rate)

Allegan County is considered statistically separate from Grand Rapids MSA, but still part of it's CSA.  It is typically consistently stronger than average in growth:

1. 795 in 2015
2. 870 in 2016
3. 1,492 in 2017 (3rd fastest growing in the state)

Muskegon County which shares more in common with post industrial counties on the eastern side of Michigan also appears to be benefiting:

1. 202 in 2015
2. 729 in 2016
3. 591 in 2017

Ionia County is the only county that doesn't seem to be affected by the trend of people moving further out.

1. -178 in 2015
2. 131 in 2016
3. 109 in 2017

Even further out Newaygo(added 454 residents in 2017  9th fastest in the state)  and Mecosta Counties are seeing a steady increase in numbers.  Now part of this could be attributed to a larger trend within the state as a whole.  Several rural and remote counties are showing a reversal of decades of decline over the last three years.   Specifically when I look at population numbers in the counties that border Kent and Ottawa Counties, I believe they are immediately being impacted by the housing situation in the core counties.   Growth in the core counties has started to slow, while Barry, Montcalm, and Allegan are starting to surge.   To me this indicates new families being attracted or recruited to the area are more easily able to find housing further out,  or people within the core counties that are looking to move up in housing brackets are choosing longer commutes in order to do so(more likely a combination of both).   It's also an indication that W. Michigan is not achieving it's full potential in gaining new residents.   I don't have the means to assess how many people are being recruited to the area, or are potentially interested in relocation but choose not to, due to a lack of housing.

Over the past several years we've seen the apartment/rental market react to demand for housing.   However single family housing has lagged.  The residential construction industry in the area is producing beyond it's capacity.   On top of that there continues to be a talent shortage in skilled trades.  The area has never recovered after several major home builders exited the region during Michigan's 10 year recession.  None of them seem to have taken note that there's hundreds of millions of dollars being left on the table these days.  Additionally the township lobby adds to this with prohibitive and expensive regulations that remove even more incentive for big builders to take a chance on the region.  In my opinion housing is the most important issue this region faces at the moment.  If we cannot accommodate those who wish to move here, we are losing opportunity.  I challenge anyone who would argue growth is a bad thing.  This region isn't experiencing anything near the level of growth that compromises quality of life and may never see it.   If the region is unable to supply an inventory to meet the demands, the demand will go elsewhere.  

Let me be clear I am not trying to over dramatize the situation, and I think almost all other metrics of the area are quite healthy.  We live in an area of transition, in order to complete that transition we need the resident base to support it.  If you do not grow you decline.   Decline only creates more decline, as municipalities receive less revenue, and in turn reduce services, which in turn makes the region even less attractive.   What can be done to remedy some of these issues?   I can't imagine W. Mich will ever see the return of Pulte or the like,  nor am I certain anything can be done about the growth prohibitive township lobby.   Could major construction players like Rockford and Orion enter the residential market instead of just building urban monstrosities?   I know all kinds of things about population statistics,  I know almost nothing about the dynamics of the construction industry, let alone commercial vs. residential.   Are any of the many economic development engines within the region working toward solutions on this front?

                                      

At one time First Companies used to do single-family home developments, about 20+ years ago in Caledonia (the one I know about, Glen Valley Estates). They've slowly waded back into this with mixed-use projects around the city of GR, with 616 Development, but I wonder if they'll ever get back to single-family homes. They have the ability to make big moves and can sit and wait for the years that it takes to lock up the parcels and get approvals, as they've shown with their commercial developments. 

If the developments go in, builders are waiting. Most of the hundreds of builders licensed in the area do not have the cash or capital to do their own developments, so they're out scrounging around for onesy-twosey lots. 

[whitemice]

16 hours ago, MJLO said:

Over these three years the housing inventory crunch has really intensified leading to one of the most cut throat real estate markets nationwide.  From what I can tell these 2 counties have been bearing the brunt of it.  I believe it is choking their ability to effectively add more residents. 

                                      

There is, an albeit half-hearted, attempt at zoning reform in Grand Rapids - under the brand of "Housing NOW".   This could open up some of the most desirable and employment rich areas to in-fill development.  We will have to wait and see what happens; possibly we will know something as early as this evening when the City Commission holds its public hearing on the proposals.
https://www.grandrapidsmi.gov/Directory/Programs-and-Initiatives/Housing-NOW

[arcturus]

23 hours ago, MJLO said:

Allegan County is considered statistically separate from Grand Rapids MSA, but still part of it's CSA.  It is typically consistently stronger than average in growth:

1. 795 in 2015
2. 870 in 2016
3. 1,492 in 2017 (3rd fastest growing in the state)

Looking at the map I was surprised to see Allegan County splits the Holland metro area from 32nd Ave south and goes as far east as Patterson from 108th St south .. basically Caledonia's back yard.  With all the development happening near M-6 and the Beltline plus south Holland my guess is the majority of the growth is happening in the northern 1/3 of that county.

[GRLaker]

40 minutes ago, arcturus said:

Looking at the map I was surprised to see Allegan County splits the Holland metro area from 32nd Ave south and goes as far east as Patterson from 108th St south .. basically Caledonia's back yard.  With all the development happening near M-6 and the Beltline plus south Holland my guess is the majority of the growth is happening in the northern 1/3 of that county.

Yeah...South Holland, Hamilton, and the Green Lake area are going to be the biggest reasons for it. Saugatuck is made up mostly of second homes. Cities like Allegan, Otsego, and Plainwell are too remote to contribute to that kind of growth in an economy where small country towns are dying out.

[MJLO]

54 minutes ago, arcturus said:

Looking at the map I was surprised to see Allegan County splits the Holland metro area from 32nd Ave south and goes as far east as Patterson from 108th St south .. basically Caledonia's back yard.  With all the development happening near M-6 and the Beltline plus south Holland my guess is the majority of the growth is happening in the northern 1/3 of that county.

Allegan County is a great example of some of the loop holes in the methodology used to calculate metro areas.  Clinically speaking Holland doesn't have a metro area.   Holland's urban area is split within Allegan County.   Metro area's are defined by commuting patterns between counties.  The bulk of Holland's urban area is in Ottawa County.   Since more than 25% of Ottawa Counties workforce commutes into Kent County it is considered part of metropolitan Grand Rapids.  That means if you're standing north of 32nd in Holland you're in Grand Rapids metro.   Somewhere between 15%-25% of Allegan's workforce commutes into Kent/Ottawa, not enough for it to be considered fully part of GR's metro area.  Therefore Allegan County is classified as a "micropolitan" area.  Micropolitan areas are always named for the largest city in the county.  Since the city of Hollands borders spill into Allegan County, it is considered the "Holland MI Micropolitan Area".   You can literally walk across the street without leaving the city and be considered no longer part of Metro GR. The irony is not lost that the bulk of the city of Holland is considered in a different metro area, than the micro area it is named for.   

In terms of growth I would imagine some of it is happening around Holland.   I would also wager that there's an uptick of housing going in around Wayland and Door near the Kent County border.  Also don't forget that Allegan County borders Kalamazoo County as well, and is likely receiving exurban spill over on it's southern borders.  Should the population trend continue I do expect to see the commuting threshold for Allegan County into Kent/Ottawa cross over that 25% threshold.  That means it will be considered part of the Grand Rapids metro area after the 2023 metro realignment. 

[Pattmost20]

2 hours ago, MJLO said:

Allegan County is a great example of some of the loop holes in the methodology used to calculate metro areas.  Clinically speaking Holland doesn't have a metro area.   Holland's urban area is split within Allegan County.   Metro area's are defined by commuting patterns between counties.  The bulk of Holland's urban area is in Ottawa County.   Since more than 25% of Ottawa Counties workforce commutes into Kent County it is considered part of metropolitan Grand Rapids.  That means if you're standing north of 32nd in Holland you're in Grand Rapids metro.   Somewhere between 15%-25% of Allegan's workforce commutes into Kent/Ottawa, not enough for it to be considered fully part of GR's metro area.  Therefore Allegan County is classified as a "micropolitan" area.  Micropolitan areas are always named for the largest city in the county.  Since the city of Hollands borders spill into Allegan County, it is considered the "Holland MI Micropolitan Area".   You can literally walk across the street without leaving the city and be considered no longer part of Metro GR. The irony is not lost that the bulk of the city of Holland is considered in a different metro area, than the micro area it is named for.   

In terms of growth I would imagine some of it is happening around Holland.   I would also wager that there's an uptick of housing going in around Wayland and Door near the Kent County border.  Also don't forget that Allegan County borders Kalamazoo County as well, and is likely receiving exurban spill over on it's southern borders.  Should the population trend continue I do expect to see the commuting threshold for Allegan County into Kent/Ottawa cross over that 25% threshold.  That means it will be considered part of the Grand Rapids metro area after the 2023 metro realignment. 

From a Real Estate perspective, the amount of homes I see selling in Dorr is astonishing. Then again it is right off 131 and presumably the land is cheaper out there than in nearby Byron township or Gaines.

[Guest]

Anyone have any predictions/speculations of when the inflating of home prices will slow?  I know there is a huge lack of housing driving it, but how much does people moving here effect the prices?  It seems like there are a ton of people moving here and the economy is doing very well.  It kind of sucks for us millennials that are looking to buy their first home.  I read in an article that GR's home prices are still undervalued.  Maybe it's just the market catching up?

[GRDadof3]

5 hours ago, Floyd_Z said:

Anyone have any predictions/speculations of when the inflating of home prices will slow?  I know there is a huge lack of housing driving it, but how much does people moving here effect the prices?  It seems like there are a ton of people moving here and the economy is doing very well.  It kind of sucks for us millennials that are looking to buy their first home.  I read in an article that GR's home prices are still undervalued.  Maybe it's just the market catching up?

I read a report that it might be 2 - 3 years before the real estate market returns to a normal supply/demand balance. If prices keep going up 6-7% a year, then you're probably looking at quite an increase between now and when the market "stabilizes," which doesn't mean prices will come down. It will just mean it may not be as crazy.  I would do whatever you can to buy now, unless you think you're going to be making twice as much money in 3 years. 

There is nothing that I can see in the foreseeable future that will increase the supply of new construction on the market, for single family homes, over what the current rate of construction is doing. All of the builders/developers are basically just replacing what they are finishing, numbers wise. 

[arcturus]

There are signs that finally suggest the residential market is starting to cool.  YMMV of course depending on the location but some of the bigger players like Opendoor and Offerpad have started to pull back on acquisitions plus Zillow's decision to completely get out of their disastrous home flipping business and unload thousands of homes at a loss.  With higher interest rates looming and at least a partial return to  the office it's clear sellers will need to adjust their lofty expectations or exercise more patience.

Maybe you've see signs of it in your neighborhood.

[Cookin_peacocks]

If it's anything, I can confirm that last week, my household, which is in the GR limits, added one to the census. Though she's gonna be a moocher for a while

[GRDadof3]

21 hours ago, arcturus said:

There are signs that finally suggest the residential market is starting to cool.  YMMV of course depending on the location but some of the bigger players like Opendoor and Offerpad have started to pull back on acquisitions plus Zillow's decision to completely get out of their disastrous home flipping business and unload thousands of homes at a loss.  With higher interest rates looming and at least a partial return to  the office it's clear sellers will need to adjust their lofty expectations or exercise more patience.

Maybe you've see signs of it in your neighborhood.

A lot of homes are still seeing multiple offers, depending on the price range and condition of the home, but yes I feel like investors have pulled back a bit, which is good for first-time homebuyers who now stand a chance to get a home.