Solving the city’s housing problems takes a multipronged approach

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Two critical areas of focus in Mayor Rosalynn Bliss’s recent State of the City address were the lack of affordable housing and homelessness, and the city’s actions toward reducing these issues.

These measures include increasing the construction of affordable housing units over the last two years and surveying to gauge the supply and demand.

To combat homelessness — which decreased for individual adults and increased by 47% for families between 2016 and 2018 — the city also plans on creating an outreach team, among other efforts.

While there’s no doubt that these initiatives are vital and the city is taking great strides with fixing housing issues, there’s still much to be done.

The Michigan State Housing Development Authority (MSHDA) recently released two reports — The Michigan Homeownership Study and the Michigan Statewide Housing Needs Assessment —to demonstrate how the demand for affordable housing is outpacing supply in the state, including Grand Rapids.

The reports also highlight the biggest obstacle in solving affordability issues: there is no single problem that Michigan needs to address to improve the state of homeownership. That’s not to say there aren’t problems. Instead, the approach to providing solutions needs to be nuanced and diversified for each region of the state.

A standard measure for defining housing affordability is whether housing expenses exceed 30% of the household income. If so, the household is considered cost burdened. In many communities, there are huge disparities between the cost of owning a home and household incomes.

Combined with growing demand and a lack of safe and affordable housing options, residents and businesses alike are feeling the strain around the state.

In Grand Rapids, the total population grew by 2% over the last decade. Notably, residents in the 25-34 age group increased by over 15% during the same period.

On the other end of the spectrum, the population of residents ages 55 and older grew by 11% between 2011 and 2016. These population shifts have created a market for new multifamily rental and condo developments.

Even with a growth in population and employment in the city, the median household income in Grand Rapids is $42,019, falling below the state’s median of $50,803. Yet, the median price of a single-family home in the city grew by 114% between 2012 and 2018. This severe increase reduces the affordability for current residents, especially for those with incomes below the median.

There’s a similar story for existing owner-occupied units in Grand Rapids: the increase of median sale prices was so drastic between 2011 and 2016 that those earning the median income couldn’t afford a home selling at the city’s median value.

To address Grand Rapids’ housing issues, there are a variety of strategies and tools available to help local municipalities and community leaders advance home-ownership opportunities in the region. As further outlined in the reports, these strategies include:

Finance tools: Help address gaps in access to capital for individuals and developers, as well as enhance existing programs.

  • Down payment assistance
  • Low-interest rate mortgages
  • Infrastructure grants

Rehabilitation and preservation tools: Grand Rapids has an older housing stock when it comes to ownership units. Rehabilitation funding and neighborhood stabilization/preservation tools can help bring these units back on the market.

  • Rehabilitation gap financing
  • Neighborhood development programs

Land use and zoning tools: Allows communities to have direct control over the type of units built, the location of those units and the time it takes to build them.

  • Diversifying product types
  • Zoning code reform
  • Incentive zoning and density bonuses

Economic development tools: Provide opportunities to help businesses thrive and employees find affordable housing.

  • Employer-funded housing funds
  • Employer location incentives
  • Trade worker training programs
  • Anchor institution partnership programs

As Grand Rapids’ population continues to grow, the supply of safe and affordable housing options has generally not kept pace with the demand.

By focusing on the specific housing issues in the region and taking advantage of the tools and resources available today, housing decision-makers will be equipped to adjust, add or reconfigure existing housing programs to match the needs of current and prospective homebuyers across the city.

David Allen is the chief market analyst for the Michigan State Housing Development Authority, an organization that serves as a catalyst for housing and homeownership in Michigan. He also is the lead researcher on the Michigan Statewide Housing Needs Assessment.

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