Mar 7, 2024
Multifamily housing starts plummeted in West Michigan last year at a rate far worse than national declines, a trend local experts attribute largely to higher borrowing costs.
Data provided to Crain’s Grand Rapids Business by Grand Rapids-based NAI Wisinski Great Lakes showed only 2,925 units of new multifamily housing under construction in West Michigan during the second half of 2023, a 43% drop from the 5,212 units during the same period a year earlier.
NAI’s reports — which are assembled using data from CoStar Group Inc., local public meeting minutes and media reports — consider multifamily housing starts as developments of five or more units in the Grand Rapids, Kalamazoo, Battle Creek, Lansing and Lakeshore markets. NAI defines the Lakeshore territory as the Lake Michigan shoreline from Benton Harbor to Muskegon.
The local decline in housing starts far exceeds the national average. A Feb. 27 report from the National Association of Home Builders showed multifamily starts totaled 472,000 units in 2023, down 14% compared to the previous year. The NAHB predicts multifamily starts will fall 20% in 2024 to a total of 379,000 units.
“Tight lending conditions and the high cost of development loans continue to hinder additional multifamily housing production,” Danushka NanayakkaraSkillington, NAHB’s assistant vice president for forecasting and analysis, said at a press conference on the organization’s report last week.