Housing experts say Kalamazoo County is on track to fill a projected housing gap of nearly 8,000 units by 2030, as new financing options and supportive local zoning policies help developers grow supply.
The Kalamazoo County Housing Plan published in 2022 by the W.E. Upjohn Institute for Employment Research determined 7,750 new housing units will be needed in the county by 2030 to keep up with an anticipated population increase of more than 8% during that period.
Lee Adams, director of community development for the Upjohn Institute and lead author of the report, is working on an updated version of the study to measure the county’s progress.
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Based on what he estimates to be about 3,000 units currently in the county’s construction pipeline, Adams said he expects the county is well on its way to meeting that goal.
“I think what we’ll see is that development has outpaced our initial estimates of what we thought was needed,” he said. “Given the pace that we’ve seen in terms of the number of units permitted and already under construction … I think we’ll get there. Probably, we’re ahead of schedule.”
Several factors have contributed to the building boom, Adams said.
Those include the Housing for All millage that Kalamazoo County voters passed in 2020 and so far has supported the addition of more than 900 housing units. After its first full year of implementation in 2022, the millage put $6.7 million in gap funding toward projects totaling $115 million in capital investments that are expected to create 655 new housing units. In its second year, the millage put $7.9 million toward projects totaling nearly $69 million in capital investments that are expected to add 252 units.
Notable rental projects receiving millage funding have included the 344-unit Abbey42 apartment project in Pavilion Township, the 97-unit affordable Pinehurst Town Homes project in Portage and the 64-unit Nomi Senior Housing project at 530 Rose St. near downtown Kalamazoo.
On the single-family side, the millage has supported projects like AVB Construction’s plan to add 50 workforce homes in Portage, gap funding for several homes being built by Kalamazoo Valley Habitat for Humanity, and hundreds of thousands of dollars toward home rehabs and critical repairs to preserve homeownership units.
Mary Balkema, director of the Kalamazoo County Housing Department, which launched in 2021 to administer the millage, said she also is optimistic about the county’s ability to fill the housing gap on time.
“We’re very encouraged with the progress we’re making,” she said. “We passed the millage in 2020, we first levied it in 2021, and we’re delivering a lot of projects. … I think other folks around the state are looking at our progress and asking how we did it and … that’s encouraging, too.”
Favorable zoning
Adams and Balkema said local municipalities also are getting serious about making housing development — especially the lower-cost variety — possible by adjusting their zoning codes to allow for higher density and smaller homes and lot sizes.
For instance, the city of Portage is recommending zoning changes to allow a wider variety of by-right housing, including multifamily units and duplexes in some single-family zone districts, as part of master plan updates currently underway. The city of Kalamazoo adjusted its zoning to ease restrictions on accessory dwelling units and is mulling additional changes. And Comstock Township in 2022 earned its Redevelopment Ready Communities certification from the state for its work removing zoning barriers to draw new investment.
“There’s been a lot of commitment that the units of government and the populace have demonstrated to solving this issue,” Adams said. “Most everybody’s pretty committed to solving this.”
An influx of state and federal funding directed at addressing the state’s yearslong problem of underbuilding housing is also helping.
Andrew Gyorkos, principal broker at Kalamazoo Commercial Real Estate, said his brokerage hears from communities like Portage and Kalamazoo that “everyone is very pro-housing and pro-mixed use development,” which are the types of projects attracting recent state funding.
Michigan Economic Development Corp. incentive programs like the Revitalization and Placemaking grants, Michigan Community Revitalization Program grants, and some construction loans and tax increment financing have favored mixed-use projects that promise to add housing units on a large scale.
“In order to get MEDC money, it has to be mixed-use,” Gyorkos said.
From what he’s observed, Gyorkos said developers in downtown Kalamazoo have been rewarded for building those types of projects, as they tend to lease up quickly.
Mike McGivney, vice president of sales and marketing for Portage-based Allen Edwin Homes, said Kalamazoo County continues to be a “staple market” for his company’s housing development efforts because of healthy demand. As of May 21, McGivney said Allen Edwin only had about five available homes on the market in Kalamazoo County.
To increase supply, the company is building additional phases to existing developments — adding 16 home sites to Meadowbrook Farms in Three Rivers and 36 lots at Concord Farms in Mattawan — as well as planning a new 118-lot development called Homestead at Centennial in Vicksburg.
Still recovering
While some developers have remained busy, the number of single-family homebuilding permits issued in Kalamazoo County has been trending downward for the past three years, dropping from 107 in the first quarter of 2021 to just 51 in the first quarter of 2024, according to a Builder Track report released last month.
That’s not because demand for housing has dropped, McGivney said, but rather because fewer single-family builders are at work in the county. As well, elevated interest rates and construction costs make it harder for builders who might otherwise tackle speculative projects like Allen Edwin does.
Adams, at the Upjohn Institute, said some builders were “snake bit” during the Great Recession, and their numbers still haven’t bounced back.
“Kalamazoo is a little bit of a smaller market, where the developers here couldn’t weather the storm as well as a bigger market, so we suffered quite a bit there after the Great Recession,” he said.
McGivney sees that as a problem because the county’s housing stock just continues to age, and construction costs are pricing new single-family homes out of reach for many buyers, especially those at the entry level.
That’s partly why Allen Edwin is trying new plans, like a 58-unit workforce rental housing community called Oakland Commons that will include a mix of detached single-family homes, duplexes and townhomes.
Adams said there’s a dichotomy now between “preference and affordability.” While many people in the county might prefer to buy a house, they will go for what they can afford, which might mean renting for longer.
“As we see the cost of housing rising faster than wages, people are leaning more toward price over typology preference,” he said.
However, Adams sees a silver lining for developers attempting to grow Kalamazoo County’s housing supply by shifting their portfolios.
“It’s why we see developers making the shift to more multifamily, smaller lot or smaller size single-family, to try to accommodate that,” he said.
“We just haven’t been building … so that’s why I think we’ve got so much room to bounce back,” he added.
Balkema said the will to build is going to be more important than ever, as Kalamazoo County expects to see an overflow of new residents from nearby Calhoun County if the Ford-CATL Blue Oval battery project planned in Marshall comes to pass. While the project initially called for the creation of 2,500 new jobs, the company still expects to create 1,700 jobs.
This is part of the reason why Kalamazoo County is updating its housing study, she said.
“Battle Creek, and certainly Calhoun County, has not kept up with the pace of housing that they need, so that just puts further demand on our region, especially our county,” she said. “… I think we’re keeping pace with what (demand) I see in Kalamazoo County. Are we keeping pace with other regions’ folks (who want to) live in our county and work in their area? Maybe not.”
Crain’s Grand Rapids Business reporter Kate Carlson contributed to this story.
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