The Myth Of The Out-Of-State Housing Hoover

Submitted by whitemice on Fri, 04/19/2024 - 07:01

There is a common myth that "out of state" developers, generally from "Wall Street", are hoovering up Single Family Units (SFU). And in the era of free-money-for-those-with-money [interest rates sub-3%] this phenomenon did occur in some places where various other economic factors were in play. That's not in dispute. But, did it happen in Grand Rapids? And is it happening in Grand Rapids? To the data!

Aside: We will not call single residential units "single family homes" here, as everywhere a human being, or more generally any sentient being, dwells with any regularity is a "home"; full stop. There is nothing what-so-ever sacred or special about a building, structure, or natural formation which just so happens to contain only a single dwelling place. Such a building, structure, or natural formation, imparts upon it's occupant no shekhinah, virtue, or merit. An apartment is a home, and Accessory Dwelling Unit (ADU) is a home, a single room in an SRO is a home, a room in a fraternity or sorority house is a home, a tent is a home, . . . Whatever deference, if any, which should be endowed upon a place which is a home is due to all and every of these.

In response to the currently proposed zoning reforms the city has assembled 👉an extensive FAQ👈 which contains the data to answer the question of if out-of-state investor groups are vacuuming up single family units in here.

First, how is Single Family Unit (SFU) ownership doing in the city? It is increasing. More SFUs are owned by the household which occupy that SFU than did so in 2013. 79% of SFUs in Grand Rapids are "Owner Occupied". This is measured by the fact that they receive the "Principal Residence Exemption" (PRE), one of the several ways Michigan's regressive tax code privileges wealthier households.

Second, what about the SFUs whose owners do not receive the benefit of the PRE? Grand Rapids has 50,230 SFUs, of these 10,688 do not receive 100% of the PRE. It is safe to assume them that some portion of this ~21% of SFUs are rented to someone for some purpose.

Note that a PRE can be partial; this does not mean that the owner does not live in the SFU, only that they do not occupy the entirety of the SFU. For example, my own property after construction of an ADU is still classified by the city as an SFU, but only receives 79% of the PRE as 21% of the property is considered non-owner-occupied.

What's the breakdown of these non-100%-PRE properties? While it is common for those who own multiple properties to incorporate them separately those corporations (mostly LLCs, Limited Liability Corporations) will generally all have the same mailing address or principle name. The owner of an LLC or other corporation is public record [see 👉Property Sleuthing 101👈]

The breakdown:

Ownership Count Percentage
Owns less than 10 units 8,872 18%
Owns more than 10 units, with a Grand Rapids address 984 2%
Owns more than 10 units, with a Michigan, but not Grand Rapids address 681 1%
Owns more than 10 units, with an out-of-state address 151 ~0%

Of the 1,816 properties owned by a principle with more than 10 properties there are ~75 owners; the largest single traceable owner owns 170 properties.

Interesting, this pattern carries over into the small multi-unit housing as well. Of the 5,855 small multi-unit (2 - 4 unit) residential buildings only 930 (16%) appear to be owned in groups of seven (7) or more. The single largest group of small multi-unit housing is sixty-one (61) units. 68% of all multi-unit properties are owned by a Grand Rapids mailing address, and another 31% by a Michigan mailing address; this is a total in-state ownership of 99%.

By the data the ownership of housing in the city of Grand Rapids is both local and dispersed.

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housing