John Bitely to GRBJ: Why rental prices in West Michigan will continue to increase in 2022

John Bitely, president of Sable Homes, doesn’t foresee any signs of the increase in rental prices stabilizing or declining in West Michigan in 2022.

“I currently don’t see any end to the increase in the rental rates for West Michigan,” he said in an interview with the Grand Rapids Business Journal. “The main reason is that we as builders and developers cannot supply enough new homes at the price point that is the most needed.”

CoreLogic, a global property information, analytics and data solutions provider, released its national Single-Family Rent Index for September 2021 and it revealed a national rent increase of 10.2% year-over-year. That is up from a 2.6% year-over-year increase in September 2020.

There are several reasons why rent prices have been increasing and will continue to do so in the coming year, including lack of supply, zoning restrictions and inflation. Bitely said there are not enough homes on the market, which forces individuals to continue to be renters instead of homeowners.

“There is not enough transition housing available for people to buy,” he said. “Many times, rental is a transition for people to get to homeownership, and when there are not enough homes for people to buy for the price range they can afford, they are force to rent, which in turn shortens the supply of rentals even tighter.”

Sable Homes builds approximately 100 homes per year, but the pandemic has driven the prices of those homes higher, according to Bitely.

“Homes that we used to build for $250,000 now cost $275,000 because of cost increases, whether it is large spikes in lumber or the shortage of lots, or because of anti-development people in municipalities,” he said. “They are not encouraging land to be developed for new houses.”

While new home builds are popping up in certain communities, such as Caledonia, Bitely explained there are many individuals in different municipalities who are against new development.

“I encourage people who are in the rental world to realize that if they don’t support new housing, they are going to pay more rent,” he told GRBJ. “Sometimes you see in the headlines, ‘Big development shot down by the township,’ or ‘Voters turn out against the neighborhood’ — whether it is revitalization, whether it is a new development, whether it is a condominium project or a townhome project. Many times, the people who are complaining about it already own a house. The people who need a house or need rent to be affordable never go to those meetings and say, ‘Hey, we need this housing because we cannot afford to pay more and more and more.’”

Bitely said there are other restrictions and regulations that hinder residential construction efforts including zoning, water control issues such as storm water, additional costs for building roads and a shortage of water main pipes. The increase in rental rates also will continue due to the predicted rise in interest rates next year, he said.

“It will make new houses even less affordable, and my gut feeling is that it will make rent go up even more because it will keep more people from buying a new home,” said Bitely.

Read the full article, here.