Communities looking to meet rental demand may be up against market forces

Sep 19, 2014

In Suttons Bay, community leaders are trying to loosen zoning rules in an effort to spur development of new rental housing.
Credit Paul Wilkinson

An extremely tight rental housing market in the Grand Traverse area is a big problem that’s getting worse.

Landlords report receiving 30 or more applications for a single rental unit and scams are popping up on Craigslist to take advantage of desperate renters.

The issue has local leaders searching for solutions.

A possible solution in Suttons Bay

In Suttons Bay – a picturesque community along M-22 dotted with farms, cherry orchards and wineries – school enrollment numbers have been declining for years, along with its population of younger folks and working families. The township planning commission has noticed the trend and is taking steps to try to reverse it.

Tom Nixon is chair of the commission. He said commissioners have concluded that the main problem is a lack of affordable housing options.

“We’ve seen it in our county and township for years,” said Nixon. “We’ve had conversations with people and nothing is happening. It just seemed at this point … this might be the time that we do something to encourage that first step.”

That “something” is a loosening of zoning restrictions on multi-family housing. That means it would be easier to build duplexes or apartment buildings near the village of Suttons Bay. Earlier this month, commissioners voted unanimously to send their proposal up to the Township Board.

Kim Pontius, director of the Traverse Area Association of Realtors, thinks it’s an idea whose time has come.

“There are a lot of people who would like to live (in Suttons Bay) but they can’t because of the property values,” said Pontius. “Is it the best way to approach it? I don’t know but at least they’re doing something.”

Pontius said not everyone is as welcoming to multi-family rental housing as the Suttons Bay Township Planning Commission.

'Not in my backyard'

In Traverse City last year, the city commission made a move to allow for residents to build “granny flats” above their garages. But the rule was only approved for one neighborhood and it proved to be a contentious issue among the neighbors.

Pontius said some neighborhoods adopt a “not in my backyard” attitude when multi-family housing is proposed in their area.

“The bottom line is that … when you live in an urban environment, you have to understand that there’s going to be mixed development and mixed use,” he said. “And I think that mix … is good for the community. It keeps the community strong (and) it keeps kids in our schools.”

Market forces at work

No matter what government does to spur development of affordable, higher-density housing, it might not matter much if the numbers don’t pencil out for builders.

“It’s quite simple … it’s the market,” said Ted Lockwood, a local builder who’s working on a high-density project near Munson Medical Center in Traverse City.

The 18 new units Lockwood is building will be higher-end condos and not rentals – and most of them have already sold even though they’re still under construction.

That’s just how hot the market is right now, said Lockwood.

“There are a lot of new projects on the books … that are starting up all over the place, both commercial and residential,” he said. “But I haven’t heard about a lot of apartment buildings.”

Lockwood said it’s a lot easier to get banks to finance a high-end condo project than it is to sell them on a rental duplex or an apartment building.

Pontius said affordable rentals are key to the long-term health of the Grand Traverse area. Without them, it’ll be impossible to continue to attract young families, workers and retirees.