East Lansing is going to soon have a housing market overload

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Andy K. Hahn

A sign posted in front of The Gates apartment complex. Photo: Andy K. Hahn

East Lansing has residents that live in apartment complexes which could see issues in coming years with rent control and foreclosures because of the amount of other apartment complexes that are opening up.

Estimates of the population of East Lansing, Estimates. Source: American Fact Finder United States Census. Graphic: Andy K. Hahn via Google Docs.

East Lansing has an estimated total population of 48,365 as of the Census estimations of 2016. The United States Census estimations has the population from 15 to 24 years being 64.1 percent of the cities population.

East Lansing is a college town and in college towns you tend to see a lot of certain types of businesses fast food places tanning salons and apartment complexes are among these, said Charles Ballard, a professor of economics at Michigan State University.

East Lansing is an example of a student driven economy where businesses appear to cater to the needs of the students as well as the residents of the city.

Although A majority of East Lansing’s population is students and young adults, who a portion of are living on campus in the available student housing.

This is Professor Charles Ballard, a Professor of economics at Michigan State University. Photo: Andy K. Hahn

“There are a lot of college towns where everybody or almost everybody lives of campus we have, I’m not sure the exact number but I think it’s between something like 15,000 to 20,000 students who live on campus in the neighborhoods and that changes the character (of East Lansing),” said Ballard.

U.S.News college rating and information database says that 39 percent of the students live in college-owned, -operated or -affiliated housing and 61 percent of students live in of campus housing.

With a student population of approximately 50,019 students attending Michigan State University that would leave approximately 30,000 students living in off campus housing. The university also has approximately 12,500 staff members that live in East Lansing and the surrounding areas. The information about student population and staff population come from Michigan State University’s website.

The on campus student housing includes the dorms and apartments that are located on Michigan State University’s campus.

“If we didn’t have as much on campus student housing then — if we had the same number of students — they would have to live somewhere and that would mean that we would have more apartments off campus.” said Ballard.

In response to the settling economy of East Lansing our population is beginning to plateau but we are seeing the construction of more and more apartment complexes in the city.

“Now as you may know, a lot of apartments have been built in recent months and years. I’m not sure who’s going to live in all of those. I think there is a possibility that we may look back on this period and say that it was a period of overcapacity in housing, but I guess that remains to be seen, because Chandler Crossings (apartment complex in nearby Bath Township) is still open for business, but I think as more and more of the apartment complexes get built it’s gonna put downward pressure on rent and it may get to the point where some apartment complexes decide that they have to go out of business. We’ll see,” said Ballard.

Such new apartment complexes as the City Center Project which will see the launch of another large set of apartments that will continue to threaten the apartment market.

This is a view of the land that will be used in the Center City District Project visible are the lots 135, 133, 135 and 201-209 E Grand River and Albert Avenue parking lot 200. Graphic: Andy K. Hahn via Google Maps

“There are multiple ones (housing projects) right now there’s the Center City project downtown, there’s the Hub Project at Grand River and Bogue Street, then there is the two residential developments in the city’s northern tear both in the Hawks nest subdivision as well as those in stratford,”said Tim Dempsey, director of East Lansing’s Planning Building & Development Department.

These projects are projects that have already been approved by the City of East Lansing that will have an effect on the housing market of the community. These projects are not created by the city but are passed through the city to check that they comply with city ordinances and zoning laws.

“The city when we look at projects we tend to look at them from the standpoint of how they fit in our zoning ordinances or comprehensive plan we generally don’t pick projects based on whether or not a project is going to be successful financially,” said Dempsey.

To create a large scale construction or project on private property a plan with building materials and schematics of the building have to be submitted to the city and approved based on the city’s ordinances and zoning laws.

“I mean people have private property rights and you can submit projects and if they meet the code they generally get approved. We have some discretion but that’s not one area we have a lot of,” said Dempsey.

In any given economy there is the simple law of supply and demand  which when in an ideal economy will be in economic equilibrium or market equilibrium. In this case that is a point in which all economic factors within the housing market as a whole reach an optimum balance between supply and demand. Formal definition of market equilibrium from Investopedia an online journal made for economist to keep up to date with stocks and the general economy.

“I think generally what happens when the market is out of balance whether there is to much supply or to much demand whatever it is the market tends to respond. So if we start to see higher level of vacancies in the community developers are gonna stop making new projects it might take some time but if the rates get high enough– generally the market kinda addresses that,”said Dempsey.

MSU’s student population from 2013-17. Source: MSU Web site. Graphic by Andy Hahn via Google Docs.

“I think that the market will figure that out in the next few years here, I think with the number of student apartments that have been constructed in the market there is a good possibility that where at a saturation point, especially since Michigan State University’s enrollment has plateaued in the last couple of years,” said Dempsey.

A saturation point in economics is the point where there are so many of a thing that no more can be added successfully in this specific case the saturation point would be the point in which there are apartments that are having vacancies to the point that the can no longer maintain business. Formal definition of market saturation from Investopedia an online journal made for economist to keep up to date with stocks and the general economy.

When looking at if we are going to reach the market saturation point there are many parts that have to be ascertained.

“But I think, part of that answer is that we are a broader market not just East Lansing at work here especially those who work or go to school here they have choices in other places whether it is Meridian Township, Lansing Township, The City of Lansing, Holt, DeWitt,” said Dempsey.

With a plateau in student population at the university we start to see signs that East Lansing’s housing market is reaching a saturation point.

“I think it’s gonna be a little bit before we know the true answer, there’s some anecdotal evidence that we are at a saturation point at least for student housing,” said Dempsey.

Most projects upon creation have an intended audience and attempt to appeal to that intended audience. Such as if a project is intended for senior citizens they will not cater to the lives of students rather to those of the elderly.

“The Center City Project a big piece of that is the 55+ project component of it there are 92 units of 55 and older housing so I think that’s clearly the demographic your gonna see there, and that was designed to peel for that demographic specifically,” said Dempsey

When it does come to student housing it is apparent that cheap and manageable are two things that are high on the list of things that they look for when considering where they will live.

Andy K. Hahn

Construction workers working on the Center City District building. Photo: Andy K. Hahn

“In terms of the Grand River building itself (the Grand River side of the Center City Project) and the apartment units there there are units that are micro and studio units so these small apartments that will just have a broader appeal to people just graduating or young professionals that might not want to spend the money on a one bedroom or two bedroom apartment because it’s to costly maybe as a single occupant but they can afford a micro or studio,” said Dempsey. “So I think that there is a potential there for supply to be met by the student oriented component of the project but well have to wait and see how that actually plays out.”

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