How Much Does it Cost to Build a House in Grand Rapids?

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Grand Rapids is the county seat of Kent County, Michigan. As of 2020, it is the second-most populated city in the state, next to Detroit. Historically, the city was a furniture manufacturing hub, earning it the nickname “Furniture City.” With its Beer City Ale Trail composed of at least 80 breweries, Grand Rapids topped national polls by USA Today readers in 2014 and was named Best Beer Town and Best Beer Scene. Grand Rapids also won the title Best Beer City in the same year and in 2021.

The onset of the COVID-19 pandemic prompted businesses and schools to push for remote activities. As restrictions have begun to ease, more and more people have been looking to buy homes that have more space and better amenities, leading to bidding wars and the overall increase in housing prices. Despite that, Grand Rapids remains as a city of Millennials. As of 2020, approximately 19.5% of the homes in the city were owned by this age group. From January to August 2021, millennials have made up around 67% of the first-time home purchases in the U.S., and Grand Rapids seems to be experiencing a similar event. With the huge demand for housing in the area, realtors are seeing more and more people from the age group purchasing homes, moving from renters to buyers. Out of 228 American cities, Niche ranks Grand Rapids as 39th Best City to Buy a House, 41st Best City for Young Professionals, and 49th City with the Lowest Cost of Living.

The Cost of Building a Home in Grand Rapids

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Nationally, building a 2000-square-foot home costs an average of around $300,000 according to Forbes. In Michigan, however, it costs an average of around $216,780 for the same property size. As for Kent County, New Home Source states that building a new home starts at $277,700, with the average cost at around $467,800 (or $215 per square foot). As of January 2022 according to Redfin, the cost of a home in Grand Rapids costs $217,750, has a year-over-year of 11.1%, and spends an average of seven days on the market. In addition, many of the listings receive multiple offers. Redfin considers the market very competitive, since average homes sell at 3% higher than the listing price, while in-demand homes can be sold for 9% higher than the listing.

The cost of a new custom home in Grand Rapids varies with the labor, resources, and professional services needed to construct it. Some of these costs are factors that fluctuate independently from each other, such as foundation, framing, exterior, and interior. It also includes various fees, including architecture and design, permits, land, plumbing, and others. All of these costs will fall within either the hard or soft costs of building a home.

Hard Costs

The hard costs are expenses that fund the physical structure and construction of the home. These costs typically include the materials, labor, and even the total building value. According to HomeBlue, standard or basic construction starts at $90 per square foot, while a middle-tier home can cost anywhere from $130 to $160 per square foot. For luxury or high-end homes, construction can range from $160 to $200 per square foot.

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest. Image Source: National Cost Guide.

Manta discusses the cost of concrete slab leveling in the area, which is around $359 to $2,058, or an average of $1,101. This price includes the labor, materials, preparation, machinery, and equipment. For the exterior finishing, roofing generally depends on several factors, such as the slope, area, or roof size, and external factors such as the weather and climate in the area. According to Montell Construction, the average cost of roofing in Grand Rapids is $7,000 and may range from $6,000 to $8,000. For framing, Innovative Building Materials states that it can range from $3 to $6 per square foot in Michigan. This cost varies with the type of framing needed, such as basement framing, which is around $4 per square foot, and garage framing, which is at $5 per square foot.

For the interior and other systems, Manta estimates that plumbing installation in Kent County costs between $94 and $685. The climate in Grand Rapids can be described as humid continental, where summers are warm and humid, while winters are freezing and snowy. Springs and autumns in the area are mild, yet short. There have been reports of winter in Grand Rapids becoming warmer, with snowfall being replaced by rain as of recent, and temperatures not dropping low enough for winter businesses to be sustained. With that, it is important for homeowners to be prepared for the fluctuations in the weather. Installing a Heating, Ventilation, and Air Conditioning (HVAC) system in Grand Rapids can cost anywhere from $1,598 to $1,906. This may still increase or decrease depending on the system type, home square footage, and the system brand used.

Soft Costs

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Soft costs are expenses beyond the physical construction of the home, such as architectural design, pre-construction, land development, and permit fees like building, HVAC, plumbing, water, and others.

Cost of the Land

Getting the perfect property is crucial in the process of home construction. Generally, prices may vary with several factors like distance from metropolitan areas, view, amenities, and even land topography. Michigan ranks 12th out of Zippia’s list of the 15 most expensive states to buy land, and on average, an acre of land in the state costs around $23,765. Bob Vila reports that back in 2015, West Michigan homeowners showed a preference for big homes, about 2,000 square feet or larger. For Grand Rapids, an 8,756-square-foot block of land that is three blocks away from Highland Park costs $30,000 on Redfin, or around $3.43 per square foot. On the other hand, a 4,661-square-foot land in the Madison area costs around $209,900, or $45.03 per square foot. On average, the cost of land in Grand Rapids is $12.66 per square foot, though this value may still increase depending on the development status of the land, since some listed properties may be underdeveloped for residential purposes.

Permits and Other Fees

When filing for permits in Grand Rapids, homeowners or home builders can file either online or in person. Filing online requires creating a Citizen Access Account, with the application discounted at $10, while filing in person can be done at the Development Center. Based on the total building cost, a project costing $1,000 will have the minimum building permit fee of $50, and the zoning fee of $22. Every additional cost of $1,000 is an increase of $6.25 on the building permit fee. To help people in calculating the total permit fees, the Grand Rapids city government developed a building permit estimate fee calculator.

Architecture and Design Fees

Architecture and design fees vary with the size, scope, and complexity of the construction project. The client’s preferences, needs, and lifestyle also contribute to the overall or final design. Some projects may be simple and straightforward, while others may require extensive research, attention to detail, and consultation with industry professionals. Nationally, architect rates range anywhere between 5 and 20%. The cost of architecture and design is computed using a percentage from the total construction cost, but some firms and professionals may charge a fixed rate, similar to one Michigan-based architecture firm which charges $95 per hour for design, consultation, and rework. Interior design services in Grand Rapids can cost anywhere from $829 to $12,449, according to HomeYou.

How do the custom home building costs in Grand Rapids compare to other nearby cities?

Kent County is composed of nine cities and 21 townships, and as of January 2022, the median listing price of homes in the area on Realtor was $250,000. With a year-over-year increase of 13.4%, the average cost per square foot was $144. Compared to the listing price, the average sold price in the area was $268,000, or 7.2% higher. The median cost of homes in Grand Rapids is around $217,700, as reported by Redfin; however, East Grand Rapids is more expensive than both the Kent County and Grand Rapids median prices. At $535,000 as of January 2022 according to Realtor or $215 per square foot, homes in the area saw a trend of 31% year-over-year. For the following nearby cities, most of the median prices fall under $300,000.

Single-family homes in Wyoming, Michigan cost around $232,000. This cost, which is reported by Zillow, is seasonally adjusted and has gone up 18.4% year-over-year. For Walker, single-family homes on Zillow have an average price of $297,000, which has gone up 14.5% from the previous year. In Grandville, Realtor’s market insight reveals that the median listing price in the area is $265,000 as of January 2022, with the cost per square foot at $141. Lastly, Realtor reports that for January 2022, the average price of homes in Kentwood is at $249,000, or around $134 per square foot.

What Leading Custom Home Builders and Architects that Serve the Grand Rapids Area Say

Christin Homes shares the cost range of homes in Grand Rapids. Basic construction or value-conscious starts at $295 per square foot, while middle tier homes are around $350 per square foot. For luxury and high-end home construction, costs can go above $450 per square foot. The firm shares their prediction that material costs will continue to increase if both the local and federal governments do not change how they are handling the pandemic, and labor costs will continue to rise until it levels out with the hyperinflation. They also noticed the trend where clients redesign plans to value engineer, “however by the time a redraw has been done the costs have increased and the original project would have given them more for their investment.” They are advising clients to continue with their projects if they can afford the costs, or wait for an economic decline.

The Project & Marketing Manager of Snowden Builders, Stephanie Snowden, discusses that new home construction in the area can cost anywhere from $315 to $400+ per square foot based on the more recent projects, but could vary depending on the overall design, materials, and finishes selected. Specifically, a more basic or value-conscious project starts at $315 per square foot, a middle-range home at $350 per square foot, while a luxury or high-end may start at $400 per square foot.

For industry insights, Snowden believes that the field is in a transitional phase. With the increased costs and supply shortages of materials, in addition to the lack of qualified skilled trades and workers, there are huge delays in projects. At the same time, consumer demand also skyrocketed, and it’s not unreasonable to say the whole situation may continue for the next year or two. Even with that, Snowden thinks that the circumstances will force the construction industry to learn and become more resilient. This may also affect the clients and urge them to adapt to the times, be more flexible, and accommodating. She advises project owners to plan early, keep a strong line of communication with the builder, and be patient throughout the process. Knowing what they want and who they want to work with will help ensure the project flows smoothly.

Brent Dykstra, Senior Architect + Residential Studio Leader of AMDG Architects, talks about design fees in Grand Rapids, Michigan, which are driven by home size, complexity, and scope of services. The complexity of design deals with a number of factors, including the probability of hiring other consultants for interior design, lighting design, kitchen design, or site and landscape design. Scope of services requires a strategy to determine the necessary documentation for the design vision. It also helps coordinate the team players, and define the level of participation that the architect may have to collaborate on in case issues arise. AMDG gives effort into understanding the client’s vision for the home for it to be given the appropriate team and services. This paves way for earlier and more accurate budgeting by the builder and a more informed decision-making process for the client.

On the industry forecasts, Dykstra shares that home construction costs have increased significantly in recent years. “At AMDG, we believe that a successful design process includes the builder early, tests budget assumptions early, and builds budgeting intervals into a schedule to allow the client to make informed decisions.” Communication with the builder on lead times and project schedules allows the architect to guide the client through prioritized decision-making to maintain the overall project schedule.

The Future of Grand Rapids’ Residential Construction Industry

The U.S. has been experiencing shortages in various industries, especially in housing and construction. Home rental in Grand Rapids is booming, with inventory running low due to the combination of high demands and lack of new home construction. The high construction costs, extended lead times, supply chain issues, and international tariffs are all considered as some of the biggest challenges builders face. Michigan home builders also face the possibility of stricter energy standards, which may further increase the already-high costs of housing construction in the state. With Grand Rapids becoming the new location of several businesses, it is expected that more and more people, especially regional employees, will be relocating to the city for work. This includes Cleveland-based technology logistics and data security company MCPc, whose new facility construction is expected to conclude in the middle of 2022.

The problem with labor also persists, as it is expected that in the next 15 years, around 48% of the current skilled workforce in Michigan will retire. To address this issue, the West Michigan Construction Institute (WMCI) was established back in 2019, and began its first semester this first quarter of 2022. The new facility will help accustom and train students in the construction industry, with programs ranging from one-week certifications to multi-year apprenticeships, and will include several practices such as carpentry, electrical, interior finishes, and plumbing.