Agent Essentials

Real Estate Agent Blog


Michigan’s Affordable Housing Shortage
February 15, 2021

Michigan’s Affordable Housing Shortage

by The CE Shop Team

Michigan Is in Need of More Affordable Housing

Per a study performed by the Michigan State Housing Development Authority, Michigan will have a deficit of more than 150,000 housing units by 2045. The Detroit metro area is one of the most affected regions of the state. This study has painted a muted picture for future homebuyers if no immediate solutions are enacted.

There was already a tight housing market that had driven up single-family prices by more than 70% statewide since 2012. Once the pandemic hit, fierce bidding wars flared, especially in high-demand neighborhoods.

What Spurred This Affordable Housing Crisis?

With nearly 81,000 vacant units, the city of Detroit actually has sufficient housing stock with a net surplus of almost 25,000 owned units expected in 2045, according to the study - but the majority of these homes are in need of serious rehab and renovation work. This raises another significant challenge for Detroit residents - having the discretionary income available to rehab these older, decrepit homes. In other words, although there are properties available to purchase, they require such significant renovations that they can’t be considered affordable.

Housing is affordable when it consumes no more than 30% of a household's income, and for many families around the Detroit Metro area, the current median housing cost equates to 48% of the average household's income. As more single-family homes either fall apart due to foreclosures, or new apartment complexes are designed and priced for luxury instead of affordable living, the housing crisis grows more dire.

The aforementioned report is the most current version available as the last report of its kind was released in 2006. Had it not been for the Home Builders Association of Michigan in 2017 urging the state to work on this report, the affordable housing crisis might have surpassed the crisis level. Thankfully, that report served as a wake up call to the state, urging officials to dig into the growing issue.

"[The report is] going to validate what we've been saying for quite some time, which is that we are approaching a pretty significant housing crisis," said Bob Filka, president of the Home Builders Association of Michigan. "Michigan is known for its housing affordability. That’s going to change if something doesn’t happen, and local communities are going to have to start working to find the housing investment they need."

What Is Michigan Doing to Combat the Affordable Housing Crisis?

Single-family home prices in the Detroit Metro area have risen 90% between 2012 and 2017 to a median price of more than $188,000, leaving many left in the cold searching for an affordable home that will accomodate their family’s needs. On the other hand, the median price for a new construction home is more than $391,000. With labor, material, and development costs also rising, this leads to homebuilders focusing their efforts on apartments and condominiums, which saw a 22% increase in the state since 2012.

To offset this crisis, Michigan lawmakers have introduced a package of bills to allow local governments to use rent control to keep housing affordable. Under Michigan law, local governments are prohibited from enacting rent control policies. This piece of legislation is being enacted by State Senator Jeff Irwin, who believes it will be a viable solution to combat Michigan’s affordable housing crisis.

“[Rent control policies have] It’s been illegal here in the state of Michigan for many years. I’m generally a fan of local control and allowing local communities to address these local concerns with strategies that make sense locally,” Irwin said. "I think we need to give our local governments as many tools as possible, especially while the state is doing such a poor job of investing in affordable housing.”

Take On 2021 With the Best Michigan Real Estate Courses From The CE Shop

Enroll in our Pre-Licensing program now to get your career started and begin connecting your fellow residents with the home of their dreams. Or keep going strong with one of our comprehensive, 100% online Continuing Education packages. Want to stay up to date on everything in Michigan? Join the Midwestern Real Estate Facebook Group!

Comments