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Post-Recession demand for affordable homes in Michigan outpaces supply
April 29, 2019
Media Contact: Misty Elliott
517-335-9847 | ElliottM7@michigan.gov
April 29, 2019
LANSING, MICH. — The supply of affordable homes for sale in Michigan is not meeting demand, and the share of Michigan citizens who own a home is falling as a result, according to new research on housing needs led by the Michigan State Housing Development Authority. MSHDA released findings of two independent research studies on housing needs and homeownership during the state’s premier conference on affordable housing, the Building Michigan Communities Conference.
“Good policy is based on data, and we believed it was important to do a thorough review of housing needs and trends in Michigan to inform next steps,” said Dr. David Allen, lead researcher in the office of market research at MSHDA.
It’s been a decade since the state has had a comprehensive assessment of housing needs. The previous research fell right before the Great Recession of the last decade and was almost immediately rendered out of date, as the state worked to address the immediate housing needs brought on by the crisis. In order to study current housing trends in more depth, MSHDA created a Statewide Housing Needs Assessment (SHNA) using Census data from the American Community Survey to investigate how the three major components of market dynamics are trending: demand, supply and pricing/affordability.
Housing affordability is a much larger issue among renter households than homeowners. About half of renters are rent overburdened, paying more than 30 percent of their incomes on housing, and about one quarter of all renters are severely overburdened, paying at least 50 percent of their income for housing. Comparatively, only about 20 percent of homeowners are overburdened.
“We see housing as infrastructure – by investing in housing as a state and community we can identify new, innovative ways to create affordable housing that makes sense for Michigan residents,” Allen said.
To better understand some of the challenges in the housing market, MSHDA also commissioned its first-ever homeownership study. The Authority engaged Boston research firm RKG and an advisory committee of key Michigan stakeholders from the Michigan Economic Development Corporation, Michigan Municipal League, Michigan Realtors, Michigan Bankers Association, Michigan Townships Association, Habitat for Humanity of Michigan, Community and Economic Development Association of Michigan, Michigan Homebuilders Association, and Local Initiative Support Corporation.
This study identified a lack of existing capacity to absorb household growth. Statewide trends project Michigan’s population to grow by 8 percent through 2045. The lack of existing housing stock to account for potential new demand indicates the need for both new residential construction and redevelopment.
The research indicates sales prices for single-family homes rose by 71 percent between 2012 and 2017 and the median sales price of a single-family home in 2017 was $156,560. The median sales price of a newly built home in 2017 was $307,970 which is 97 percent greater than existing units. The upward pricing trend is one of the most significant barriers to entry for households across the state.
Results of the homeownership study show there is no single problem that Michigan needs to address to improve the state of homeownership. The approach to solutions, therefore, will need to be nuanced and diversified across different regions of the state. MSHDA will work with the study advisory committee and other statewide stakeholders to gather public input and advance goals that lead to future housing-related planning.
MSHDA’s Acting Executive Director, Gary Heidel, said, “With the release of these studies to the public, we can officially initiate the sharing and gathering phase and start the important work of collaborating across government, public and private sectors to develop solution-oriented housing policy that addresses the challenges of those most in need.”
Read the full studies and summary reports at www.michigan.gov/housingresearch.