Michigan’s Governor on Housing Affordability: “Build baby, build!” Following Eight Decades of Unfettered Sprawl

“The rent is too damn high and we don’t have enough damn housing," the governor declared from a rostrum in the Capitol building, drawing a standing applause from some lawmakers. "So our response is simple: build, baby, build — let’s go!”

I came across this article tonight shared by the Michigan State Housing Development Authority on LinkedIn about my beloved home state of Michigan and it left me dismayed and frankly a bit angry. Evidently Governor Whitmer is blaming their current housing affordability issues on a lack of supply.

Does Michigan have a history of urban decay and white flight? Without a doubt. How about economic issues related to manufacturing decline? Definitely. But a housing supply issue? Not a chance.

Michigan hasn’t grown in population in any meaningful way in 25 years, yet its metropolitan areas have continued to sprawl virtually unabated for 8 decades across thousands of acres of cheap, pancake-flat farmland.

And if you think I’m kidding about the sprawl, Metro Detroit’s urbanized area is larger than Paris at less than one third the population. Yes, the Motor City is bonkers for sprawl and the cars that enable it.

Perhaps the most misleading thing about the article above was the thought that Michigan cities wont approve new development because of infrastructure costs. I think the truth is that developers are just unwilling to pay them.

Impact fees are urban planning speak for a tool cities use for passing the cost of infrastructure onto the developer, which is a fiscally responsible practice but has the effect of increasing the price of each house built, potentially cutting into profits and making housing more expensive.

I just calculated impact fees for the average house in my area (Metro Portland) and they’re about $50,000 per detached single-family home, which we call system development charges (SDCs).

While the Michigan article touches on the cost of building permits as a hurdle to housing affordability, I saw no mention of these common impact fees, likely because homebuilders don’t need to pay them if they’re building custom homes in exurban or rural locations.

Cities also can’t stop exurban housing from being developed outside their boundaries and on the urban fringes where roads are already built and houses come complete with their own septic systems and wells.

In this way, the impact fees absent some physical or legislative growth limitation can promote even greater sprawl than might otherwise occur. Development ends up taking the form of pseaudo-rural, auto dependent super blocks where houses surround the four corners of what were once farm fields. While it may be fiscally neutral, it’s definitely no good for the environment or public health.

Oregon’s Urban Growth Boundaries (UGBs) are lines drawn around urban areas past which urban development can’t occur. They’re required by the State for cities above a certain population threshold and they keep the worst of that sort of exurban sprawl from being built in Oregon. However, those environmental benefits come at a significant cost to land and thus housing affordability. Michigan has nothing of the sort, and therefore has much cheaper buildable land than Oregon.

Michigan had the 3rd lowest home listing price in 2023 (behind West Virginia and Ohio) according to Rocket Homes market research, and the state consistently ranks in the middle for real median income.

So while Oregon does have a 20% higher real median income ($87k vs $69k), the median home listing price in 2023 was over 2 times as high in Oregon vs. Michigan ($474k vs $227k). And we’re the most affordable state on the West Coast to boot!

I‘d like to see the data on how corporate landlords are impacting housing affordability in Michigan and what the State is doing about it.

Corporate purchasing of housing as rentals can have various effects on market prices, depending on the specific dynamics of the local housing market and the scale of corporate investment.

Corporate entities purchasing housing as rentals can increase demand in the market. This increased demand can put upward pressure on prices, leading to higher housing costs for both renters and potential homebuyers.

There’s a lot to love about Michigan. I miss it quite a lot, in fact. I miss its lakes, live music, ethnic diversity, and culture. I miss its early 20th Century architecture and stately historic homes that I frequently daydream about buying. I miss my family. But what I don’t miss was its stagnant economy that’s flatlined its population.

In 2000, Michigan had 4.2 million housing units for 9.952 million residents and in 2023 it had 4.5 million housing units for 10.03 million people. So despite only growing by 98,000 residents, the state has added 300,000 housing units in that time. Even accounting for an aging population doesn’t make up the difference as there were only 3.98 million households, showing an excess inventory of 500,000 units.

So please, Governor Whitmer: let’s not shit ourselves. Michigan‘s affordability problems have very little to do with supply, at least as it relates to availability of actual housing units. Other issues are at play and Michigan isn’t going to built its way out of this problem.