Study finds affordable housing is lacking


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 a homeownership study commissioned by the Michigan State Housing Development Authority.

The study was conducted by an advisory committee of key stakeholders in government, finance, real estate, construction and nonprofits.

The recovery from the Great Recession of 2008 and 2009, coupled with a low-interest rate environment has led to a general uptick in home buying, but in many markets, supply has not kept up with demand, and MSHDA expects the gap to increase.

The study defined affordability as “the relationship between household income and monthly housing expenditures.” Specific to the study, affordability was examined using Department of Housing and Urban Development Area Median Income data, which is based on specific geographies: state, metropolitan region and county levels.

The study identified three primary housing markets in Michigan: those below 80% of AMI, between 80% and 120% of AMI, and those earning more than 120% of AMI.

According to the study, statewide sales prices for single-family homes rose by 71% between 2012 and 2017, with the median sales price of a single-family home being $156,560, compared to the median sales prices of a newly built home, which is $307,970.

Similarly, the statewide condominium market experienced price increases of 73% over the last six years. In 2017, the median sales price of a condominium statewide was $161,710 while the median sale price of a new condominium was $276,550. That is a 71% price difference between existing and new units.

The upward pricing trend is one of the most significant barriers to entry for households across the state. Costs to build a new home or rehabilitate an older home continue to rise, and population and job growth in urban centers put additional pressure on housing prices.

The study also projected Michigan’s population will grow by 8% between now and the year 2045. The number of jobs is expected to increase by 4% in the same time frame.

Approximately one-third of those projected jobs are in sectors that tend to pay lower wages on average, like food services, administration and support services, and local government. The state’s median household income of $50,803 provides enough money to afford a house priced around $175,000, yet the median sale price for a new single-family home in Michigan is just over $330,000.

Additionally, one-third of all employment growth in Michigan is expected in the professional and technical services sector, which has an average wage of more than $100,000.

Michigan has nearly 3.8 million households, of which 15% lived in poverty and 25% are categorized as ALICE (Asset Limited Income Constrained Employed), or “missing middle,” by popular definition.

In Grand Rapids

To better understand how regional issues were manifesting in local communities, RKG Associates Inc., a national economic planning and real estate consultant, presented the advisory committee with a subset of cities from across Michigan that were representative of different demographic, economic and housing conditions.

The resulting list of communities included Grand Rapids, as well as Saginaw, Westland and Alpena.


Over the last 10 years, Grand Rapids’ total population grew by 2%, compared to the state’s overall population, which did not increase at all. In particular, Grand Rapids residents ages 25-34 increased by 15% over the same period.

Driving some of this change is Grand Rapids is home to 15 higher education institutions in the metro area with a combined 40,000 students. Some of these students may be staying in the city after school for job opportunities.

The number of Grand Rapids residents ages 55 and older is growing, as well. Between 2011 and 2016, the city saw an increase of 11% in this population. The population changes and economic opportunities in Grand Rapids have inspired developers to invest in new multifamily rental and condo buildings.

Neighborhoods like the downtown core and the West Side have seen new apartments, condos and mixed-use developments, which include stores, restaurants and other amenities catering to young professionals and retirees alike.

Even though employment has increased in Grand Rapids, median household income continues to fall behind the state’s median, with $42,019 in Grand Rapids, compared to $50,803 for the state.

From 2011 to 2016, the housing market in Grand Rapids has seen a shift in ownership patterns with the share of owner-occupied homes declining by 6% — from 42,025 in 2011 to 39,655 in 2016 — compared to the region and state at 1% and 3% percent, respectively.

At the same time, renter-occupied housing has increased by 8% – from 31,064 to 33,413 – and vacant properties experienced a dramatic decline over the last decade with a decrease of 21%, or 6,651 from 8,471.

The drop in vacancy showcases the desirability and strength of the city’s housing market. The overall increase in rental units is a result of a combination of new apartment construction around Grand Rapids and the ever-increasing occurrence of single-family homes that were once ownership units being converted to rental units.

Older homes

Grand Rapids also has an older ownership housing stock. Nearly 68% of owner-occupied structures were built before 1959, and only 5% were built after the year 2000. However, recent trends show that between 2007 and 2016, there was a 25% increase in the number of homes built after 2000.

Between 2012 and 2018, there were 19,700 sales with a median price of $145,142. Home sales of structures built between 1900-1950 were the most numerous and offer housing at a price point that is more affordable to homebuyers in Grand Rapids. Although the units may need improvements, the relatively low price point allows buyers with low to moderate incomes an entry point for homeownership. Not surprisingly, home prices increase as the age of the home decreases.

The difference in price between a single-family home built between 1990-2010 compared to one built between 2010-2018 is about 28%, but newer homes are generally more attractive with updated heating and cooling systems, modern insulation and friendlier layouts.


With the somber findings of the housing study, RKG crafted a series of recommendations to help advance homeownership opportunities. Recommendations were grouped under four categories: finance tools, rehabilitation and preservation tools, land use and zoning tools, and economic development tools.

Finance tools included down payment assistance, low interest-rate mortgage, land disposition strategies and infrastructure grants.

Rehabilitation tools included rehabilitation loan programs, rehabilitation gap financing, neighborhood development programs and demolition funds.

Land use and zoning tools included diversifying product types, zoning code reform, reduced minimum lot sizes and incentive zoning and density bonuses.

Economic development tools included employer-funded housing funds, employer location incentives, trade worker training programs and anchor institution partnership programs.


The data used for the housing analysis comes from a variety of both public and private sources. Basic demographic data comes from sources such as the U.S. Census Bureau American Community Survey.

Housing data used for the study includes data from the ACS, U.S. Department of Housing and Urban Development, Regional Economic Models Inc. and Michigan Realtors.

The housing data is used in the analysis to understand the baseline conditions of the State and Prosperity Regions, and to provide context for understanding needs and gaps.

Information about employment and wages was obtained from the Census Bureau data resource Longitudinal Employer-Household Dynamics quarterly workforce indicators, which provides data related to wages and employment sectors.

Projections data comes from the industry standard proprietary source REMI. This data provides projection data to the year 2045 in five-year increments.

To supplement hard data and provide a better understanding of the nuances found across the state, qualitative data was obtained via interviews with stakeholders and officials. The individuals interviewed included state officials and policymakers, developers, real estate brokers, affordable housing advocates and community groups.

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