Construction, Economic Development, and Real Estate

Report: Housing shortage could stymie growth

Home Builders Association of Michigan releases 13 recommendations to help attract housing investment in state.

June 9, 2017
| By Pat Evans |
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An impending housing shortage in Michigan could hamper the state’s economic growth, according to a report released by the Home Builders Association of Michigan.

The Lansing-based association released a study last week that suggests, without action, it will become harder to attract housing investment needed for the state’s growth.

“Housing is right behind workforce development as the top economic development issue we face in Michigan today,” said Steve Arwood, CEO of the Michigan Economic Development Corporation.

Home Builders Association of Michigan (HBAM) made 13 recommendations within the report “Housing Challenges Threaten Our Economic Growth: Where Will Ten Million Michiganders Live?” to help promote investment within the industry.

There has been growth in housing since the Great Recession, but it has been stifled by policies causing regulatory delays and requirements resulting in rising costs, said Bob Filka, HBAM CEO.

“This combined with a severe shortage of skilled workers and lots to build upon means production levels aren’t able to keep up with demand,” Filka said. “We hope this report serves as a call-to-action tool for economic developers and policy leaders to address the housing challenges our state faces.”

At the peak of the residential building in Michigan, the industry contributed more than $3.3 billion in taxes and $10 billion annually, as well as supporting 153,000 jobs.

Now, the industry is less than half the size despite demand for new homes and renovations. Home values in Grand Rapids, for example, are nearly 23 percent above the pre-recession peak of $186,030 at $228,400, according to HSH.com, a nationwide publisher of mortgage information. At the bottom of the recession, home values dropped to $140,640.

“The challenges we face are pricing middle-class citizens out of the housing market and squeezing revenues from housing growth that are needed to support our schools and local units of government across the state,” said L.R. Swadley, HBAM president and a developer and builder in Marquette.

Approximately a quarter of a home’s cost is now attributed to government regulations, Filka said. The 13-step plan HBAM suggests will help reduce the regulatory delays at the local level and help empower the state to enforce violations at its level.

“Now more than ever, an efficient review and approval process will not only benefit the builder/developer but the government and taxpayers of communities across the state,” Filka said.

Other points in the plan will be to attract, train and retain worker in skilled trades. In the skilled worker section, recommendations include a career pathway curriculum for K-12 students that blends with the Merit Curriculum, exposing youth to opportunities in construction and other skilled workers.

HBAM also suggests counselor development should include hours dedicated to learning about career pathways included in skilled labor. The report also suggests the creation of campaigns to highlight career opportunities in skilled trade and construction to the public.

The organization believes the recommendations will help alleviate the housing shortage, which is causing price increases, Filka said. The hope also is to stimulate the entire state’s economy.

“First and foremost, we need local leaders and elected officials to hear and understand that the world has changed for our industry,” Filka said. “Housing investment must now be looked at like any other type of economic development investment a community may need or desire. It won’t just happen.

“If communities want to attract jobs to their region and have those employees live in their towns, they need to think about their housing stock and review the approval systems they have in place for land development, new home construction and the renovation of existing homes.”

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