
Housing demand in Michigan has steadily increased for more than a decade and then spiked during the COVID-19 pandemic, but the number of builds barely increased. In the meantime, inflation rose and interest rates on loans skyrocketed. That’s a summary of a recent report from economists at the University of Michigan.
In sum, the state is seeing increased costs and demand for houses but not enough supply. That’s why the cost of housing has increased tremendously almost everywhere and doubled in some Michigan cities. It’s a particular problem in Detroit, where low incomes and high crime increase insurance costs for homeowners and landlords while strict zoning rules limit growth and competition.
Michigan is a low-growth state. A key way to grow is to make it easier to build, buy and rent. Yet we’ve approved fewer permits than we did in the 1990s. And that isn’t forecast to change — unless the state makes some changes.
So what needs to change? Here are some ideas.
Michigan should lower housing costs by increasing supply, not subsidizing demand. The state must speed up permitting and approvals, reduce unnecessary licensing and regulatory requirements, and pursue statewide zoning reform. Restrictive local rules — such as minimum home sizes, parking mandates, setback limits, and aesthetic requirements — raise costs without improving safety. Local governments should allow more multifamily housing and adopt pre-approved building plans. Housing projects should be presumed approved unless denied for clear public-safety reasons within a reasonable timeframe.
Lawmakers need an abundance mindset in order to increase affordability. Housing is a great place to start.
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