Opening the Door

Opening the Door

From The Daily News | By Cory Smith | on September 24, 2022

Study: More than 4,000 new rental units, 6,000 homes needed to address area affordable housing shortage

Focus on Housing: This is the eighth and final story in a series about housing issues in Montcalm and Ionia counties.

For years, Terri Legg and her colleagues at United Way Montcalm-Ionia Counties (UWMIC) have been telling community groups and municipalities that a lack of affordable housing continues to be a growing problem.

After partnering with the W.E. Upjohn Institute for Employment Research to conduct a study of each county, the executive director of UWMIC now has a healthy supply of data to back up the organization’s claim.

During the annual United Way Community Leadership Conference at Belding High School held this past spring, Legg was excited to have Lee Adams, director of the Southcentral Michigan Planning Council and community development leader with W.E. Upjohn Institute, and Emily Petz, fellow member of the Southcentral Michigan Planning Council and community development coordinator for Upjohn, release the results of the housing study they performed.

“This has really been several years of work and it’s revealed that it’s an issue that is multi-faceted,” Legg said. “This is not the end of our conversation.”

While the study revealed a plethora of data related to housing, there was one detail that stuck out to Legg, that showed in her mind just how serious the affordable housing situation within the two counties is.

According to the Upjohn study, when it comes to finding homes for “overburdened families” — families that see 30% or more of their income go toward rental or housing payments — there simply isn’t much available for them to consider when it comes to options for relief.

The study revealed that in order to provide relief in the housing and rental markets, the answer is simple — more units are needed.

According to the study, more than 4,000 new rental units and 6,000 homes are needed, at affordable rates, in order to unburden renters and homeowners who are currently struggling.

“For folks that are making less than $20,000 a year, we think there’s over 2,200 new rental units and 2,500 houses that are needed in order to allow those people to no longer be burdened,” Adams said. “Generally, those folks can only afford $500 a month and that’s an impossible number for any developer to be able to attain.”

In looking at households that earn between $20,000 and $35,000, Adams said an additional 1,300 rental units and 1,800 homes are needed for those who would expect to pay between $500 and $875 per monthly payment.

What complicates the matter, however, is that Adams said no housing developer is likely to construct any new apartments or houses at those rates.

“That’s still probably less rent than any developer is going to want to put in place,” he said. “This gives you an idea of the gap that needs to be solved here.”

While both counties have recently experienced growth in terms of additional rental units and housing projects, from single-family homes to condominiums, Adams said those units have not been aimed at residents who currently live in Montcalm and Ionia counties, but struggle to make housing payments.

According to the study, there are 7,149 households between the two counties where the household income is $20,000 or below.

Of those households, only 31% have no cost burden, while 24% of them are burdened (30% of income toward housing payments) and 45% are severely burdened (50% or more of income toward housing payments).

By comparison, of the 9,906 households that earn between $50,000 to $75,000, 92% face no cost burden, with only 7% being burdened and less than 1% being severely burdened.

The problem, says Adams, is that there’s no easy solution to find a way to construct affordable housing while making it profitable for housing developers, who often won’t construct a home unless it will sell for more than $250,000 nor construct apartments that rent less than $1,300 for a single bedroom unit.

“There’s not many houses that will be sold for or built for less than $75,000, but given the income of the folks in the area, we think there’s over 2,500 households that would need to be alleviated from their current situation and put into a house that would be less than that,” he said. “That’s not to say that any kind of development wouldn’t free up additional housing units. What we’ve seen is that any kind of development will help. Even if it’s not for the target audience of overburdened folks, increasing the number of supply loosens things up throughout the entire housing ecosystem. So having development in any way, shape or form is going to help. That’s something we want to underline.”

According to Adams, one way to make things more affordable for developers is for municipalities to assist with infrastructure — roads, water and sewer.

“The other piece is infrastructure — having that in place to allow development cost to be lower,” he said. “If the health department isn’t going to allow septic systems on lots of less than one acre, a sewer system is going to allow folks to build houses on very small lots. Those smaller lots will allow developers to bring down the overall development cost.”

While many developers concentrate their efforts on single-family homes, Adams said that type of construction doesn’t help alleviate those who are overburdened due to higher market costs.

“Less folks are demanding single-family housing than what is actually here,” he said. “People are willing to move to duplexes or little houses arranged around a common courtyard. There’s a lot of demand for housing you don’t typically find, that’s more affordable. Maybe mobile homes are part of the solution. They definitely aren’t something that people want to live in, but … They would prefer that rather than doubling up with someone else.”

In holding several stakeholder meetings, in which more than 100 different people representing area organizations have collaborated together, Petz said their eyes were opened to the many issues and restrictions preventing the construction of affordable housing.

“Right now there’s very few contractors as we’ve lost a lot of our supply of people doing this work and there’s fewer people in the trades,” she said. “On top of that, construction prices are increasing. It makes things very challenging for developers and creates much more of a risk when putting together a housing project.”

“From contractor shortages to lack of infrastructure, all of these things are pinching together, making the gap of development even larger,” she continued. “The word ‘affordability’ seems to scare people. It’s become a negative word, but it literally just means somebody is not paying more than 30% of their income on their residence. It can be anyone that we know that is making somewhere between $30,000 and $40,000. They would be eligible for affordable housing. So we need to re-envision who is living in these affordable units and say ‘yes’ to having these units in our backyard. We need to be willing to support these types of developments next to other homes.”

From government subsidies, grants and relaxing zoning regulations, Petz said a number of different pieces coming together could help alleviate the expense burden on contractors, providing more incentive to construct more affordable housing.

“Increasing density in our areas is a huge way to relieve some of this housing problem,” she said. “Or saying ‘yes, we can have duplexes and triplexes in certain zones,’ it doesn’t have to change the character of your existing community. Allowing more flexibility is going to alleviate some of those cost barriers for the developer. You can look at it as opening the door to affordable housing. We want to open the door, to make it as easy as possible so we can get as much housing as possible.”

Moving forward, Legg said she is hopeful community leaders will find ways to collaborate together in an attempt to open more doors toward affordable housing.

“We’re going to polish off this report and send it off to our developers,” she said. “As one example, Rockford Construction Co. said something at one of our meetings, that there is a lot of construction that is tailored to happen in our area. We’re close to Grand Rapids, we’re close to Lansing, but we’re also close to a major airport. From their perspective, there’s a lot of businesses that want to come in within a 25 to 50 miles radius of an airport. Where does that put them? Right in Ionia. So we’re primed to grow.”

“So we will have more community conversations about housing, but we have to, as leaders, be bold enough to go to some of those zoning meetings,” she continued. “Hopefully together we can figure this out. We have a lot of funding in our townships and hopefully we can look at how some of that funding can be used to strengthen our infrastructure. As of right now, the moral of the story is, we’d like 5,000 additional housing units, yesterday.”