Housing crunch goes from bad to worse

May 9—TRAVERSE CITY — A new report about the state of the housing market across northwest Lower Michigan paints a dismal picture for all but the wealthy.

Workers now commute further between work and home, schools have declining enrollment as families move to more affordable areas, and businesses are left with fewer customers when high housing and transportation costs leave residents with less disposable income, according to the report from Networks Northwest.

"It's, I think, the largest issue facing our region," said Rob Carson, regional director of community development for the nonprofit. "There are many issues we're facing, but this one is impacting so many different sectors."

The report outlines how shortages of affordable housing exist across the region for a variety of reasons: developers focus on large single-family homes that have long been profitable at the expense of building rentals, smaller houses for older people and those with disabilities, as well as many residences that have changed from owner-occupied permanent homes to short-term rental units.

The short supply of affordable and supportive housing also leads to homelessness.

"The problem is the inventory. You've got pent-up demand, you've got extremely low interest rates which leverages the buyer's purchasing power, right? But at the same time, you've got home values rising because people can afford more. They can borrow more so that, in turn, drives those prices," said Dave Wilsey, president of the board for Aspire North Realtors, the area's real estate association.

"Then you couple that with a restricted inventory — it's just a perfect recipe for that competition. You know, so it's a perfect storm," he said.

The predominant type of housing in northwest Michigan is single-family homes, with a lack of alternate sorts such as apartments, duplexes, fourplexes and townhouses.

The housing report also outlines multiple reasons why officials expect the demand for long-term rental homes to outpace growth in homeownership in coming years, including financial struggles caused by student loan debt, a tight job market and a lack of living wages; older people who want to sell their homes and move into rentals; an increase in the number of short-term rentals and a large inventory of vacation or seasonal homes.

In fact, the nonprofit determined that while the area currently is home to only 3 percent of the state's population it contains 25 percent of the short-term rental units in all of Michigan. The number of STRs increased by 233 percent from 2016 to 2018, the report says.

Networks Northwest looked at the number of local residents who live in poverty or who are asset-limited, income-constrained and employed — often called ALICE workers — who earn more than federal poverty levels but not enough to make ends meet.

Of the region's nearly 143,500 households, 12 percent lived in poverty in 2017 and another 29 percent were classified as ALICE. That means more than 40 percent of the region's households are one lost paycheck away from financial catastrophe, the report says.

Carson said some local workers commute as much as two hours to work in Traverse City because they can't find affordable housing any closer. Eventually those workers will stop commuting here to work, especially if jobs don't provide living wages, he said.

That leads to other problems — businesses can't find workers.

"It's largely due to housing," Carson said. "We've had multiple examples where individuals go through a recruiting process and interviews and come down to the position being offered to them, and then they can't find appropriate housing in the community, so they just turned down the job and they go elsewhere."

Wilsey said the only solution is more housing. And plenty of it.

"We need more homes built and that's been the case for years," he said, adding the types of homes needed are not more large single-family ones.

"Really, we need density, especially in Traverse City. We need to build up, not out," Wilsey said.

It will be key for the community's existing residents not to shoot down affordable and increased-density housing units, he said.

"Developers don't grow on trees," Wilsey said — particularly not those keen to build affordable housing units, which don't come with as attractive profit margins as more expensive homes.