Looming Housing Shortage Threatens Michigans Economic Future

Over the past decade the number of new single family residential homes built in Michigan fell to
historically low production levels (in excess of 170,000 units below normal during this
timeframe). Today, production levels remain stagnant. From a low production point of just over
6,000 homes built in 2009, the HBA of Michigan estimates that roughly 16,000 new single
family homes will be constructed in 2017 (just a 4% increase over 2016). While significantly
higher than our low point, this still remains well below normal.

During the past 50 years Michigan has built an average of 28,000 homes per year. Economists
suggest that a state our size should build somewhere between 25,000 and 30,000 new single
family homes each and every year to keep up with normal life cycles of aged housing and the
changing demographics and population shifts in our communities. It has been nearly ten years
since this type of production level was achieved.

Without changing the dynamic of the current marketplace, production levels will remain well
below this norm and more and more Michigan communities will experience housing shortages.
While there are some near-term positive results of this shortage (regained equity in the homes
people own), the long-term impact will mean constrained economic growth and a shortfall in
resources needed to support job creation, schools and local governments.

To better identify the issues impacting housing across the state, this winter the HBA of Michigan
hosted eight regional housing summits. These summits highlighted the dynamics of each
regional housing market along with in-depth discussions of the industrys challenges.

Following those summits, HBAM unveiled an aggressive 13-point action plan to stimulate the
housing industry and promote economic growth in Michigan. The HBAM action plan focuses on
three main areas that were identified at the regional summits as major factors in hampering the
housing industry in Michigan; attracting housing investment, reducing regulatory delays and
responding to a severe shortage of skilled workers.

It is our hope this report serves as a wake-up call for everyone involved from homebuilders, to local
and state officials and citizens of Michigan. The challenges we are facing are pricing middle class
citizens out of the housing market and squeezing revenues needed to support our schools and local
units of government.

It is imperative that local community leaders and elected officials understand that the world has
changed for our industry. Housing investment must now be looked at like any other type of
economic development investment a community may need or desire. It wont 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. Those practices may
unwittingly be keeping investment away from their towns at a time when more housing options are
increasingly needed.

Robert Filka is chief executive officer of the Home Builders Association of Michigan