Great Lakes Wire

Michigan’s housing crisis persists despite efforts by the Michigan State Housing Development Authority (MSHDA). While MSHDA has increased its initiatives, limitations remain.

The imbalance between home buyers and available homes continues nationally. Slight market progress is threatened as the Federal Reserve considers interest rate cuts. Lower mortgage rates could prompt more people to buy or sell homes, potentially increasing market activity.

Brad Ward of Michigan Realtors stated, “According to our national economists, usually when you see that first-rate cut, that means that there are going to be a series to follow.” He explained that the housing market follows supply and demand principles: higher supply reduces prices while lower supply increases them.

Lower interest rates may encourage sellers to move, creating more housing supply and attracting potential buyers. However, affordable housing remains a concern. Detroit Mayor Mike Duggan noted on the MIRS Monday podcast that despite $1 billion invested in new affordable housing over five years, another $1 billion is needed.

State officials have increased funding for housing through budgets and programs, but challenges persist. Local zoning regulations and a not-in-my-back-yard (NIMBY) mentality slow new production.

MSHDA staff are working on financing 42 developments statewide; six or seven have initially closed this year. Typically, 12 deals are completed in slow years and 30-35 in busy years. Chief Financial Officer Jeff Sykes said, “Folks are really working hard.”

Two bills in the Legislature aim to aid homebuyers: HB 5032 would raise the cap on low-interest loans via MSHDA, and SB 293 would change funding allocations within the Michigan Housing and Community Development Program.

Interest rate cuts directly impact MSHDA customers by enabling refinancing options for single-family homes. Sykes noted this helps borrowers manage other expenses like groceries and car payments.

When rates decrease and supply diminishes, prices rise, leading more people to seek MSHDA assistance. The agency helps developers bridge cost-return gaps for lower-rent apartment complexes but faces annual funding limits for such programs.

The development process includes proposal submission, board review, initial closing, construction, and final closing—taking one to one-and-a-half years per project. Sykes acknowledged some projects might take longer due to challenges.

“If there are challenges or difficulties, a development might take longer than that. Some can get done a bit quicker,” he said.

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