Great Lakes Wire

The number of single-family home building permits pulled in Michigan last year is significantly lower compared to 2005, a decline that experts attribute not to a lack of need. Instead, home builders argue that the high costs of building new homes are pushing potential buyers out of the market. Builders are urging lawmakers to reduce regulatory costs by 50%, a move they believe could reduce the price of new homes by $47,000 and make housing more affordable.

Robert Donovic, a builder from Livonia, revealed to the House Regulatory Reform Committee that a home he could sell for approximately $375,000 in 2023 now costs nearly $450,000. "A few years later, you’re almost at $450,000," he said. "That’s a lot of money, and not everybody can afford that."

Dawn Crandall from the Michigan Homebuilders Association identified materials, labor, and regulations as the primary factors driving costs. While the state has limited influence over materials and labor, regulatory costs account for about $94,000 per home. "We can’t continue to build housing for anyone in a reasonable price range when we have to spend $90,000 in fees and regulation," said John Bitely of Sable Homes.

Bitely, who initially questioned the regulatory cost estimates, conducted his own assessment and found the costs to be accurate. He noted, "I was within 1% (of $94,000)."

One contentious regulation involves the requirement for basements in some communities. Bitely mentioned that alternatives like the Shallow Frost Protection System could allow homes to be built without basements, saving $25,000 to $40,000 and enabling more manufactured housing.

Donovic criticized the extensive regulations suggesting that while necessary, they should be balanced.

City officials, represented by Jennifer Rigterink of the Michigan Municipal League, acknowledged the hurdles posed by lack of buildable land and outdated zoning regulations. Rigterink noted, "We haven’t had a lot of stories from our members where people are coming from out of town to protest housing."

In response to regulatory challenges, 84% of municipal league members reported updating zoning regulations to facilitate housing development. Rigterink supports a strategic state investment in housing as part of a comprehensive approach to address the shortage.

House Regulatory Reform Committee's Joseph Aragona and Rules Committee Chair Bill G. Schuette are exploring ways to streamline regulations and stimulate housing and business development. House Speaker Matt Hall has prioritized regulation reform in his spring agenda, aligning with Governor Gretchen Whitmer’s proposed reforms. Aragona expressed readiness to tackle the issue, saying, "You want to cut red tape? We’re your guys."