demand in the same way it could in pre-recession years. As a result, we are seeing more and more hard-working middle-class families be pushed out of the new construction housing marketplace because they cannot afford the cost of a newly constructed home in their community. To kick-start more building activity at all price points and to develop a more sustainable housing environment well into the future for our state, the HBA of Michigan believes three cornerstone principles must be addressed by policy makers and community leaders to better encourage investment, eliminate costly delays and help shape the industry’s future workforce:
I. Local Government Policies & Processes that Impact Housing Investment Must be Spotlighted, Identifying Impediments and Adopting Best Practices
II. State Authority to Enforce Code & Land Development Laws Must Be Clear & Unwavering
III. Efforts to Train and Attract Individuals to the Skilled Trades Must be Dramatically Increased and Sustained Over the Long-Term
The HBA of Michigan and its members believe the recommendations linked to these three cornerstones in the following pages of this report are crucial. But, first and foremost, we need local community leaders and elected officials to hear and 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 won’t just happen. If communities want to attract jobs to their region and have employees live in their towns, they need to think about their housing stock and the review and approval systems they have in place for land development, new home construction and the renovation of existing homes. If they have shortage of housing, they need to look at how their systems may be impeding such development and determine what they might be able to do to attract such investment in the future.
Lengthy and complicated review processes represent an especially difficult challenge for obtainable (quality housing options at low and moderate price points) housing development. With a lower return on investment, obtainable housing projects suffer disproportionately from costs associated with regulatory processes and delay. Not surprisingly, fewer obtainable housing units are being built. According to the National Association of Home Builders
It is fundamental that communities recognize the changed industry dynamics in housing.
(NAHB), an ever-increasing portion of the cost of a new home is attributable to the cumulative effect of these types of costs. On average, nationally, 25% of the cost of a typical home can now be attributed to these costs—everything from mandated studies to multiple site reviews, delays, permit and other fees, code requirements, etc. In this landscape, communities that can distinguish themselves by streamlining these processes and removing barriers to investment will benefit now, more than ever. An efficient review and approval process will benefit not only the builder/developer, but the government and taxpayers of communities across the state by keeping housing affordable and expanding the local population and tax base. More families, more children and more homes equal more money for schools and local government. Regions that develop the most efficient practices designed to attract investment will gain housing options for their citizens and grow. Those that maintain the status quo, or actually increase burdens, will lose out and see their communities passed by.
At its height in 2005, Michigan’s residential building industry contributed more than $3. 3 billion is local and state taxes, generated nearly $10 billion in income and helped generate and sustain more than 153,000 jobs. Today the industry is less than half this size even though demand for housing and renovation services continues to grow. Each new home built