Address unknown: Midland teams up to confront housing challenges

This is the first part of a three-part series on housing. Next week, we’ll meet Cheryl Purtell, a woman who lives in affordable housing and learn more about the Affordable Housing Alliance. Then in part three, we'll talk with Home To Stay and Habitat for Humanity, who is building a new multi-family unit.

It’s no secret that the housing market is unstable across the nation. After COVID-19’s economic quake and the 2020 dam breach, Midland County is looking for solutions to meet the community’s needs.

“When you think about what it takes for people to thrive, housing is such a vital component to allow individuals to really thrive,” says Sharon Mortensen, president and CEO of the Midland Area Community Foundation (MACF).

One component to improving housing was the formation of the Housing Task Force (HTF), established about two years ago. Mortensen co-chairs the task force with Tom Wyatt, the City of Midland’s community development planner. The team is a meeting of the minds across functions to look at the comprehensive picture of housing.

The 2018 housing analysis identified three housing challenges: low income affordability, neighborhood, and economic development.“Housing is part of an ecosystem, and there’s different players within that ecosystem,” says Grant Murschel, director of planning and community development for the City of Midland. In that ecosystem are policymakers, financial institutions, federal agencies, investors, realtors, contractors, and consumers. “... Balancing that whole ecosystem is very challenging.” 

Murschel works with the HTF and is the staff liaison for the City of Midland Housing Commission, where Mortensen has served for more than 10 years.

The 2018 housing analysis identified three housing challenges: low income affordability, neighborhood, and economic development. While these challenges are distinct, they also intersect. 

Low income affordability challenge

According to the housing analysis, nearly 40% of renters in Midland County earn $20,000 or less annually. Midland County has a shortage of units that these renters can afford, so they’re forced to pay more than one-third of their income for housing. As a result, 90% of those renters are cost-burdened. 

According to Linda Owen, the average sale price for a home in Midland in 2019 was $176,000. Now, the average sale price is $206,000.“The cost of a rental today, the exact same rental from two years ago, is probably up 20%, and they’re all leased,” says Jamie Broderick, a realtor with Bricks Real Estate Experts and member of the HTF and City of Midland Planning Commission.

The demand for rentals is so high right now, that Linda Owen, associate broker with Ayre/Rhinehart Realtors and member of HTF, has seen bidding wars, so to speak. People are offering to pay higher rent, lock in longer leases, or pay months of advance rent. “I don’t recall a rental market ever quite like this, and I’ve been doing this for more than 40 years,” she says.

It isn’t any different for homeownership.

“Like most of the country, inventory of available homes for sales is at record lows,” says Owen. “... because we have limited supply, prices have risen.”

According to Owen, the average sale price in Midland in 2019 was $176,000 and spent an average of 53 days on the market. Now, the average sale price is $206,000 and homes spend an average of 23 days on the market.

“We’re not unique,” says Owen. “That’s kind of the case across the board in the country.” The bidding war rages on.

“There are other people that can often pay cash,” says Owen. "The buyers that are able to have the best financing — mostly cash, eliminate contingencies — are often beating out other kinds of buyers. … You’d be surprised at how many cash sales are happening right now.”

To lessen this issue, Owen and Broderick both think new builds are the solution, namely multi-family units or accessory dwelling units — a compact unit that homeowners could build on their property, but is currently unallowed in most areas due to zoning regulations. 

A new affordable housing construction, Center City Lofts, is expected to begin in 2022 in the property behind the Post Office, near Jefferson Road and Dartmouth Street.A new affordable housing construction, Center City Lofts, is expected to begin in 2022 in the property behind the Post Office, near Jefferson Road and Dartmouth Street. It will have 55 units, serving people who fall within 30-70% of the area’s median income, which is $65,000 a year. The construction is waiting for approval from the Michigan State Housing Development Authority (MSHDA) and is on hold due to cost of construction.

“Most of the builders that I’m talking to right now tell me that they’re at least 12 months out from even sometimes breaking ground,” says Broderick, “versus two years ago, it was ‘we can break ground as soon as we sign the paperwork, and you’re probably looking at 4-6 months of construction.’”

Another barrier to new affordable builds is parking regulations. It costs $35,000 per parking space to build on a site, according to Murschel. 

Grant Murschel is the Director of the City of Midland's Planning and Community Development.“That’s one thing that the city should look at a little bit more, is how we’re regulating parking to see if we’re burdening new development in different ways,” says Murschel.

Owen believes financing is needed for more builds. 

“Government or foundation or some other kind of mechanism has to help because otherwise, no builder is going to build it and lose money,” says Owen. “Because our community is generally doing well, we don’t qualify for a number of government subsidy programs. ... It’s a wonderful blessing that we have, but at the same time, it’s difficult for us then to turn around and provide housing that’s affordable for people that are perhaps making minimum wage.”

On July 27, Gov. Gretchen Whitmer proposed $100 million of COVID-19 rescue funds be invested in the Housing and Community Development Fund to provide MSHDA a way to create attainable affordable housing. Projects could include rental housing financing, homeowner rehabilitation aid, and/or increased homeownership.

“This new housing investment will make a huge difference in the lives of Michiganders because a home is the foundation for long-term prosperity,” says Whitmer in her proposal. “This transformational investment will put Michiganders first by expanding access to affordable and attainable housing, helping close equity gaps, and supporting the development of vibrant communities across the state.”

It’s unclear if Midland County would qualify for these funds.

Neighborhood challenge

Neighborhoods are deteriorating because of higher numbers of rental units, rather than owner-occupied homes. A mix of rentals and owned homes is good for a neighborhood but not when the rentals outweigh the homes. For the City of Midland, a neighborhood of concern is Center City, or Midtown.

Midland's Center City has many rental properties. The imbalance of housing and rental units can lead to neighborhood deterioration.“[It’s] a great area of our community. … But an area that’s deteriorated over the years and become kind of our de facto affordable housing area, because those homes have been turned into rentals," says Mortensen.

Mortensen emphasized the amenities in that area and its potential: the Community Center, Central Park Elementary, Central Park, Grove Park, and Live Oak Coffeehouse.

Center City runs from James Savage Road to Manor Drive in Midland.“We have to make sure we address the core part of our community and make sure that there are homeownership options there,” says Mortensen.

Owen commented that values in Center City have appreciated greatly and more people are beginning to buy rather than rent.

“The neighborhoods are certainly benefitting from the owner-occupied properties, but it means less rental property,” says Owen. “... People that were looking for lower-priced property, as the values crept up, they’re kind of out of the market.” 

Economic development challenge

With people still displaced from the flood and housing preferences changing, Midland’s high prevalence of single-family homes isn’t enough. Midland is “missing middle housing.” Adding diversity in housing options, like multi-family units or microtown homes, could help balance the housing ecosystem.

Missing Middle Housing comprises a large number of urban setups for accessible living. (Image Credit: Missing Middle Housing)“A big part of the whole housing discussion is how you can build more housing and how easy it is to build more housing, and a lot of that is constrained by zoning regulations that are a little bit out of date,” says Murschel. “There is a lot of work that needs to be done on that side of things going forward, but we’ve started that work.”

Murschel highlighted setback distances, parking regulations, and the allowance for accessory dwelling units to be built. These units are about 500 square feet. If these units are allowed, Broderick says homeowners could turn what’s considered a liability — a home — into an income-producing asset. To test the waters, owners in the RB-2 Single and Multiple-Family Residential zoning district around the Ashman/Indian intersection are permitted to build them.

Sharon Mortensen is the president and CEO of the Midland Area Community Foundation.Setback distances impede the ability to build accessory dwelling units, which would usually sit on the property of a single-family home. Broderick, a supporter of the units, explains that it’s challenging to build on a “postmark stamp-sized lot” when you have a house in the middle of it. 

The first step to changing these zoning regulations would be for a petition to be initiated, either by City staff or by a member of the public. The entire process takes about 75-90 days to complete, according to Murschel.

“Looking at some of the ideas that could be very beneficial to try and see if we can begin to increase density, if we can fill in some of the housing needs that we have in the community, and to pilot something,” says Mortensen, “that could be the start of something that could be very beneficial to our community.”

Next week, hear Cheryl Purtell’s story about finding affordable housing in the area and her seven years of experience living in an affordable unit in Midland. We’ll also talk about the work the Affordable Housing Alliance, Habitat for Humanity, and Home To Stay does for our community.