Michigan Housing Demand Grows, But Skilled Worker Shortage Slows Supply

Demand for new homes in Michigan is far outstripping the ability of state builders to keep up, according to a new report.

The Michigan housing demand challenges revolve primarily around three important issues, according to the report from The Home Builders Association of Michigan. They are:

  • A lack of skilled home building workers
  • Not enough places to build new, affordable homes
  • An overly complex system of government regulations

In a news conference held earlier this year, representatives of the statewide builders association, as well as the Home Builders Association of Grand Rapids, said the situation continues to worsen.

Bob Filka, chief executive officer of the Home Builders Association of Michigan, said that while the housing industry has moved slowly to recover since the recession in 2008, “the recovery has been slowed significantly due to policies that hamper housing investment, including lengthy regulatory delays and requirements that are raising costs."

Michigan Housing Demand Facing Lack of Skilled Workers

Another pressing issue is the lack of skilled workers. This is especially notable in a state where online classes are available to help people prepare to earn their Michigan State Builders License.

Filka said at the news conference that the lack of skilled workers, combined with the regulatory delays and the lack of property available for new home building, has led to severe challenges for the industry.

The Michigan building industry at one time employed 153,000 people, but the workforce now is about half that size, according to Michigan Live. That means the 16,000 homes built every year by home builders in Michigan has the industry working at capacity.

A decade ago, the industry produced about 28,000 homes per year.

Clearly, there is a great opportunity for those who want to go into the home building business. Michigan housing demand continues to grow without the home builders and skilled workers needed to get the job done.

Hurting Michigan Economy

The housing situation in Michigan provides not only an opportunity for individuals wishing to go into homebuilding, but also a chance to help revitalize the state’s economy.

The report from the Home Builders Association of Michigan provided numbers to illustrate the vital role the home building industry can represent in the state.

For example:

  • In 2005, the home building industry generated about $10 billion in income
  • That same year, the industry generated $3.3 billion in local and state taxes
  • Each new home built results in 3.4 jobs that last 12 months, and 1.2 permanent jobs
  • Due to the slowdown in construction, the average age of home in Michigan is now 50 years old

The association recommends that the state should be building between 25,000 and 30,000 new homes to keep up with MIchigan housing demand. Otherwise, people will find themselves priced out of buying affordable homes as the price for existing homes will continue to rise.

For example, one homebuyer told The Detroit News that it took much longer to buy a home than expected when searching in the Southfield area north of Detroit. The reasons included multiple competitive offers on every house that hit the market – as many as 20 on some homes.

Prices also were higher than expected because of high demand and low supply, the buyer said.

New workers in the home building industry could rectify this problem, the home builders association believes. Clearly, getting into the home building industry in Michigan offers a great business opportunity as well as a way to help the state and its homebuyers move Michigan onto better economic footing.