Nobody Home

Spectator

We continue to be told there is a housing shortage, sometimes called a housing crisis. To read the stories and listen to the advocates, you’d think legions of people are wandering the streets of northern Michigan, dragging their possessions behind then searching for a place, any place, they can call home.

The National Low Income Housing Coalition says the country is short an astonishing 7.1 million affordable housing units, and Fortune says only 21 percent of home purchases are first-time buyers, an all-time low.

Housing North, representing 10 northern Michigan counties, claims we need another 30,000 housing units by next year, about 22,000 owner-occupied units and another 8,000 pure rental units. Though housing is being built—87,000 new or refurbished units in Michigan in the last five years according to Realtor.com—we are not going to reach anything vaguely close to tens of thousands of units being discussed.

Different parts of the country are using different strategies to deal with this apparent problem. Abandoned and failing malls have become targets for some new housing, and around the country, 192 malls as of last year are in the process of some kind of conversion to at least some housing according to CNBC.

Successful projects are thriving outside of Denver, Philadelphia, and elsewhere, but there have also been failures. There is a certain logic to mall conversion since malls are typically close to urban areas and all they have to offer, are already adjacent to or near transportation corridors, and have substantial existing infrastructure like power and water. But the conversion from bricks and mortar stores to residential units is complicated and expensive. Most of the conversions have chosen to maintain some retail and/or entertainment component as they create housing.

In the Traverse City area, home to the downtown canyon of condos, we’ve taken a different approach: we are apparently going to subsidize everything. In fact, we’ve never met multi-unit residential construction we couldn’t subsidize. Garfield Township, not wanting to be left out of the celebration of subsidies is now proposing their own, something called a service-fee-in-lieu-of-taxes, very similar to a payment in lieu of taxes (PILOT) program but under a slightly different name. In this program, a developer will pay a predetermined fee to the township, which will be less than and instead of normal property taxes, in this case for 15 years.

The result, supposedly, will be that residents will be able to pay less, based on their income levels, so this feeds the notion of “affordable” housing.

But the income level they’re discussing is going to make many people wonder what’s happening. The rent break will accrue to individuals earning $95,760 or households with incomes of $136,680. We are told that what seems like a very high income level to many of us is necessary because it is right at the salary level they have the most difficulty attracting employees. Really? So, we’re to believe there are jobs in Garfield Township paying nearly $100,000 annually that are difficult to fill because applicants can’t find housing they can afford? How many of those jobs are there that an entire development must be subsidized? Are there such job openings now? Is there ever going to be an upper income level we’re unwilling to subsidize under the guise of creating affordable housing? How do you explain this to all the people making less than $95K, who somehow managed to find housing without government help?

There are other questions we also ignore. According to Bridge Michigan, our state’s population has hovered around 10 million since the 1990s and gained only 28,000 new residents in 2025. Why do we need tens of thousands of new residential units when there are not tens of thousands of new potential residents? And where are all those people living if they can find no place to live?

There could be some answers coming from the Public Policy Institute of California, which has studied this and come up with some explanations for why more housing is needed for fewer people.

For one thing, there are far more one- and two-person households than in prior generations. People are marrying later, if at all, and having families later, if at all. That means the “family home” with three or four people, possibly multi-generational, is now the family home with one or two. Additionally, the housing turnover that was once natural because older people downsized, for example, or housing that became available when people died, has slowed.

People are holding onto their single-family home longer to avoid onerous capital gains taxes or, in some states, new so-called mansion taxes.

There could be other clues to the “shortage” tucked away in some of the research. There is housing but it isn’t housing people liked or where they wanted it. That’s a different kind of shortage altogether.

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