2020 Winning Essays

In the Grand Traverse Region, there is a devastating gap in affordable housing for those who make more than 60 percent of the median income. This is a critical issue for the area because a worker who wants to live and work in Traverse City needs to earn about $17 per hour to afford the median rent price of $815 per month, whereas common positions including food service, maintenance, and manufacturing make a median wage less than $15.91 (Beggin). According to Executive Director Sarah Lucas of Housing North, “Grand Traverse County needs at least 1,160 more rental units and 260 new ownership units in 2020 to keep up with local demand” (Milligan). This is not a problem unique to Grand Traverse, either; citizens across the state and nation are finding themselves rent overburdened as housing development cannot keep pace with population growth (Aurand, Elliott). I propose three solutions to solve the housing shortage while still supporting economic growth. The first two relate to managing existing housing stock, while the third will work to create new houses at more affordable prices. They involve focusing on workforce housing, lessening competition between investors and buyers, and decreasing home-related costs.

To start, focus needs to shift from homeless to workforce housing. It may seem counterproductive to help those that have some economic power over those who have none and even Mayor Jim Carruthers asserts that “the city has long been working on solutions and has made it a priority for the City Commission to build more subsidized housing and broaden workforce housing if possible. But young workers who have trouble finding housing in Traverse City are not the ones that most need local government’s help…as mayor, if I’m going to subsidize housing for anybody it’s going to be the homeless,” (Beggin).  If Traverse City builds homeless housing without workforce housing, it will be funneling money into a project that will not provide a significant return on investment and workers will be unable to move in because of unaffordable workforce housing; the city will lose a huge source of revenue. However, if the focus is shifted to workforce housing, more people will be able to move here and contribute to the Grand Traverse economy.

Although this solution only reallocates resources to another sector of affordable housing, the local government can use these funds to support more homeless housing projects in the future. Homeless housing is important; people in unfortunate situations need government assistance when they have no other options. However, if officials choose to focus only on homeless housing, they squander the opportunities for growth that workforce housing yields.

Competition is another issue. Investors crowd the market, buying up the supply of viable homes to create short-term rentals for tourists. According to Kathy Eagan of Networks Northwest, “investors purchased 11 percent of homes nationwide in 2018 – a rate almost double pre-recession investment levels. Nearly half of those homes were purchased for rental income.“ Sarah Lucas of Housing North addressed the problem locally, “a lot of our year-round housing stock is coming off the market and being converted into use as a seasonal housing unit,” (Milligan). This means homes that could otherwise satisfy the demand for affordable housing are instead competing with hotels for business. As this continues, the shortage will only worsen. However, if there is an incentive for investors to stop buying the houses and invest in affordable housing, investors will pursue the action with the highest reward.

Investors would argue that homes on the free market are anyone’s game; they would be right. However, if the local government incentivized affordable housing projects, investors would be simply responding to these new market forces and still profiting. The seasonal home issue would be lessened because even though the vacation homes would be a lucrative business and those homes would still be on the market, investors’ profit would translate to more capital for building new, affordable homes and a naturally decreased demand.

Finally, to decrease rent and ownership prices, homes in the region can model Habitat for Humanity Grand Traverse Region’s example for their Award-Winning Net Zero Energy Neighborhood. An average Net-Zero house yielded $900 in annual energy savings compared to a typical new home and the average monthly energy bill was only nine dollars (DOE Tour of Zero). These houses make use of sustainable energy to lower utility costs thereby lowering housing-related expenses and raising disposable income, which people can spend on other essentials. As more homes with lower utility costs enter the market, the supply curve of homes that are considered “affordable” will increase, meeting demand. This means that the market price will be decreased for future homes as more of these affordable, more efficient housing units are built.

The drawback is that Net Zero Energy homes cost $9.80 more to build per square foot.  But luckily, the money lost can quickly be recovered in annual energy savings (“Cost to Build a Net-Zero Energy Home”). Additionally, companies like Habitat for Humanity benefit from volunteers and discounted materials which further decrease costs (Carr). Ultimately, these homes reduce the financial burden on the consumer, making housing affordable for lower-income families and individuals.

The goal of any of these proposed solutions is to manage existing resources intelligently while using other methods to increase affordable housing to meet demand. If the plans to increase workforce housing, incentivize investor competition, and lower home-related costs are implemented, Grand Traverse will become home to more of the people who fuel its tourism and other industries. The Grand Traverse Region deserves high quality, affordable homes for families and individuals who will help increase economic output and draw more people to the area. In the end, cities all over Michigan will deal with the same problems the Grand Traverse Area faces, and these same principles can be tested statewide and nationally. Put simply, the use of economic principles to lower market prices, increase supply at that lower market price, and facilitate economic growth will eliminate the affordable housing shortage.

Works Cited

Aurand, Andrew, et al. Out of Reach. National Low Income Housing Coalition, 2019, pp. 1–3, Out of Reach.

Beggin, Riley. “Traverse City Grows as Local Workers Search for a Place to Call Home.” Bridge Magazine, 15 Aug. 2019, www.bridgemi.com/quality-life/traverse-city-grows-local-workers-search-place-call-home.

Carr, Tom. “Depot Project To Make Living Affordable With Energy Savings.” interlochenpublicradio.org, 2014, www.interlochenpublicradio.org/post/depot-project-make-living-affordable-energy-savings.

“Cost to Build a Net-Zero Energy Home.” 24h Site Plans for Building Permits: Site Plan Drawing & Drafting Service, 24hplans.Com, 19 Feb. 2019, www.24hplans.com/cost-to-build-a-net-zero-energy-home/.

“DOE Tour of Zero: The Depot Neighborhood by Habitat for Humanity, Grand Traverse Region.” Energy.gov, Office of Energy Efficiency and Renewable Energy, www.energy.gov/eere/buildings/doe-tour-zero-depot-neighborhood-habitat-humanity-grand-traverse-region.

Elliott, Misty. “Post-Recession Demand for Affordable Homes in Michigan Outpaces Supply.” MSHDA – Post-Recession Demand for Affordable Homes in Michigan Outpaces Supply, 29 2019, www.michigan.gov/mshda/0,4641,7-141-7559_9637-496067–,00.html.

Milligan, Beth. “Local Experts Weigh In On Housing Crisis, Solutions.” The Ticker | Traverse City News & Events, 26 Nov. 2019, www.traverseticker.com/news/local-experts-weigh-in-on-housing-crisis-solutions/.

Northern Michigan is known for its breathtaking views, crystal clear waters, sugar sand beaches, and that Midwestern hospitality at the heart of every small town.  All these remarkable qualities have attracted tourists by the thousands every summer for decades.  Grand Traverse County and its surrounding areas have become the epicenters for this tourism, with our annual visitors growing exponentially every year.  The summer vacationers come and enjoy the pristine lakes, beaches, local festivities, and are an integral part of our economy.  This heavy tourism fuels the hundreds of small businesses owned and operated by locals, and allows local governments to raise large sums of money through public events.  But where are all these visitors staying? Short-term rentals.  One of the most prominent issues facing our region is something that most tourists don’t consider while staying in a $1,400/week Airbnb.  The lack of affordable housing for permanent residents has reached a crisis level. The root of this problem being the excessive number of short-term rentals flooding the housing market.

Since Northern Michigan has become such a popular tourist destination, the housing market has been less than ideal for middle and low-income residents.  This can mostly be attributed to how our supply and demand in the economy and housing market are not always reflective of permanent residents’ needs.  Because tourism is one of our leading modes of income, prices for goods and services are often indicative of what tourists will pay, not what locals are able to. The prices of housing are largely set by people who are not participating in the local economy, such as investors and retirees (Vansickle).  This creates a huge obstacle for local buyers, especially those not able to compete with hefty cash offers set forth by property investors.

Investors’ participation in our housing market not only inhibits locals’ buying ability, but also their ability to rent.  Investors are purchasing properties to rent out at steep short-term rates, rather than housing for year-round residents. This is an issue I have struggled with in my own housing situation.  We must be out of our current rental by May for the start of the short-term season, so my mom has been frantically searching for a rental in the area of Elk Rapids.  Unfortunately for us, there is only one in the

area that meets our needs. Not surprisingly, the rental is occupied, so we are forced to look for a place outside of our desired area. This creates a longer commute to work and school, an issue many renters are facing.  Our ten-county region is home to only three percent of the state’s population but, at the same time, about a quarter of Michigan’s short-term rentals (Milligan).  This ratio illustrates how severe the lack of practical housing for locals is.  Luckily there are a few solutions that can be implemented by local governments in order to reverse the housing shortage.

One solution is for municipalities to enact regulations limiting the number of short-term units a single entity can own.  These regulations would still allow families and retirees to rent out their summer cottages, and allow investors to purchase property and make a profit, but they would now be compelled to rent out more long-term units.  The need for more units has become increasingly dire with the waiting lists for affordable rentals months, or even years, long (Vansickle). This solution would be very beneficial to both buyers and renters in the area because investors would be deterred from scooping up such large amounts of property and more long-term units would become available.  Despite this, some people may be concerned that this solution would limit the number of places available for tourists to stay.  Although they would have fewer rental options, visitors would be more compelled to stay in a hotel and, in turn, boost the hotel business and open up more jobs for locals. Overall, putting these regulations in place would help provide the rental units that year-round residents desperately need, and even create more jobs.

Local governments could also improve the housing situation by implementing or adjusting zoning ordinances in order to encourage builders to create more affordable options.  There are a few different zoning strategies municipalities could experiment with; the most effective being to relax certain zoning regulations when developers include a certain number of affordable units in a complex.  The city of New Orleans has already tried this by allowing developers to build on smaller lots, as long as they include a few low-income units in their buildings (McClendon).  This would be a great model for Traverse City and other Northern Michigan towns to follow because it will gradually increase the number of affordable units without creating 100% affordable buildings that are prone to drugs and crime.  Some argue that this solution would create issues by integrating different classes in the same building.  However, this unification of people would actually allow low-income renters to reside in nicer buildings, and escape the drug pits that many affordable complexes have become.  In the long run, amending certain zoning laws would be a very effective way to gradually increase the amount of affordable housing.

The housing crisis should be a concern for all community members, year-round or seasonal. It is critical for our Northern Michigan communities to experiment with different solutions to solve this issue because middle and low-income workers are essential to the economy in every town.  This is especially true in our region, with local workers enabling small businesses to stay open and ultimately allowing our economy to thrive.  The combination of enacting new rental regulations and modifying existing zoning laws will allow Northern Michigan localities to create more practical housing options for their permanent residents.

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Works Cited

McClendon, Robert. “In Fight against Gentrification, New Orleans City Council Loosens Density Restrictions.” NOLA.com, 27 July 2015, www.nola.com/news/politics/article_e2861b28-dd18-5f51-ae41-6bcbd59c793a.html.

Milligan, Beth. “Local Experts Weigh In On Housing Crisis, Solutions.” The Ticker | Traverse City News & Events, 26 Nov. 2019, www.traverseticker.com/news/local-experts-weigh-in-on-housing-crisis-solutions/.

Vansickle, Todd. “Paying the Rent in Paradise.” The Northern Express, 27 July 2019, www.northernexpress.com/news/feature/paying-the-rent-in-paradise/.