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Shrinking housing stock a growing problem

News Photo by Steve Schulwitz Mason Crown looks out the windows of his new home in Alpena, which he and his family got to see for the first time Thursday, while construction crews work outside. Alpena’s housing shortage makes finding certain price ranges challenging.

ALPENA — A growing housing problem in Alpena and the rest of Michigan could worsen over the next several decades if action isn’t taken, experts and area officials say.

Without a significant increase in the inventory of homes and apartments, prices could climb, likely impacting low-income residents, seniors, and people wanting to relocate to Alpena. And it could hurt economic development efforts in the area..

“If we don’t have the housing stock available, then people may not come or stay,” city Planning and Development Director Adam Poll said. “There is definitely a definitive link between housing and economic development.”

Alpena’s housing crisis persists despite a falling population. That’s because the city’s population fluctuation isn’t drastic enough to have a large impact on the housing issue and because population statistics don’t account for seasonal residents, said Steve Schnell, community and economic development senior planner at the Northeast Michigan Council of Governments and a former Cheboygan County housing director.

“You also have people who live and work downstate that buy second homes or cottages in the Alpena area that aren’t always factored into the equation,” Schnell said. “There are more of these types of people than you think.”

Across all of the Alpena’s 5,075 housing units, 90.7% were occupied in 2017, the most recent year for which data was available from the U.S. Census Bureau. A total of 2,871 were occupied by the owner of the property.

The median value for the owner-occupied units was $75,200.

Few rental units are available in Alpena, Poll said. He said 2018 occupancy rates for rental developments, such as Thunder Bay Apartments and Birchwood Meadows Apartments, was 97.7%. Market-based units, which are rentals where the rent is determined by supply and demand, were 99.4% occupied, while low-income subsidy units were 95.6% occupied.

Those numbers do not reflect rental units for single-family homes or other types of housing, such as duplex units.

Meanwhile, city Building Official Don Gilmet there 15 new were homes built from 2010 until the end of 2018. He said space for new construction in the city is becoming limited, which may be contributing to the limited number of new houses being built.

“We’re pretty much built out,” he said.

‘WE HAVE A GAP’

Poll said the main reason there aren’t more large rental complexes in Alpena is because of the low cost of rent in the area. Private investors who would take on such as projects often choose other parts of the state where higher rents can be collected.

Those kinds of developments, especially condos and high-end apartments, are important to many young professionals, said Jim Klarich, Alpena Area Chamber of Commerce economic development director.

“We have a gap, and we just don’t have any condos, and, in order to attract some of these people, we need to have them,” Klarich said. “Filling that gap is important, but not an easy thing to do.”

It’s no easy task for people looking to purchase a home in Alpena, either, but it’s easier than for renters.

Banner Reality real estate agent Margie Haaxma said the housing market in Alpena is much stronger than it was during the Great Recession of 2008 through 2011, but prices have not rebounded to the point they were before the market collapse.

Haaxma said most buyers are looking for homes in the $80,000 to $125,000 range. Although inventory is somewhat limited, houses can be found in that range, she said.

“People can find what they are looking for, but it just might take some time,” Haaxma said. “There are always numerous people from out of town who are looking for waterfront homes or property or high-end subdivision homes. These are often professionals who often are looking for secondary housing, in some instances.”

Real Estate One of Alpena owner Lori Stephen said that, as of Monday, just 10 houses in that $80,000 to $100,000 range were on the market in Alpena and Alpena Township. When inventory is low, Stephen said, her team gets creative to try to find clients homes.

“We reach out on social media or advertise in the paper for what we are looking for,” she said. “A few weeks ago, I went door to door, looking for a very specific type of house for a little old lady.”

Stephen said the market slows some this time of year, but the market was red-hot only a few months ago. Often, sellers would receive multiple offers or sell before their house was officially on the market.

“It was crazy busy,” she said.

AGING INVENTORY

Meanwhile, Alpena homes are getting old.

Nearly three-quarters of the homes on the market in 2016 and 2017 were built more than a half-century ago, said Lee Schwartz, executive vice president of government relations for the Michigan’s Home Builders Association.

Schwartz said homeowners in Alpena often rehabilitate an existing home instead of building new. A lack of available land and good-paying jobs are two main reasons why, he said, and there aren’t as many young families moving to or staying in Alpena.

As a result, he said, many of the homes on the market today are either expensive, because of demand, or in need of work.

“Younger people are buying and building homes at a slower rate, and, when you look at the employment opportunities and the types of jobs they are seeking, they just aren’t there,” Schwartz said. “Plus, a lot of the homes need maintenance or repairs, and they want places that are move-in ready. Affordability is another issue.”

To help promote the construction of new homes, the city has established at least one enterprise zone, where homeowners can receive incentives. A pair of new homes are currently being built in the enterprise zone where the former Thunder Bay Junior High School once sat between 1st and 2nd avenues.

Schwartz said the ever-growing list of codes that must be met also escalates the prices of new home construction.

One proposed change would require new homes to have a place to charge electric vehicles or at least the capacity to add a charger, Schwartz said.

Overall, meeting all of the code changes would hike the price of a new home by between $3,000 and $10,000, if they are all approved and become law.

Building a new home in Alpena right now costs between $150 and $250 a square foot, builder Dennis Schultz said.

That means a new, 1,000-square-foot home would cost as much as $250,000.

He said that doesn’t include the cost of the property, having utilities installed, landscaping, or installing a driveway or furnishing them.

Steve Schulwitz can be reached at 989-358-5689 at sschulwitz@thealpenanews.com. Follow him on Twitter @ss_alpenanews.com.

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