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Housing shortage threatens economic growth in Northeast Michigan

News Photo by Steve Schulwitz Tom Dihle and his wife, Cecilia, look recently at an Alpena home they considered purchasing. The couple is looking for a home because they are moving to Alpena from the St. Joseph area.

ALPENA — A shortage of housing could weaken the local workforce and future development if people wanting to invest money and talent in Alpena can’t find places to live, Northeast Michigan business leaders say.

People trying to move to Alpena sometimes have to wait months to find a place to call their own, with housing demand exceeding supply or high prices for existing homes or new construction pricing some out of the market entirely, The News learned through weeks of research and interviews with homebuyers, sellers, and officials in real estate and economic development.

Adding to the problem in Northeast Michigan, most of the existing property without a year-round resident is tied up in what the U.S. Census Bureau calls “part-time, seasonal, or recreational” housing, such as lake cottages and hunting cabins. The share of homes for sale or rent in Northeast Michigan is less than half that of the share available statewide or nationally, according to census data.

Some businesses struggle to fill positions, and the housing shortage contributes to that challenge, said Jackie Krawczak, corporate representative for Employment Services Inc., which helps corporations attract talent.

Some Employment Services clients want to move employees working remotely from out of town into Alpena, Krawczak said, but difficulties finding housing often prevent the employees from moving, at least as quickly as they would like.

“Housing has become one of the growing challenges to recruiting people with the competencies our clients are looking for,” Krawczak said. “It can take a month or longer for a new hire who is relocating to find a suitable rental or house. We try to assist as much as we can by making connections and referrals, but the inventory is low, and goes fast. We have lost potential hires to lack of housing.”

‘WE WON’T GROW’

In May 2006, Harvard University researchers at the Rappaport Institute for Greater Boston looked at the economic effects of a restricted housing supply and found shortages drive up home prices, which can drive up the cost of doing business and encourage some companies to leave the community.

“In the short run, high housing costs force firms to pay higher wages but in the long run, firms generally leave high-cost areas,” the researchers wrote. “Places with rapid price increases over one five-year period are more likely to have income and employment declines over the next five-year period.”

Such trends most impact those just getting started in their careers, and, “if younger people play key entrepreneurial roles creating success then this could indeed be problematic,” the researchers found.

Census data shows the median property value in Alpena increased 1.7% in 2019 to $95,600. Prices have gone up since then, said Lori Stephan, owner of Real Estate One in Alpena.

Northland Area Federal Credit Union recently opened a new, multimillion-dollar headquarters facility in Alpena, despite the housing shortage.

Though some employees of the credit union have struggled to find homes to rent or purchase, Marketing Director Matthew Duthler said the market is the same all over the state.

Other businesses, however, struggle to bring employees in.

If the housing shortage continues, “we won’t grow,” Krawczak, of Employment Services, said. “That’s the bottom line. We won’t be able to grow.”

‘THE STRUGGLE IS REAL’

Not all homebuyers have a hard time.

Tom Dihle and his family intend to move to Alpena because he accepted a job in the area. He said he and his wife, Cecilia, looked at four different houses in one day recently. Any of them would suit his family’s needs, he said.

“Every house we have looked at are contenders for us,” Dihle said. “It’s not really stressful, thinking we won’t be able to find one. Rather, it’s, what one we will choose? Because they are such good houses. The process has been really easy, actually.”

Dihle admitted bidding wars could break out for a home they want, which could change his experience.

Kristi Blackaby and her family haven’t had the same kind of luck.

They want a home with acreage after outgrowing their current home in Ossineke, which they’ve already sold and have to leave by the end of the month.

For eight months, now, they’ve tried to buy a home. Finding a rental to live in while the housing search continues was also a chore, so the family will stay in a relative’s cottage until they can find a new house.

“There have been a couple houses we really liked, but they were really way over budget, or someone else got them,” she said. “The struggle is real, and I know other people are going through the same thing we are.”

The lack of housing has created a backlog in the rental market. Landlord and prefabricated home salesman Kiley Selden, of Michigan East Side Sales, said his rentals are entirely booked, with more potential renters in the wings.

Before the 2008 mortgage crisis, when people moved often, Selden would have 20 to 40 used prefab homes on his lot.

“Now, I have one home for sale,” Selden said, “and it needs a ton of work.”

Apartment complexes in Northeast Michigan have always had at least a few empty apartments. Not now, said Cindy Amlotte, Northeast Michigan housing agent with the Michigan State Housing Development Authority.

According to Amlotte, MSHDA has vouchers available to help low-income folks pay their rent. There’s nowhere they can spend the money, though.

2006 Harvard paper on economic impacts of housing shortage by Justin Hinkley on Scribd

‘IT’S VERY DIFFICULT TO DO’

Not only do prospective employees have a hard time in the housing shortage, developers and investors struggle, too.

Joe Borgstrom, principal with the East Lansing-based economic development firm Place and Main, said municipalities have gained control of properties for development, but those municipalities struggle to find investors to build on those properties because construction costs have climbed so high — especially during the coronavirus pandemic — that builders can’t turn a profit.

“The first developer who can figure out how to profit from a $150,000 house is just going to print money, because it’s very difficult to do, from the cost side of things,” Borgstrom said.

Many developers nowadays won’t build unless they can presell properties before construction, officials told The News.

At the same time, Borgstrom said, skilled labor such as carpenters and electricians are hard to find.

So, meanwhile, local governments — including Alpena — sit on empty property.

Andrea Kares, the former Alpena planning, development, and zoning director, said the city owns a “fairly large” piece of property on U.S.-23 North. The city even built a road to get through wetlands, which she said developers would not want to do themselves.

“That’s something the city purchased in 2001 to hopefully help, you know, get another assisted living facility in there or apartment buildings, and things like that,” Kares, who left the city after being interviewed for this story, said. “It’s zoned for really anything, but, unfortunately, it’s not something people have really latched on to.”

News staff writers Crystal Nelson and Julie Riddle contributed to this report.

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