By Ryan Kilpatrick, Director of Housing Next
Housing Next was created in the fall of 2017 in response to the significant demand from the local workforce for more housing at a variety of price points. Our organization was a direct result of the hard work of dozens of community partners who invested their time, talent and resources into the Ottawa Housing Next report.
The mission of Housing Next is to unlock market-driven, community-based solutions to make workforce housing affordable for all in the greater Ottawa County region. This is a long-term strategy designed to allow all those who work within the area to also have the choice to live in the area and maintain a high quality of life.
Why is this work necessary?
In short, West Michigan has a significant shortage of skilled workers. The local talent powering our centers of manufacturing and shop floors are increasingly unable to live in Ottawa County due to rising housing prices. This puts a strain on family budgets where workers are either travelling 20, 30, or 50 miles to get to work, or spending much more than 35% of their annual income on housing costs. In turn, this has a dramatic impact on the competitiveness of our region not only to attract and retain talent, but to support our companies in their growth strategies and maintain a sustainable economy over the long term.
Why is housing so expensive?
Following the housing crash and great recession in 2007/2008 a number of national economic factors began to exert significant influence over the West Michigan economy and its housing market. First, there were large numbers of foreclosed homes across the region, which were more often purchased by distant investment groups than by local families. Many of those homes are now rented instead of owner-occupied.
Second, Ottawa County has been one of the fastest growing counties in the State of Michigan for several years running. More than 2,200 net new residents moved into the County in 2016 and that trend is on pace to continue. There is a strong manufacturing base, high quality of life, and good schools at the K-12 academic level. However, demand for housing is growing faster than supply. Which leads to point number three.
The West Michigan construction market took a big hit by 2010. After two solid years of very little construction activity, many skilled workers found other means of employment or left the State altogether. As the market for new construction has come roaring back, the supply of available skilled trades labor is only about half of what it was during the housing peak in 2006. There aren’t enough workers in the market to fulfill the demand for new housing construction.
Finally, wage growth has been slow for middle class workers over the last two decades. According to the Seidman Business Review, average weekly earnings in West Michigan have actually fallen by 1% since 2007 when adjusted for inflation. Meanwhile, the cost of housing in some sub-markets in the region has increased by more than 30%. The current paradigm is unsustainable.