Can We Make a Home for Tomorrow's Ann Arbor Today? Part 2

There is nary a Michigander unfamiliar with the threat of the brain drain. In Ann Arbor, however, we tend to think ourselves on the outer fringes of phenomenon impacting the entire state, if not an exception entirely. After all, the economically perilous trend of young, bright professionals fleeing the majority of municipalities for the quality of life offered in such popular cities as Seattle, San Francisco and Boulder shouldn't apply here, right? Not in Ann Arbor, with all of its livability?
 
Yet there is a new factor in the brain drain for today's brain drain conversation, and other extremely livable, well-educated cities like Boston are starting to ask themselves the same question.
 
"The problem, Massachusetts economic development folks say, is that metro Boston is so expensive they can’t keep the kids, especially after those kids begin to have their own kids," writes William Fulton for Governing.com. With student loan-strapped Millennials, a generation 70 million strong, hitting 30 and factoring affordability into their long-term residency plans, the question is one that could impact Ann Arbor for the next several decades is, could the brain drain be happening here? Or could it soon begin?
 
In the first part of this two-part series, we spoke to some of the young professionals who moved here from other cities about their experiences searching for housing. Both 24-year-old Kristin Bernstein and 28-year-old Maura Fulton expected to find considerable savings in their housing costs from their previous cities of Minneapolis and San Francisco. While Ann Arbor was certainly less expensive than San Francisco, Bernstein now pays more in rent now than she did in large Minnesotan city, and neither women found the price point or availability they were anticipating. 
 
Bernstein settled on a lower quality apartment than she hoped to find that was a bit farther from the center of downtown. But as residents chose living spaces further from downtown, their walkability score drops, creating not only more transportation costs, but also more congestion, climate impact and other problems for Ann Arbor as a whole. They also deny Millennials something they seem to crave - casual connections with their peers. Though these apartments may only be a few miles from downtown they offer little in the way of cultural or mixed retail and dining amenities, minimizing the chance to develop relationships. 
 
"There is a bigger issue to this," says Ann Arbor City Councilmember Chuck Warpehoski. "The getDowntown program has data that shows that the closer someone is to their job, the more likely they are to walk or bike to work, which means better public health, less traffic congestion, and less demand for new parking structures."
 
Could future housing seekers find better options - for both young professionals and the community impacted by their housing choices? 
 
As anyone paying attention has likely noticed, changes are on the way to the Ann Arbor housing market. New near-downtown condo projects, such as Kerrytown Place, Liberty Landings and the recently resurrected Kingsley Lane condos join forthcoming apartment buildings Ann Arbor City Apartments, the 618 South Main development and the controversial apartments at 413 E. Huron as a rush of new housing options in and near downtown for future sale or rent.
 
The condo projects, such as Kerrytown Place, are projecting sale prices of $400,000 to a million dollars. The progressing Ann Arbor City Apartments are asking $1455 for their least expensive one-bedroom apartment and up to $2875 for two bedroom units - more than twice what Bernstein and Fulton pay for their already pricy two-bedroom living spaces. With the standard for housing affordability recommends 30 percent of one's income be spent on housing, a young professional would have to earn more than $100,000 for such an apartment. 
 
"There is a very large demand for rental apartments," says City of Ann Arbor Planning Manager  Wendy Rampson. "That's not just downtown. First Martin is looking to develop a piece of land north of town. They imagine it will appeal to young professionals entering the workforce." 
 
It's projects like this, as well as the forthcoming Packard Square mixed-use development, that seem to hold the most promise for adding reasonably affordable housing to the market a bit outside the near downtown area. Though, according to the rules of supply and demand, the general development rush could be beneficial in and of itself.
 
"The idea is to try to increase the supply, but it seems every time the supply is increased the demand seems to go up," Rampson says. "So it stays pretty expensive." 
 
Housing doesn't develop in a purely capitalist vacuum, however, and Rampson says local zoning ordinances, though slow to change and sometimes slow to have an impact, do have a real influence over the kind of development that occurs here.
 
"We revamped our whole downtown zoning to try to encourage more housing development where we thought people wanted more density," she says, pointing to the recent rush of mixed-use developments as outcomes of those changes. The city's active pushing for mixed-use developments is something local employer Dug Song mentioned was integral to his company's growth, as well as to attracting future tech employees. 
 
Both new Millennial residents interviewed for this series also cited a desire to eventually buy homes here in Ann Arbor, which points to a second question regarding the Ann Arbor housing market: if they survive the rental market, is the buyer's market enterable?
 
"I think we're going to be in Michigan for the long term," says Fulton, who chose to live in Ann Arbor despite she and her partner's Detroit-based jobs. "We have talked about buying a house, but we haven't really explored that yet. We have friends who have looked though, and it's been really challenging for them to find anything affordable."
 
With 52 percent of Ann Arbor housing renter occupied, the need for affordable, desirable rental units is widespread and where that housing is located is nearly as important as what it costs. 
 
But with the elder Millennials in their early 30s, homeownership becomes the next challenge over the horizon for the sizable generation. Owner of Ann Arbor Builders Alex de Perry says the custom and semi-custom built homes his business constructs for local residents don't fit the typical "starter home" model. 
 
"The custom homes can get very expensive," he says. "If you have a lot that costs $100,000 you're at starting at a $400,000 home, and it's hard to find a good build-able lot for under $100,000."
 
The good news is on the existing home front, where there is a large number of smaller Ann Arbor homes. Built in the 1950s and 1960s they are, size-wise, more appropriate for the smaller household sizes typical of the Millennial generation. The average Ann Arbor household contains 2.15 residents, making the plentiful supply of homes in the 1,000 square foot range the right size - if young professionals find them palatable. 
 
"What people want today are glitzier bathrooms, and a two-car garage is a minimum," says De Perry. "I grew up in a house with one bathroom that everybody shared. Now, 2.5 bathrooms are a minimum." 
 
Rampson agrees there may be a disconnect in the permanent housing needs of Ann Arbor residents in the next 10 to 15 years from what is currently in the market, though she cites a greater emphasis on attached housing being a greater priority than changes in single family homes - a need De Perry himself is helping to fill with his proposed Liberty Landings condos. Even before this and the other forthcoming projects hit the books, 53.8 percent of Ann Arbor's housing options are in attached developments, including condos, townhouses and apartments. The strong demand for more indicates greater density will become a way of life for a growing majority of residents. 
 
"The nice things about Ann Arbor housing that is it has good bones, and it has transit access," says Rampson. "Even as the market changes a little bit, it seems like Ann Arbor will do okay. We've been adapting for 150-plus years."
 
Adapting is exactly what William Fulton says is needed to combat the new brain drain threat posed by the lack of housing affordability in cities that should otherwise be attracting Millennials. 
 
"What Boston needs, the experts say, is more starter homes in interesting, transit-rich locations," he writes, in a recommendation that smacks of Ann Arbor's existing, if in high demand housing stock. "If Boston can’t stop the brain drain, is there any hope for the rest of us? Yes, but it requires a concentrated effort to create compelling places to live and work -- and fast."
 
Part of that adaptation, suggests Warpehoski, should include creating more walkable cores, corridors and nodes beyond the center of downtown. 
 
"It won't all fit in the downtown. My neighborhood has a good walk store, and I do walk downtown, but much of our walk store is due to our proximity to the businesses on Stadium," he says. "We have areas with lots of businesses and lots of residential, such as the State Street corridor, but few of the other features that make for a vibrant area."
 
Because Ann Arbor has the amenities young professionals are looking for - great downtown dining and retail, entertainment, recreation and cultural opportunities - whether or not we suffer, or could suffer the consequences of brain drain hasn't seemed pressing in the past. With a new generation of student debt-laden residents looking for a place they both want to live and can afford, it seems Ann Arbor should take heed the latter qualification, especially if its burgeoning startup economy hopes to attract the best and brightest talent. 
 
After all, the median age of an Ann Arbor resident is now 28 years old. One might argue that this number is weighed down by the temporary residents brought in by the university, but another perspective might view that number as a signifier of Ann Arbor's potential. Why shouldn't that influx of young, educated adults become the next generation of permanent Ann Arbor residents, if only they can afford to?

Natalie Burg is a freelance writer, the development news editor for Concentrate and Capital Gains, and a regular contributor to Metromode.

All photos by Doug Coombe

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