Housing pros answer the question: Are these places really affordable?

A Way Home — Housing Solutions: This story is part of Southwest Michigan Second Wave’s series on solutions to homelessness and ways to increase affordable housing. It is made possible by a coalition of funders, including Kalamazoo County, the ENNA Foundation, and Kalamazoo County Land Bank.

KALAMAZOO, MI — Is housing affordable in Southwest Michigan?

The answer appears to depend on who you ask and how much you make.

“Most people, when they see the word ‘affordable,’ they immediately think ‘Low-income/Subsidized.’ And that’s not the fact,” says Judy Lowery, founder of Kalamazoo Together for the Unhoused.

People most often picture housing that almost anyone could rent or buy, she says. “Call it what it is — low-income housing. The problem is that we don’t have low-income housing.”

“That always gets people tripped up. ‘What’s ‘affordable?’” agrees Kalamazoo County Housing Director Mary Balkema.  For people who are at 30 percent of the Area Median Income for Kalamazoo County, a lot of new housing developments remain unaffordable. AMI represents the halfway point between the highest and lowest earnings in a county. A single person who makes $20,130 per year or a four-person household that has annual earnings of $28,740 are considered 30 percent of AMI in Kalamazoo County. So they have very little income to cover their rent, she explains.

Lowery suggests that developers and municipalities stop calling housing affordable, unless it truly is. Affordable housing is a benchmark term, defined as housing that costs no more than 30 percent of the annual income of a person or family.

“Making housing affordable in our state is making it affordable for everyone — a housing situation where their cost does not exceed 30 percent of their income,” says Amy Hovey, executive director of the Michigan State Housing Development Authority.

Is that doable?

“Yes,” Hovey says. It’s possible for most people, but not for people who have very low earnings.

“You need the government to subsidize that housing,” she says, “because housing cannot be developed for somebody that is affordable for people at 30 percent of AMI, whether it’s a rental or it’s a home-ownership unit.”

Financing the construction and ongoing maintenance of low-income housing remains a challenge, professionals say. Kalamazoo Mayor David Anderson says it is a problem that basically asks how do we create housing for someone with zero income. He says you’d have to create housing developments where people pay zero rent. 

“That’s not going to get done without a vast, vast contribution of resources to build it,” he says. “But then you need to cover your operating expenses. Then rent (that a low-income person would pay) is not sufficient to cover everyday, ongoing operating expenses.”

Anderson, who is also director of housing and facilities at Integrated Services of Kalamazoo, says, “The only way to create affordable housing for people at the very lowest end of the category is to provide them with rent vouchers so that the landlord can still get rent and the tenant’s rent is subsidized.”

A 5-year pilot program for locally managed vouchers to support low-income and vulnerable populations is a part of the “Keys to Kalamazoo,” a recently adopted plan put forward by Kalamazoo County and the City of Kalamazoo to “unlock the future of affordable housing in Kalamazoo County.” The vouchers will complement federal voucher programs to meet unmet needs. The locally administered vouchers also will allow the county to set the value of the vouchers so that they can be used based on the county-wide market rate. 

Helping more people land good-paying jobs is another consideration. Hovey says, “In our state, incomes have been ranging fairly flat while the cost of housing has just quickly escalated over the last five to 10 years. We know that over 50 percent of the people who rent in our state are paying well over 30 percent of their income for the cost of renting. And we know that home-ownership is out of reach for more and more Michigan families.”

She says the average cost of a home listed for sale in Michigan is well over $350,000, while the average Michigan family can only afford about $175,000. There is also a shortage of homes available to rent or buy, and that is driving up the cost. So, she says, “We’re facing a housing crisis.”

Home building dropped off after the start of the 2008-2010 economic recession, and it has taken the state a long time to recover from that as well as from a shortage in the ranks of skilled laborers, Hovey says. Many shifted into other jobs during the slowdown. Others left the state to find work. But she says there are a lot of other factors that contribute to the housing shortage. Among them is the state’s aging population. 

One or two older people remain in homes that once housed them as well as all their children. With fewer people in many housing units, more housing is needed. There are more short-term rentals in the state, meaning properties that once served as rental homes for working families are now being used as Airbnb or vacation rentals. That leaves fewer dwellings for people who live and work in Michigan. And a lot of people who live in Michigan also have second homes here.

Of the housing shortage, Hovey says, “Sometimes it’s just a mismatch of where our housing units are versus where we’re seeing (population). Or the type of housing is unavailable where people want it, or with the amenities that people want.”

The shortage also means there is less opportunity for first-time and moderate-income families to become homeowners as fewer veteran homeowners step up to buy larger or more expensive houses. 

“We’re not seeing a lot of people moving probably because mortgage interest rates are increasing,” Hovey says. Speaking of those with 30-year fixed-rate mortgages, she says, “They now have mortgages that are (at interest rates of) 2 to 3 percent. If they sell their house and buy a new house, their new mortgage will likely be around 6 percent or higher. … So a lot of times it’s not economically favorable for them to move at this point.”

But, she says, “People are still building housing at different levels.” 

Balkema says there are several “workforce housing” developments being built in Kalamazoo that should be affordable for many working people. Workforce housing is living space that can be rented or purchased by households with annual earnings between 60 percent and 120 percent of the AMI. Sixty percent of AMI for a one-person household in Kalamazoo County is an income of about $40,280. For a family of four, it is $57,480. Since April of last year, 120 percent of AMI is $80,520 for a one-person household. For a family of four, it is $114,960. 

As developers seek funding for housing projects through Kalamazoo County’s “Homes for All” Housing Millage, Balkema says she routinely urges them to include some units for people of limited means. While only one or two units may be affordable to low-income people, she says it’s important to keep trying. 

“I really have to squeeze people to put a 30-percenter in there,” she says. Why? “Because they’re just so hard to find,” she says. 

“We have folks who say, ‘Mary, I need a unit, and I just can’t find it,” she says. “A 30-percenter can afford about $300 a month (after taxes and other costs). Well, you know there’s nowhere to rent for $300 a month. You know that has to have a deep subsidy. And the units are super hard (to develop). So we want them in every place. But to get them is hard.”

Hovey says the state is incentivizing the development of housing that is affordable for people at 120 percent or below of Area Median Income because there is demand for that now. It has loans, grants, and tax credits for the development of multi-family and single-family homes. But it also has a rental assistance program to help pay the rent for families at very low income levels. And it has a down-payment assistance program to help people who are trying to buy their first home.

Lowery, whose organization advocates for the unhoused, says she would like to see Kalamazoo:

• Challenge federal, state, and local sources to require that 30 percent of the housing units that receive government funding be affordable for low-income earners. “They are already giving people money to build,” she says. “Make it a requirement that 30 percent of those units are low-income. Give them tax breaks.”

• Build low-income housing as a village to give its occupants a sense of community, and to provide wrap-around services that help new owners learn how to do such things as budget their money.

• Monitor the practices of landlords who charge high prices for small living spaces. “They prey on the poor,” Lowery says. Although she would not name them, she says there are landlords who charge $600 to $800 per month for boarding house rooms.

Asked if Kalamazoo County is on track to catch up with the need for more housing here, as determined in a 2022 study by the W.E. Upjohn Institute for Employment Research, Balkema says, “We started with (being) 7,500 units short of all housing types. Then our study was updated last year. It was 8,000. And to that, we’ve built over 2,000. So we’re building all types of housing. Are we building it fast enough for the lowest of the low AMI? That could be up for disagreement for sure. But I think we’re making progress toward the number. 

She says, “We have over 800 units going up right now. We’d better be making progress, otherwise we’re doing a lot of work in vain.”

For more on housing affordability in Kalamazoo, please click here.