The Price of Prosperity
Western Washtenaw confronts soaring housing costs.
by Julie Halpert
Published in April, 2019
Thomas Bentley wanted to buy a home within twelve miles of where he works in Chelsea. But after a three-month search, he hasn't found any viable options in his $220,000-to-$240,000 price range. "In Dexter, you're looking at a one-thousand-square-foot fixer-upper" for that price, he says.
Bentley is not alone. Last year, Duane and Katherine Quinn bid $220,000 on a 1,200-square-foot Chelsea condo that was listed at $218,000. They didn't get it--another buyer paid $230,000.
As housing prices continue to spiral upward in Ann Arbor, "the surrounding communities are experiencing the spillover from the economic growth" there, says Lan Deng, an associate professor of urban and regional planning at the University of Michigan.
According to the Ann Arbor Area Board of Realtors Multi Listing Service, the average price of a 2,000-square-foot home in Chelsea last year was $327,000, up a whopping 39 percent from five years earlier. In Dexter, a house that size averaged $351,000, a 33 percent increase. Saline saw an increase of 30 percent, to $354,000.
That's squeezing out young people in the market for their first home, like Bentley; empty nesters like the Quinns; and working people who "find that their salaries are not keeping up with the increased cost of housing," says Wendy Carty-Saxon, director of real estate development for nonprofit Avalon Housing.
Past government efforts to promote affordable housing, Deng notes, have usually focused on the poorest households. "The assumption is that working class and people with decent jobs should be able to find housing," she says. But "now the issue is: where are they able to live?"
Bentley has a good job in law enforcement (he'd rather not say where). Yet he says less than a handful of his fellow employees can afford to live in Chelsea. Instead, he says, they chose to purchase homes in less expensive towns like Jackson.
That's also true at Jiffy Mix, the city's largest private employer. Owner Howdy Holmes says only twenty-six of his 300 employees live locally.
Most commute from towns outside Washtenaw County with less pricey real estate--like Jackson, Stockbridge, or Grass Lake.
Manchester falls just inside Bentley's twelve-mile radius. But while it's considerably more affordable than Chelsea or Dexter, he didn't see anything he wanted there. Rather than making a longer commute, he's chosen to stay in the 900-square-foot condo he rents for $840 per month.
"I would love to find something" to buy, he says "but it's not out there."
Several factors contribute to the squeeze: job growth; an influx of young families lured by strong school districts and small-town quality of life; and limited new construction.
Tracy Rose, a member of the Ann Arbor Board of Realtors whose territory includes western Washtenaw, says she's seen buyers routinely bidding $20,000 over the asking price, sometimes with cash offers, on homes in the $400,000 range. "We have a critical housing shortage," she says.
Options are limited, too. Chelsea's housing stock is almost entirely single-family homes: rentals make up only 3 percent. That makes it "hard to keep a well-rounded, balanced, growing, thriving community," state rep Donna Lasinski told a housing diversity forum there in January.
"It's such a huge issue," says Chelsea city councilmember Jane Pacheco, who convened the forum. Lasinski says it launched an important discussion on possible solutions, like rezoning, allowing "accessory dwelling units" in existing homes or garages, and building "tiny houses" on small lots.
One of the first things Chelsea mayor Melissa Johnson did when she took office in 2017 was to establish a Housing Research Advisory Commission. Its report, issued in November, found that an affordable rent for someone earning Michigan's minimum wage would be $481 per month, while the fair-market monthly rent for a one-bedroom apartment is $687. Johnson points out that Chelsea is largely built out, so barring expanding the city's boundaries, any new housing will need to be redevelopment. Vince Elie, who chairs the commission, says they're looking at more flexible zoning as one possibility.
Johnson points to one success story: a recent rehab of the Sharon Ann Apartments, which Avalon Housing purchased in 2017. Working with Faith in Action, a Chelsea social service agency, Avalon developed and renovated seventeen units for very-low-income residents.
Avalon also has a project in the works in Dexter: In January, the city approved its purchase of a two-acre parcel on Dan Hoey Rd., where it will build roughly two dozen low-income units.
Teresa Gillotti, director of the Washtenaw County's Office of Community and Economic Development, calls the Dexter development a model that other community leaders could learn from. But it doesn't help what Pacheco calls the "missing middle," a group that includes both millennials and seniors.
Mackenzie Pfeiffer, senior services coordinator at the Chelsea Senior Center, says many seniors want to move from rural areas to town to be closer to services. Yet they struggle to find a rental there for under $1,000 a month. James Lippens, president of the Dexter Area Chamber of Commerce, said there's no rental available in Dexter for less than $1,500.
"If you're a young professional, are fresh out of school, or are downsizing, you don't have options," says Dexter city councilmember Zach Michels. Late last year, council approved his plan for a housing task force to inventory existing stock, identify needs, and learn what other communities are doing.
Saline is looking at the problem, too. "Expanding our affordable housing stock is a personal goal for me, and it's shared by our city leadership and city council," says mayor Brian Marl. He'd like more projects like EHM's Mill Pond Manor, whose forty-seven apartments accept federal Section 8 vouchers. With 142 people on the waiting list, manager Belinda Booker says, there's an average wait of two years to get in. Marl is considering the possibility of expanding the borders of Saline, annexing property for affordable residential development.
Some new homes are being built in western Washtenaw, but few of them are cheap--a building site alone can go for $50,000, says Dexter Township supervisor Harley Rider. "Developers can sell $400,000 houses just as fast as they can build them," he adds. But people who need affordable housing, he says, need to be close to public transport and places of employment, which the township lacks.
"Rural communities aren't suited for that at all," agrees Marc Keezer, Lyndon Township's supervisor. Keezer notes that Lyndon is working on an ordinance that would allow for an accessory unit under 1,000 square feet on most residential properties, with a special use permit. That would "allow for multigenerational living, allow the aging residential population to age in place, and also provide more affordable workforce housing opportunities," he says.
But Ann Arbor's experience with ADUs isn't encouraging. The city's 2016 ordinance was hemmed in with so many rules that as of last summer, the Ann Arbor News reported, not a single one had been built.
"Part of the reason we're not building enough homes is zoning restrictions," says Lou Glazer, president of pro-growth think tank Michigan Future Inc. "Prices are going up in places where you have more demand. The only way to fix that is more supply."
He calls the idea that rural townships can do nothing about affordable housing "malarkey." While the very poor need mass transit, he says, working-class people have cars.
But the townships value their rural atmosphere--they don't want the high-density apartments, condos, or subdivisions needed to significantly increase the housing supply. With some prodding from the state, though, they are permitting another affordable option: manufactured housing.
That turned out to be the answer for the Quinns, the couple who lost the bidding war on the Chelsea condo. They had a home in Grass Lake, but wanted to be closer to Katherine's job at St. Joseph Mercy-Chelsea. (Duane operates Quinn Tax Service from home.) They ended up just outside the Chelsea city limits in Sylvan Crossing, a manufactured home community in Sylvan Township.
They paid $76,000 for their 1,620-square-foot home. They added another $3,200 for an attached garage, upgraded the standard appliances to stainless steel, and plan to build a deck this spring. Even so, Duane says, "it's a heck of a lot lower than a stand-alone home." They're paying $542 a month on a twenty-five-year loan, and $485 per month in lot fees.
Because tenants in rental communities like Sylvan Crossing don't own any land, their homes lose value rather than appreciate. But Duane says they're not worried: "We didn't buy it for an investment, but for a place we can stay at a reasonable cost."
Property manager Patty Pappas says Sylvan Crossing's residents include retirees, young families, and University of Michigan employees.
Kevin Shaughnessy, managing partner of owner Four Leaf Properties, says demand is high: only two of the 137 homes in Sylvan Crossing's first phase are currently for sale. Discussions are now getting underway with Sylvan Township to add 127 homes in phase II. Sylvan township clerk Kathleen Kennedy points out that if Sylvan Crossing is fully built out--a third phase would add another eighty-seven homes--it will account for 20 percent of the township's residences.
In Scio Farms, a manufactured housing community off Jackson Rd. in Scio Township, a new 1,500-square-foot, three-bedroom home costs $77,000, plus $600 to $700 per month in rental fees. Older homes can be had in the $30,000 to $40,000 range. John McLaren, president and COO of owner Sun Communities, says the 913 sites are nearly 100 percent occupied: "We can't keep up with the demand."
Higher-income homeowners often are wary of manufactured housing, but local governments can't ban it--Michigan law forbids "exclusionary zoning." Governments can, however, choose where manufactured housing goes, as Sylvan Township did when it placed Sylvan Crossing adjacent to the city of Chelsea.
Saline Township did the same, placing the 288-home River Ridge at the border of the city of Saline. Saline itself has the Saline Mobile Home Park on Maple Rd. It's smaller than Sylvan Crossing and Scio Farms, with just eighty-six older "single wide" units.
But the Saline Mobile Home Park may also have a foot in the future: according to its website, "tiny houses" are welcome there.
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