Michigan Gov. Gretchen Whitmer has signed a spate of bills aimed to boost the state’s housing supply, including a ban on large investors from buying single-family homes and reforms to zoning and building codes.
The governor late last week approved several housing measures, including a new housing tax credit, a $50 million investment in the state’s housing fund, rollbacks of some laws, and a ban on institutional homeowners that is even tougher than a recent federal ban.
The spate of new tax reforms comes as Michigan lawmakers approved a new budget for the coming fiscal year, but also as affordability is front of mind locally and nationally.
“Every Michigander deserves an affordable, quality place to call home,” Whitmer said in a statement. “I’m proud to sign these bills that cut red tape, lower housing costs, and expand our housing stock available to working families looking to put down roots.”
Michigan rolled out a statewide housing plan in 2022, and Whitmer and other lawmakers have targeted “nonsensical” building policies and rules since then. This year it set a goal of adding 115,000 new or rehabilitated units to the state’s housing stock.
The state-by-state housing affordability report card from Realtor.com® gave Michigan a C this year and last. About 73.2% of the state’s housing stock is owner-occupied, well above the national average.
State-level large investor ban
Michigan’s new investor ban targets certain large corporations that own more than 100 homes in the state. House Bill 6074, sponsored by state Rep. Karl Bohnak (R-Deerton), is an even stricter ban on institutional investor homeowners after Congress passed the 21st Century Road to Housing Act.
The federal law also restricts institutional investors in the housing market, penalizing certain companies that own more than 350 single-family homes.
Michigan’s new ban brings a civil fine of up to $25,000 for each violation. There is some controlling language for the new bill with clarity that it targets large, private institutional investors that primarily work in the single-family market.
Bohnak said there was “tremendous” bipartisan support for the package.
“This bill ensures that Michigan families are not squeezed out of the housing market by large corporations,” Bohnak said.
The Michigan Realtors® supported the legislative package overall. Its policy team pushed for the new bills as a way to increase housing supply in the state.
“Michigan Realtors applauds Governor Whitmer and the Legislature for advancing commonsense, bipartisan housing policies that remove barriers to building more homes,” Brad Ward, vice president of public policy and legal affairs at the Michigan Realtors, said in a statement. “At a time when Michigan faces a significant housing shortage, increasing inventory remains the most effective way to improve affordability and expand homeownership opportunities.”
Big changes
Lauren Strickland, executive director of Abundant Housing Michigan, tells Realtor.com the state is looking to encourage more small-scale development.
“There are many ways to tackle the housing issue we have,” Strickland says. “We know that changes to building and zoning codes can shift the narrative. It’s a foundational approach. We know we have a road ahead to tackle the housing crisis.”
The budget creates a new Michigan Housing Opportunity Tax Credit, which works in tandem with the federal Low Income Housing Tax Credit program. Michigan expects to invest $42 million in tax credits, to create 2,500 new affordable units. Developments must reserve units for renters at or below 60% of the area median income to be eligible.
About 30 other states have similar programs—affordable housing projects often require multiple funding sources to build.
Michigan is also rolling back the requirement that four-story apartment buildings have more than one staircase. Several states and federal lawmakers have also considered this idea as a way to increase the space in buildings devoted to housing and make projects easier to finance. Michigan estimates this will save 10% on the cost of four-story buildings.
That came from House Bill 5571, whose sponsor, state Rep. Stephen Wooden (D-Grand Rapids), said it will encourage construction of more small apartment developments. The state already allowed single-staircase apartment buildings of up to three stories.
Also, the budget adds $50 million to Michigan’s Housing and Community Development Fund. The state earmarked more money for affordable housing initiatives, including $5 million for permanent supportive housing.
