Is the Housing Shortage Hitting Detroit?

Credit: ZoningAtlas.org

America's Housing Affordability Crisis and Detroit: What It Means for Landlords

Let’s talk about what’s really happening with America’s affordable housing crisis and how it looks for us here in Detroit.

We’ve got a serious shortage on our hands—somewhere between 2 to 6 million homes short, depending on who you ask. Local zoning rules play a big part in this mess.

But while the rest of the country is scrambling, Detroit’s housing market is cooking up some unique opportunities for savvy landlords.

The Big Picture: America’s Housing Shortage

The National Zoning Atlas is trying to map out all the local zoning rules across America to make sense of this craziness. Think of it as a giant decoder ring for housing regulations.

This thing is a work in progress, but what they have so far is so detailed that states like Connecticut and Montana are already tweaking their policies based on what they’re learning. And yeah, California’s rules are always in the mix, because why not, right?

The gist is that we’ve underbuilt for decades, and now it’s catching up with us. Fewer homes, more people needing places to live.

What This Means for Landlords Nationwide

Here’s where it gets interesting for landlords.

When demand outstrips supply, prices go up. That’s just Economics 101.

For us, this means rental income is looking good, like really good. But don’t get too comfortable. With great power (or higher rents) comes greater scrutiny. There’s a push for affordable housing solutions, and we need to keep our ears to the ground for any regulatory changes.

Zooming In: Metro Detroit’s Housing Landscape

Now, let’s bring it home to Metro Detroit.

First, we always have to remind outsiders not to mix the suburbs of Detroit with the City of Detroit. They are two completely different markets.

Suburban Detroit

Just like the rest of the country, there’s a housing shortage in the suburbs of Metro Detroit. There’s a decent amount of new construction going on, so it may not be as bad as other parts of the country.

City of Detroit

If you’ve been around, you know Detroit’s been through its share of ups and downs. And right now, we’re facing a housing shortage, just like the rest of the country. The Detroit Housing Resource Helpline is busy, and people are struggling to find affordable places.

- The city has lots of vacant houses, but there’s no cohesive plan to renovate enough of them to make a difference - Individual investors are trying to meet the demand, but they’re often not renovating housing in the neighborhoods people want to live in.

- There are still challenges with the quality of renovations meeting the market expectations.

Rent Trends and Their Implications

Let’s talk dollars and cents. With fewer new homes being built, the existing stock is getting snapped up fast, pushing rents higher. That’s great for the bottom line in the short term, but keep an eye on the horizon. As rents climb, the pool of folks who can afford them shrinks. Higher vacancy rates could be a reality if we’re not careful.

Balancing Profit and Responsibility

We’re in a unique position here. The housing shortage gives landlords a chance to make some decent coin, but it also means we have a responsibility.

Investing in affordable housing isn’t just a good PR move—it’s good business. Reliable tenants mean steady income, and the city might even throw some financial perks your way. Stay informed about zoning changes and community initiatives, and you’ll navigate these waters just fine.

If you’re interested in investing in Detroit, drop me a line and I’d be happy to share my insights, based on 25+ years of landlording in the Motor City.