Michigan lawmakers are currently considering the Housing Readiness Package, a series of bills aimed at making housing more affordable by expanding property rights, cutting unnecessary government red tape, and allowing the free market to better respond to the state’s housing needs.

One of the bills included in the package is HB 5531, legislation to help stimulate the creation of more housing by reducing burdensome regulatory barriers, namely, unnecessary studies that stall necessary projects.

Mandating impact studies and plan resubmissions drives up the cost of construction and provides an opportunity to block further development. These additional regulatory costs can increase a home’s cost by over $90,000, much of it borne by the developer and then passed onto consumers. When a housing project is stalled, the prices of key inputs like lumber, steel, and gravel do not freeze, as inflation and supply chain disruptions can continue to raise prices. Quantitatively, a four-month delay can increase housing costs by $20,460 per unit. HB 5531 addresses these high costs by barring local governments from requiring additional studies or documents after an initial site plan approval. Even if there is a material change to the project, the local government cannot throw more requirements merely to stall the development. By reducing the power of governments to impede housing, developers are less cost-burdened, which translates into cheaper homes and apartments for consumers.

Not only will these reforms reduce costs, but they will also reduce uncertainty. The current Michigan regulatory landscape is a patchwork of local burdens imposed by localities, often with no firm deadlines for decisions. This creates more uncertainty, as local regulators can delay site plans and keep developers in process purgatory. This uncertainty makes it harder to secure financing and increases legal expenses and redesign costs. HB 5531 fixes this by mandating that localities issue a decision on a site plan submission within 60 days of the submission. Firms want certainty regarding project approval, and having clear timelines can help smooth out financing and bring more developers into the market, better enabling the supply of housing to increase.

There are two paths Michigan can follow. It can continue down the path of burdensome regulations driving up development costs and delaying new housing, or, it can follow in the lead of states like Texas and Florida which have streamlined permitting and reduced barriers to new construction, helping both rank among the top states for new housing construction per capita. The Housing Readiness Package, and HB 5531 as a part of it, will help to put Michigan on the latter path.