Home Size Requirements are Choking Housing Supply in Michigan

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 5581, introduced by Representative Tom Kunse. This legislation would allow for smaller homes to be built by capping minimum dwelling size requirements at 500 square feet in metropolitan statistical areas.

Having minimum home sizes only serves to artificially keep prices elevated. These zoning laws restrict the construction of smaller homes, making housing more expensive. For example, Grand Rapids, Michigan has a minimum floor size of 750 square feet for a single-family detached dwelling. This year, the median sale price for a home in Grand Rapids is over $300,000, up 3% from last year. For financially strapped individuals, a group that includes many Michiganders, it may not be feasible to afford that kind of home. Because these laws restrict the kind of housing that can be built in local communities, they are priced out and forced out of the state. For a state once known for being the bedrock of the middle class, it is disappointing to see laws on the books that actively work against hard-working Michiganders.

HB 5581 addresses these local regulations by capping minimum area requirements. Per the legislation, local governments could only impose a minimum cap of up to 500 square feet. This helps reduce costs by enabling developers to build a wider variety of houses. Some consumers may not be able to afford a $300,000 house but would be willing to purchase a smaller, cheaper home. This benefits consumers, who gain access to cheaper homes, and developers, who now have a wider customer base. This would not stop the development of large homes; this bill would just give more flexibility to develop all kinds of housing.

Eliminating these mandates has been highly successful in other states and localities. For example, Portland, Oregon, rolled back these minimum dwelling size requirements in its Residential Infill Projects in 2021 and 2022, allowing cottage courts and other smaller homes to be built in the city. This has caused a rise in the construction of middle housing and a 6.2% fall in median listing prices. If this same drop in list prices happened in Michigan, list prices would fall by almost $18,000. Given that the actual sale prices tend to be lower as negotiations between buyers and sellers occur and the final savings just get better.

At a time when Michigan needs more housing units, governments should embrace an all-of-the-above policy for housing types. Having local zoning laws that constrain the availability of different types of housing will just price out lower and middle-class Michiganders and prevent more housing from entering the market. HB 5581 cuts through these unnecessary regulations to give Michiganders more housing options.