In Lansing, the issue of affordable housing a ‘two-headed monster’

Lansing has long been touted as an affordable place to live. In 2018, it was listed as the nation’s best affordable city by Livability.com, which cited the average price of rent at the time as $734.

Today, the city remains below the average cost of living elsewhere in the U.S. and Michigan, but the average rental price in Lansing has risen to nearly $1,000.

Local landlords like David Sheets have seen that phenomenon unfold firsthand.

“What used to be around $800 to rent a three or four-bedroom house now costs $1,200, and that’s happened in the last few years,” said Sheets, once widely known as Discount Dave from ads for his mattress stores. “The availability is just not there. People will wait for months to find a place.”

Of the 120 properties he owns and rents out in Greater Lansing, Sheets said he doesn’t have a single unit available right now. He called it “the best market for what I do that I’ve ever seen.”

“If we have a vacancy, I mean, boom, it’s gone immediately. Do I understand it? No. I just deal with it, and it’s working pretty well for me,” he said.

Dave Sheets

It’s part of a national trend that has grown more prominent in recent years, and one that Michigan, in particular, has struggled with. According to Rent.com’s Jan. 2024 rent report, Michigan had the third highest increase in average rent prices in the country over the past year, at 12.47%.

Renters and activists in Lansing have taken notice. Last week, a diverse group of concerned Lansingites gathered at The Fledge, on Lansing’s east side, to discuss the state of affordable housing in the city and strategies for addressing a related spike in its homeless population.

The session’s panel featured state Rep. Emily Dievendorf, D-Lansing, City Council member Ryan Kost and Rawley Van Fossen, who became Lansing’s director of planning and development in December following five years as executive director of the Capital Area Housing Partnership.

“We know that we don’t have enough housing, that housing is not safe enough, rent is too high, full ownership is too expensive, and there are unfair obstacles to getting into renting and to stay in renting,” Dievendorf said.

The event touched on a vast array of issues related to homelessness and tenant rights, although the debate frequently circled back to one keystone issue: the need to boost the city’s available housing stock.

“If we don’t have enough roofs over the head to be offering throughout our city, we’re not going to solve homelessness in Lansing,” Van Fossen said. “The pure and easy answer is to offer permanent solutions.”

For Kost and others, one way the city could put a dent in the mismatch between supply and demand is through reducing the number of red-tagged properties in the city, thereby adding more homes to the city’s pool of safe rentals. When Kost first joined City Council early last year, the city had around 700 red-tagged homes. He said it has since fallen to “just over 500.”

Doug Fleming

But Lansing Housing Commission Executive Director Doug Fleming said in an interview that the city needs to exercise caution in pursuing this goal.

“Right now, the city will readily admit that they have hundreds of people living in red-tagged units. Why would anybody live in a unit that’s red-tagged? Because they don’t have a better alternative,” LHC’s Fleming said. “If the city went out and enforced all of those and dumped all those people on the street, what is that going to do for our homeless population?”

A more sustainable solution, he said, would be to build more new units.

“As people move out because they have options, you’ve forced the landlord to either invest in their property to keep up with the Joneses, so to speak, or sell it,” Fleming said. “If they sell, someone with the capital can hopefully go in there and buy it, fix it up and get it within code. In either case, building more new affordable housing units is actually going to help solve our red-tag problem as well.”

The city, in partnership with groups like Fleming’s LHC, has tried to capitalize on state funding designed to help bolster Michigan’s housing stock.

This includes LHC’s Riverview 220, a $22.5 million mixed-use and mixed-income apartment building made possible in part through a $1.5 million tax credit Michigan State Housing Development Authority. Slated for completion by 2026, the project planned for the south side of East Kalamazoo Street, between South Grand Avenue and Cherry Street, will have 63 units, with 56 of them designated as affordable. Fleming cited it as the first mixed development of its kind in Lansing.

The process of planning and completing these state-assisted projects can take a lot of time, however. To solve the issue, Fleming said more development is also needed in the private sector.

The problem, he said, is that rising inflation has impacted both sides of the coin. The cost to construct and ensure new buildings has increased, which has led developers to become more selective in the projects they pursue.

In that way, Fleming added, achieving greater affordability is a “two-headed monster.”

Pat Gillespie, one of Greater Lansing’s largest developers, agrees.

“The supply and demand curve is upside down right now. We have sites all over the state that we would love to go build on, but we can’t make many of the numbers pencil out to make enough economic sense for a bank to allow us to borrow,” Gillespie said.

Pat Gillespie

“In the past, you could figure out a business model,” he added. “But right now, with costs being so high and interest rates up at the mid 7% to 8% range, you put those two together, and it’s not a good combination to have a lot of explosive growth.”

These factors have led to fewer developments, particularly for low-income renters.

“You’re risking a lot to do some of these projects, so those variables can really swing on you quite a bit,” Gillespie said. “With the market like it is now, it is almost impossible to build anything residential without having it be super high end.”

This is a problem Fleming faces daily in his role with the Lansing Housing Commission, which helps facilitate the process of awarding Section 8 housing vouchers in Lansing. He said they’ll accept applications for a five-day period once every 10 months, but that the demand far outpaces the availability.

“Last year, we opened it right before Thanksgiving, and we had 2,800 people apply in five days. To get a workable number that we can get through in a timely manner, we have to lottery that down to 600,” Fleming said. “Even if you’re successful, it’s still not immediate, because you could still be 10 months away from getting a voucher.”

Riverview 220, which the Lansing Housing Commission plans to build on Grand Avenue in downtown Lansing, will be Lansing’s first mixed-used …

Again, he said, the quickest way to alleviate the pressures placed on renters is to build more units, which takes time. To do so effectively, Fleming stressed the importance of planning for the long haul.

“The conversation about affordable housing needs to be focused on what our needs will be in 2027 and in 2028,” Fleming said. “Because that’s just where we’re at with affordable housing right now, and we’re already behind.”