Exiled from Ann Arbor – Ann Arbor Observer

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As prices soar, buyers are looking everywhere from Waterloo to Milan.

by Julie Halpert

From the June, 2021 issue

When the pandemic struck, Caroline Sloss and her husband, Rowan, were living in a brownstone duplex in Brooklyn, New York, with their two-week-old son. “Being near family seemed the safest,” Caroline says, so in March 2020, they moved to Michigan, where her parents live.

They had paid $2,875 a month in rent for their three-bedroom brownstone and presumed they could easily afford a nice home in Ann Arbor. But they’re earning less here–as a social worker at a Chelsea-based nonprofit, Caroline earns between $600 and $700 a week, and Rowan, who was laid off from his architect job, is now working in contract roles.

They found nothing in their $100,000-200,000 price range, and were shocked to find that even homes listing at up to $350,000 needed substantial work.

So they began looking elsewhere. “Anything in Ann Arbor hasn’t seemed worth it when something outside the city is far less,” Caroline says. They’re currently living in Munith, north of Jackson, in a rental property that her parents own, and looking in the Stockbridge and Waterloo areas.

Even there, she said, prices have jumped from about $150,000-$200,000 a year ago to $300,000-$400,000 now. “It boggles my mind that a family like mine, with so much privilege, can experience housing issues,” she says.

What the Slosses encountered is “a seller’s market on steroids,” says Kirk Keebler, president of the Ann Arbor Area Board of Realtors. Houses are sold “almost as soon as they hit the market,” he says, with many cash offers over the asking price. In a recent search, Keebler found only five houses in the city that were listed for under $300,000.

Realtor Nancy Steiner Bowerbank says that people’s desire for a yard and more space after being cooped up due to Covid is one of the factors fueling demand. She sees areas close to Ann Arbor like Dexter, Saline, and Brighton getting pricier as more buyers who can’t afford Ann Arbor flock there. Some are being priced

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out of those markets too, sending them even farther afield to areas like Belleville, Milan, Romulus, and Dundee, which have more modest housing stocks. “Families or individuals making less than 70K are unable to compete in the Ann Arbor area,” she says.

Realtor Tracy Rose says she’s seeing buyers getting five to twenty offers as soon as their house is listed, with many over the listing price. In April, Realtor Deb Odom Stern listed a home in Country French Estates off Zeeb Rd. for $478,000. It got eighteen offers and sold for $524,000 with no inspection, a commitment to cover the entire difference if the buyer’s lender appraised it for less, and free rent back to the sellers for several weeks. “It is like the wild, wild west out here!” Stern says.

Ann Arbor is not an anomaly. The lowest inventory on record and extremely low interest rates have fueled a hot market nationally, says Gay Cororaton, the director of housing and commercial research for the National Association of Realtors. In March, the median sales price in the Midwest was up nearly 14 percent from last year. On realtor.com, the median listing in Ann Arbor is up by 16 percent.

A perfect storm of factors has made the situation especially dire here, because for decades the number of jobs in the city has grown faster than its housing stock.

Between 1940 and 1970, Ann Arbor’s population tripled to more than 100,000. In 1965, then-city administrator Guy Larcom predicted it would hit 150,000 by 1980. Yet forty years later, it’s only recently passed 120,000.

What changed? During its postwar boom, Ann Arbor was constantly annexing land from neighboring townships. Once they were hooked up to the city’s water and sewer systems, subdivisions sprouted.

But the townships got tired of being nibbled away and started fighting annexation requests. Karen Hart, the city’s planning director from 1992 to 2004, explains that, after a series of boundary disputes, Ann Arbor entered into agreements with the townships that fixed its ultimate limits, roughly coinciding with the freeway ring. The townships agreed not to contest annexation of property within those boundaries, and the city agreed not to try to push beyond them.

Most “township islands” have since been annexed. Of those that were vacant, almost all have been developed–but lately, instead of single-family subdivisions, they’ve typically been filled with condos and apartments, which spread high land costs among more residents.

That’s what happened a few years back to the former Nixon farm on the north side, and what’s being proposed for the city’s last remaining large undeveloped site. The Village of Ann Arbor, off Pontiac Tr., would have nearly 500 apartments and condos, but just forty-five single-family homes.

Andrea Brown, executive director of the Michigan Association of Planning and an Ann Arbor resident, says that, in addition to a lack of land, “There’s the issue of nimbyism”–the “not in my backyard” forces that have often blocked or shrunk proposed developments in the city.

Brown thinks Ann Arbor could take a cue from Grand Rapids, which has modified its zoning and other regulations to allow for more dense housing. If a permit applicant meets certain criteria, projects there can proceed without having to get approval from the planning commission and city council.

Ann Arbor’s current council is more change-positive than the last, and persistent developers can still find pockets to fill in–city planner Christopher Cheng says that national builder Toll Brothers is working on a deal to develop part of Concordia University’s property off Earhart Rd. But the city will never again grow the way it did after World War II.

Toll Brothers’ only current single-family subdivision in the area, Trailwoods of Ann Arbor, is in Scio Township. Homes there start at 2,100 square feet and range from the mid-$500,000s to the upper $600,000s. Company spokesperson Andrea Meck says “the community has seen high demand in the past few months, with only a few to-be-built home sites left.”

City councilmember Julie Grand said housing affordability is a problem that weighs on her every day. She says her goal is to make it so that people who work here can live here if they choose to do so and provide housing for that “missing middle.” She and other members of council’s currently dominant “activist” coalition are asking themselves, “How do we make it easier to build the housing that we need?”

Since regaining a council majority last November, they’ve been working on rules that will make it easier to add accessory dwelling units to existing homes and zoning changes to allow higher, denser development along transit corridors like State and Eisenhower. But Grand admits that the city has “limited control over what happens in the private sector, especially as it relates to single-family development.”

Her council colleague Lisa Disch says that doesn’t mean government is helpless. She says that increasing the supply of rental housing may eventually slow the rate at which prices rise for more modest single-family homes. And she thinks that the new multifamily dwellings council wants to encourage along transit corridors will appeal to some families.

“We shouldn’t underestimate people’s appetite for different styles of housing for high-rises, as long as they have enough bedrooms,” Disch says. “Not every generation coming up wants to own their own home.”

Grand adds that mixed-use developments there would also be less car dependent. “We don’t spend as much time thinking about single-family homes,” she says, “because when it comes to the affordable housing crisis, there are important reasons for focusing on rental housing.”

Kirk Westphal, a former city councilmember who served on the planning commission, agrees with the majority’s approach. He said that absent a massive federal public housing initiative, “we have to rely on expanding the availability of market-rate units” to temper rising housing prices. The cause of the soaring prices, he says, is clear. “Study after study shows it is a matter of constrained supply.”

Current councilmember Kathy Griswold ousted Westphal in a 2018 primary–with voters angry about the Nixon farm development providing the winning margin. Griswold says she doubts the city can increase supply enough to make a difference. In Ann Arbor, she says, “your demand is always going to outpace your supply.”

Griswold has lived in Ann Arbor since she was in high school, and remembers in 1967 stores and restaurants weren’t open on Sundays. “It was a very quiet town compared to what it is today.”

While she believes the city has changed for the better, Griswold doesn’t want Ann Arbor to turn into another Austin, where her son lives and where housing costs are similarly spiraling out of control. She knows service workers and young people who have moved to Ypsilanti and Belleville, which she says have “hundreds” of very moderately priced homes. “We can’t just look at the positives without looking at some of the negatives,” she says.

Local property manager Tom Stulberg agrees with Griswold. He says that trying to bring down prices by increasing supply “isn’t going to work without many tens of thousands of units.” But with demand for high-end housing surging, “we’re just not going to have builders and developers build for a lower end,” he says. “It’s a very segmented market, and unless you add supply to the market segment you’re trying to impact, you’re not going to have an impact at all.”

Jennifer Hall, executive director of the Ann Arbor Housing Commission, understands that it can feel like development isn’t helping, since demand continues to exceed new supply. However, “it would be much worse and cause further economic segregation if supply does not increase while demand is increasing,” she says.

City planning manager Brett Lenart agrees that new housing will cost more, but says “that’s part of the long game towards getting to a more balanced market.”

Ryan Tobias is doing his part. In January, council approved his plan to replace a small shopping center on Packard with seventy-two apartments and two retail spaces.

That was exciting news to Naomi Goldberg, who lives a block away with her wife and child. But Goldberg says she wouldn’t choose to live in Tobias’s building herself.

Goldberg’s family moved here in August 2017 from a condo in the Hyde Park neighborhood in Chicago. She says they would have gladly bought a condo downtown, but prices there rivaled single-family homes in expensive Chicago neighborhoods, and she saw no point in buying farther out: “Part of what we liked about condo living, and would want here in A2 would be walkability and being downtown,” she says. They ended up buying a single-family home for $479,000.

Colleen Seifert also doubts that many people will make that trade-off. The city is “prioritizing transit, but I’m not sure if people are prioritizing that in their own housing decisions,” she says. Seifert believes the city’s focus on multi-unit dwellings “is headed in the wrong direction for making single-family homes in A2 affordable.”

A college professor who is married with one child, Seifert paid roughly $200,000 for a house in the Easy St. neighborhood thirteen years ago. She’s appreciated living in a diverse area where everyone knows one another and says younger people want the same.

None of the graduate students she knows lives in high-rises. “They all have dogs, cars, and want a quiet natural space outside,” Seifert says. “And they want to build relationships and community in their neighborhood.”

Realtor Jean Wedemeyer agrees that while young professionals and retirees are interested in condos, most families with young children still crave single-family homes. To find them, though, many are having to look outside Ann Arbor.

Builder Craig Welch, president of Wexford Homes, says most new construction is happening in places such as Pittsfield, Scio, and York townships. There’s more open land there, and construction costs less. While new single-family homes in Ann Arbor run about $300 per square foot, Welch says, in the townships it’s in the $225-$275 range. For a 2,500-square-foot home, a $50-per-square-foot difference adds up to $125,000.

Taxes, too, are lower outside the city. Wedemeyer points out that a $200,000 Ann Arbor home with a taxable value of $100,000 will pay $5,046 a year, while a similarly priced home in Pittsfield Township with Ann Arbor schools pays $4,048–and $3,842 a year for Saline schools. In Lodi Township, with Saline schools, a $200,000 home would pay $3,402 a year, $1,600 less than Ann Arbor. “That’s real money to people,” she says.

Yet Lodi isn’t sprouting new subdivisions and doesn’t plan to. Supervisor Jan Godek says most of the township is zoned for agriculture, with a 2-acre lot minimum for new homes–if the heavy soil will accept a septic system. According to the Southeastern Michigan Council of Governments, Lodi has issued just forty permits for single-family homes in the last five years, compared to 192 in Ann Arbor–and 449 in neighboring Pittsfield Township.

Pittsfield supervisor Mandy Grewal says her township is serving that “missing middle” seeking mid-range, single-family homes. Unlike Lodi, much of Pittsfield has water and sewer service, which permits denser development.

And Ann Arbor’s exiles aren’t stopping at Pittsfield. In the county’s southeast corner, “I definitely feel we are getting extra buyers in Milan due to the hot Ann Arbor market,” says Realtor Ed Kolar, who’s also the city’s mayor pro tem. “One home can bring up to thirty or forty showings, with up to twenty offers … Homes are selling in a few days at prices exceeding list price almost every time.”

Like Ann Arbor, Milan is geographically constrained, but remaining spaces in its existing subdivisions are filling fast.

Keebler, the Board of Realtors president, says new arrivals to the area “are very interested in Ann Arbor, until the market realities hit. Then they might pivot to plan B” and look in areas like Canton, Plymouth, Dexter, or Saline.

He’s done that himself. Keebler, fifty-two, was raised in Ann Arbor but says his father, who worked for the city’s water department, could never have afforded to live here today. Keebler recently traded a condo in the Lakewood school district for a home in Manchester.

Savannah Weidner and Ethan Warren hope there’s still a home for them. Weidner, a physician assistant at Michigan Medicine, and Warren, a financial advisor, both twenty-eight, were married last July.

Born and raised in Ann Arbor, they’re eager to buy a house in the city so they can send their future children to Ann Arbor schools and Weidner can walk or bike to work. And they would prefer that the $1,800 a month they pay in rent for a 1,200-square-foot house on Packard in Ann Arbor instead go towards a mortgage.

They’re ideally looking to pay between $400,000 and $410,000. Since they started their search in April, they’ve been outbid four times.

The first house, on Bruce St. in the Haisley school neighborhood, was just under 1,700 square feet. It was listed at $419,000; they offered $425,000 and offered to top the next highest offer by $2,000. But they couldn’t top a buyer who came in with a $450,000 offer.

“You just get your heart crushed,” says Weidner. But they’ve decided not to renew their rental agreement, which is up in August, so they’re hopeful they’ll find a house by then.

“We wouldn’t want to be newlyweds living with our parents,” Weidner says.     (end of article)

 



 




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