While the tourism and travel industry in Michigan may be booming, the housing market seems to be struggling. Resort towns throughout the state are seeing a decrease in available affordable housing, despite the success of the area’s primary economic driver.
Travel Industry Continues To Thrive
Northern Michigan counties that rely on tourism as a primary economic driver have been seeing continued economic success within those industries. Hotels continue to see guests at a high rate, with some new hotels needing to be built with ever-increasing speeds. Many hotel chains are even relying on modular construction to keep pace with the demand, with Mariott having pledged to modularly construct 13% of its North American developments in 2017.
This growth is encouraged by travel becoming easier, more affordable, and more accessible in recent years. More than three million people around the world fly safely on commercial aircraft every day, with many destined for resort towns like those in Northern Michigan. However, this booming tourist industry is not without its drawbacks.
Tourism Creating Housing Shortages?
With more people traveling to the area, there has been an increase in demand for affordable guest accommodations. This has resulted in a climate that has favored temporary, cheap housing over long-term housing for permanent residents.
In many areas in the state, homes that were once exclusively intended for long-term residents are now being converted to capitalize on the trend of renting private rooms and homes on apps and websites like AirBnB. These converted homes can contribute to an overall housing shortage, as homes that were once intended to be bought and lived in are now used as short-term rental property, reducing housing availability for permanent residents.
Additionally, the rate at which new homes are being constructed is shrinking. In order to meet the demands of the tourism industry, new home construction is slowing in favor of new guest accommodations. The Home Builders Association of Michigan suggests that in order to meet housing demands, 25,000 new homes should be constructed by the end of 2018. Unfortunately, they expect only 17,000 to be completed.
What This Could Mean For Michigan Housing
If you are lucky enough to find available housing, expect to pay heavily for it in the coming years. The average price for a single-family home in Michigan is rising in response to the lack of available housing supply, and will likely continue to do so into the future. The average price for a single-family home in one of these areas is expected to reach $277,542 by the end of this year, according to the Traverse Area Association of Realtors.
As available housing decreases, many are likely to seek alternatives to purchasing a home of their own, including long-term rentals or corporate housing. Around 40% of people who use corporate housing do so because they’re relocating; however, it’s possible this number could change as a result of housing market shifts.
As available housing continues to decrease as a result of tourism and travel industry trends, it remains uncertain what will happen to the existing housing market as a result. Michigan housing may continue to grow even more scarce unless a plan is put into place to reverse this worrying pattern.