Fact check: Are regulations to blame for rising Michigan house costs?

Several candidates for Michigan governor said the state’s regulatory building makes it too hard and expensive to build housing here
Michigan’s housing is less affordable than in neighboring states, but far more than regulations go into it
Local governments and the state are working to streamline regulations

TRAVERSE CITY — This month, one gubernatorial candidate after another — Democrat and Republican — used their platform at the Northern Michigan Policy Conference to bemoan the regulatory burdens they said make it too difficult and expensive to build affordable housing in Michigan.

Secretary of State Jocelyn Benson, a Democrat, lamented that it can cost $90,000 to build a house in Michigan “before you even put a brick in the ground.”

Senate Minority Leader Aric Nesbitt, a Republican, said “a lot of it is regulatory red tape and burden” that can add $95,000 to the cost of a new home.

Several candidates said Michigan loses to neighboring states because regulations are too burdensome.

No doubt, affordable housing has become an issue in Michigan’s 2026 election. It’s shaping up as a top 10 concern among the 1,300-plus readers who have participated in Bridge Listens, an ongoing, unscientific survey about campaign concerns.

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But as is often the case in campaigns, the facts can sometimes be more complicated.

The figures cited by candidates about up-front costs, for example, don’t come from Michigan but from a nationwide study conducted by the National Association of Homebuilders, which found regulations add on average $93,870 per home across the US. Bob Filka, CEO of the Michigan Association of Homebuilders, guessed Michigan’s cost would be similar but said state figures weren’t available.

And in many ways, regulations are no more cumbersome in Michigan than other states.

Here are the facts surrounding the affordable housing issue in Michigan.

Are homes less affordable in Michigan?

They can be.

Zillow’s housing market reports show the typical Michigan home in December cost $249,916, about 49% more than in January 2020, before the coronavirus pandemic.

A typical Michigan house costs less than those in Illinois or Wisconsin but more than those in Ohio or Indiana.

Michigan’s home prices are climbing slower than in neighboring states, but average residents pay a larger share of their income toward housing than in some neighboring states.

Home-Cost.com, which says it surveys homebuilders around the country, pegs Michigan’s building costs at as much as $290 per square foot, the same as Indiana and cheaper than Ohio, Illinois or Wisconsin.

The reality is, “lots of different things go into” the cost of building a home, said Ryan Coffey, an educator in land use planning at Michigan State University Extension.

Inflation, land and labor costs, the availability of contractors and local supply and demand can drive up homebuilding prices depending on where the home is being built, Coffey said.

In 2023, the most recent data from the Bureau of Labor Statistics showed that, as a share of the workforce, Michigan had more construction workers than Ohio and Illinois but fewer than Indiana or Wisconsin.

Michigan’s laborers made an average of $49,760 per year, the lowest-paid among the Great Lakes states.

Is the housing shortage any worse in Michigan?

It’s hard to say.

Methodologies for determining a shortage can vary widely, with national shortage estimates ranging from 3.7 million to 5.5 million, according to one congressional report.

In Michigan, state officials estimate the state needs 119,000 new housing units, while the National Low Income Housing Association says it’s closer to 185,000.

One way to compare states is through vacancy rates tracked by the US Census Bureau. In 2024, the most recent data says, Michigan’s vacancy rate for homeownership was 0.7%, the same as Ohio, more than Wisconsin but slightly less than Illinois or Indiana. Michigan’s rental vacancy rate was 5.7%, the highest among the Great Lakes states.

Zillow says Michigan had 31,761 units for sale in December, including more than 8,000 new listings. On a per-capita basis, that’s more than Ohio, Illinois or Wisconsin but fewer than Indiana.

As a share of total housing stock, Michigan is building fewer homes than every other Great Lakes state except Illinois, according to census data.

Does homebuilding take longer in Michigan?

“What takes a year here takes two to three months in Ohio or Indiana,” former Attorney General Mike Cox, a Republican running for governor, said in Traverse City.

Filka, of the state homebuilders group, referenced one recent Michigan housing project that took four years to complete because of all the back-and-forth with the local government.

But similar things happen in other states, and builders in Michigan, Ohio and Indiana report similar typical build times for new homes.

The Michigan Department of Licensing and Regulatory Affairs, which oversees the state building codes and does some home inspections, does its work in a timely manner, spokesperson Abby Rubley said.

She said customer service calls are answered within 20 seconds on average, for example, and 92% of building plan reviews are completed within 30 days after being assigned.

“LARA recognizes the importance of customer service, timeliness, and effectiveness in protecting people and promoting business,” Rubley said in an email to Bridge, pointing to her agency’s 2025 “Cutting Red Tape” report.

Ditto for the Michigan Department of Environment, Great Lakes and Energy, which reviews a small share of homebuilding projects affecting wetlands, lakes or streams. EGLE typically completes permits in two-thirds of the time allowed by statute, said Jerrod Sanders, director of EGLE’s Water Resources Division.

He said Michiagn is one of only two states (the other is New Jersey), where the state, as opposed to the US Army Corps of Engineers, conducts wetlands inspections, which he said “certainly is a simplified process,” he said.

No doubt, some Michigan townships only have part-time inspectors or staffers, which can make some projects take longer, said Mike Selden, director of member information services at the Michigan Townships Association. But the organization urges members to do more preparation such as examining zoning rules so they’re readier when developers come knocking.

And he said he wouldn’t call the inspection and review process unnecessary red tape.

“That’s just ensuring that the things that are being built are being built to the standards,” Selden said.

Is Michigan’s building code different from other states?

Yes, but not very, and in some ways Michigan’s code is easier for developers.

All five Great Lakes states base their codes off of similar building codes from the International Code Council. Michigan actually has fewer regulations on the books than Ohio and Illinois, according to the ICC.

Michigan currently uses a 2015 version of the residential building code, the oldest residential code among the Great Lakes states. It contains fewer energy efficiency requirements than codes in other states.

Michigan wants to update to the 2021 version, but Filka’s group has sued, saying the energy efficiency requirements in the 2021 code would drive up costs. The homebuilders want Michigan to move to the 2024 code, which Filka said has more manageable energy efficiency standards that would be less costly.

Rubley said LARA doesn’t comment on pending litigation.

Illinois has adopted the 2021 residential code, the most modern code among the five Great Lakes states.

Are local governments the problem?

“This is a problem in all states,” said Filka of the state homebuilders group.

He argued that Michigan’s layers of local government bureaucracy can drive up costs in some areas.

Michigan has 1,856 local governments excluding school districts, according to the Census Bureau, fewer than all other Great Lakes states except Indiana. Illinois has more than 2,800 local governments.

Homebuilders in all Great Lakes states would have similar experiences seeking permits from cities, villages and townships. However, Indiana and Wisconsin are considering statewide zoning reforms and Ohio this year set up a grant program to incentivize local communities to allow more density in housing.

In Michigan, the Michigan Municipal League is pushing what it calls the MI Home Program, which asks the state to provide grants to local governments that update their zoning and fund developers for the gap between what it costs to build a home and what Michiganders can actually afford, among other things.

Meanwhile, many local governments throughout the state have recognized the urgent need for housing and have streamlined their permitting process and reduced regulatory burdens to bring down costs for homebuilders, said Jennifer Rigterink, assistant director of state and federal affairs at the MML.

“I don’t think local governments are the boogeyman that they’re being made out to be,” Rigterink said.

Are other states doing things Michigan isn’t?

Yes.

Michigan has largely thrown money at the problem, for example spending $2 billion in 2024 “in the production, preservation, or purchase of more than 12,000 housing units,” according to the Michigan State Housing Development Authority.

Many advocates of streamlining housing rules say Michigan ought to follow California, which in 2021 passed a law essentially allowing multi-family housing to be built without local review and regardless of local zoning.

As a share of total housing stock, California is building more than Michigan, Ohio or Illinois, but less than Indiana or Wisconsin.

Other states, such as Texas and Oregon, have also passed zoning reforms. As a share of total housing stock, Texas is building far more than any Great Lakes state and Oregon is building more than Michigan, Ohio and Illinois but less than Indiana or Wisconsin.