Q&A: Michigan housing director says tariffs, ‘uncertainty’ posing challenges

• Tariffs and economic uncertainty are slowing housing projects and increasing costs, hindering Michigan's affordable housing goals
• That’s according to the state’s top housing official, Amy Hovey, who says areas like Detroit and Kalamazoo are bright spots for housing
• To combat lag, Hovey wants streamlined federal rules and sustained funding to boost housing development and meet statewide goals

LANSING — Economic uncertainty, tariffs and potential federal funding cuts are posing unexpected challenges as Michigan seeks to add affordable housing for residents, the state’s top housing official told Bridge Michigan in a recent interview. 

Amy Hovey, executive director and CEO of the Michigan State Housing Development Authority, has overseen the state’s housing arm since January 2023 — the first woman in state history to do so.

Under her tenure, the state has implemented a number of new initiatives, including a program aimed at increasing affordable housing for those on tribal lands and a mortgage rate relief program for first-time homebuyers, among other things. 

While Michigan has grown its affordable housing stock in recent years, one of the biggest challenges facing the state in its race to meet a self-imposed housing stock goal “is still the uncertainty,” Hovey said. 

“All of this talk at the federal government — and quite honestly, even at the state government — uncertainty leads to people not wanting to be involved in the development of housing,” she said, noting that housing “takes a long time to get put together.”

In an effort to expedite that housing push, Gov. Gretchen Whitmer set a goal for the state to build or rehabilitate 75,000 homes by September 2026. When it became clear the housing development authority would exceed that goal, state officials raised the new threshold to 115,000 units.

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The state is still working to try and meet that goal, Hovey said, but fluctuations in tariff policy are causing projects to stall as builders reevaluate the costs of items such as lumber and aluminum. 

And when work stops, she added, that can cause overall project costs to increase — suddenly making a project that had enough money to finish a build come in over budget, potentially stymieing the effort entirely.

“We need bankers at the table. We need folks that are willing to take the time to put these developments together,” Hovey said. “If they think the funding is not going to be there, they're not willing to come to the table and get it done. … And so people are just uncertain, and they’re watching, and they’re not moving as quickly as we need them to move.”

Bridge sat down with Hovey earlier this month at the Building Michigan Communities Conference to talk about her plans for still meeting the state’s affordable housing goals in the face of economic turbulence. 

Read more of the interview below:

Bridge: Your agency is hoping to tackle the state’s affordable housing crisis, setting a goal of creating or repairing 115,000 units by September 2026. You've already surpassed 68,500 units to date, so where in the state is most of that work ongoing?

Hovey: We're seeing a lot of our funding specifically being spent in southeast Michigan, which is no surprise for a couple reasons. 

One, we have a bulk of our population there. But the city of Detroit — and even in Oakland County, beginning now too — are really more focused on the housing, or development of housing, so they're putting some of their own funds, which help us leverage additional money and get more projects completed.

We're seeing the same thing in the Kalamazoo area, with their housing trust fund out of the county there. We're starting to see an uptick here in Ingham County, which has been slow for a long time. … And so in communities where there are more players interested in the development of housing, and local governments are willing to come to the table with some additional incentives to kind of close that gap, is where we're really seeing a lot of housing development. 

Bridge: Earlier this month, you said MSHDA had the “most productive year ever” in 2024, investing $2.16 billion into producing and preserving 12,425 housing units across the state. Yet, in 2022, the authority spent $756 million to produce or preserve just over 6,100 units — almost tripling the cost for less than half of the housing. Why is that?

Hovey: There’s a couple of reasons for that.

One is, we're putting a lot more money into our single family mortgage (program). And so, every time we put a dollar into a mortgage, we're paying for that full mortgage amount. 

While we might be only putting in $100,000 into the creation of a rental — or even a single family home for development subsidy — when we're giving somebody a mortgage, that's going to be $200,000 or $220,000, right? So, that production has skyrocketed because of the down payment assistance (program), and our partnership with the Federal Home Loan Bank.

Bridge: Do tariffs and the surrounding economic uncertainty play into this? 

Hovey: These threats of tariffs honestly haven't helped. 

We're seeing funding come in now — or proposals coming in now — that are high even before the tariffs hit. We all know markets react to rumors, and what they think are going to happen, not just what happens. So, we've had an increase in the cost of getting housing developed, too.

Bridge: Congress is currently reviewing the US Department of Housing and Urban Development’s (HUD) annual budget and suggesting some serious cuts — $32.9 billion — to the agency. What kind of impact could that have on Michigan?

Hovey: So far, we have all the funding we've had in the past. We haven't seen any cuts right now, so … we're happy for that. We're continuing to put money out at the same pace that we did last year. 

We are taking advantage of this time where we know that they're looking to try to make the federal government more efficient. Well, we've been working with these programs for years — and we have ideas on how they can make them more efficient. So, we have been participating in putting together lists of changes to the existing programs to help remove barriers that will drive down the cost of those.

Bridge: Could you give me some examples of what you mean by “remove barriers?”

Hovey: If we look at either the Community Development Block Grant or home programs, right? They have the same level of requirements often for a $50 million project as they do for a $30,000 rehab to a home when you're looking at doing these full environmental reviews and those types of things. 

And what we really want to do is say, “Can we help the policies make sense?” A house that's getting a new roof doesn't need the same environmental reviews as a new construction of a multi family development on a brownfield site. 

So, there are always nuances like that … We still want to protect families and the environment, but let's have those policies make sense.

Also, allowing us to administer some of the reviews that HUD would have done in the past, that sometimes takes a lot longer to get done … We could have a little bit more control over that so we have control over the time frame for some of the reviews we do. Like, subsidy layering reviews — to make sure that we're not giving too much money to a development — which has always been a concern of state lawmakers as well. 

Well, we actually do reviews of that. Sometimes they're done at the federal government as well. Well, if we're already doing it at the state level, can they just pass that along to us? We'll use their formulas, but we'll get it done, and we're not going to be waiting then on the time it often takes for the federal government to be responsive. … We know, in this environment, time is equal to money in getting housing done.

Bridge: So, to that end, what — if anything — can the state government do at this time to help Michigan meet its affordable housing goals? 

Hovey: A couple of things: One is continuing to fund the Housing and Community Development Fund. That $50 million … really helps us leverage additional funds from the federal government and the private sector. We really need that fund. 

We've been trying for the last couple of years for them to give more flexibility with how we use those dollars, which will allow us to be responsive to the local needs across the state. 

That's our highest priority right now for them to get done, and then any additional flexible funds continuing to fund the Employer-Assisted Housing Fund — which leverages dollar for dollar private investment into the development of housing or critical housing programs — is also really key.