U-M Should Be Part of The Solution To Ann Arbor’s Affordable Housing Crisis

Affordable student housing crisis

Ann Arbor and the University of Michigan have always had a mutually supportive relationship. As corporations like Borders and Pfizer have surged and disappeared, the University has consistently created jobs and brought lasting wealth to the region. For its part, Ann Arbor is a city with a lot to offer to the talented folks that the University attracts. Great public schools, a walkable and lively downtown, a vibrant cultural scene, and beautiful neighborhoods with abundant parks help to give U-M an edge over other research universities. However, as national wealth inequality and stagnant wages creep into Washtenaw County, housing costs have risen to the point where many students, and middle-class wage earners are feeling the crunch. With housing-seekers spilling over into Ypsilanti looking for affordable options, rents in that city are soaring, segregation is deepening, and certain neighborhoods have become bedroom communities for less-affluent Ann Arborites. The relationship between U-M and Ann Arbor needs to be reevaluated in light of the changing needs of the University and the community at large. How U-M could contribute to the construction of more affordable housing to accommodate growing numbers of students and staff should be on the table as part of that discussion.

Low Vacancy, High Rent

Housing is defined as “unaffordable” when more than 30% of take-home income is spent on rent or a mortgage. If that’s not news to you, then you’re not alone. According to the 2016 Housing Affordability and Economic Equity study funded by Washtenaw County, nearly everybody in the county making less than $35,000 per year experiences unaffordable housing costs, as did 40% of those making between $35,000 and $50,000 per year. The Department of Housing and Urban Development found, since 2016, that the increase in housing costs has accelerated, while wage growth slowed, worsening the burden on those earning median incomes or less. These changes are the most pronounced in downtown Ann Arbor, where students comprise the majority of the renting population.

Despite creating space for one thousand students last year, on-campus housing barely kept up with demand. Less than 2% vacancy rates, paired with rising enrollment, caused campus housing rent to rise almost 4.5% last year alone. The University reports that 32% of students live on campus. The remaining 32,000 students flood Ann Arbor’s housing market, making up 86% of renters in downtown Ann Arbor, according to a market study by 4Ward Planning. The Department of Housing and Urban Development found that a full quarter of renters in Ann Arbor’s housing market (which includes essentially all of Washtenaw County) are students. Additionally, the University and the U-M Hospital employ 48,119 faculty and staff combined, most of whom are middle-class earners. The impact of U-M on the area’s housing market cannot be overstated.

When asked about limited housing options, Amir Baghdadchi, Senior Associate Director for U-M’s Housing Department said, “With no requirement to live on campus, many students choose to live off-campus. We, of course, think there is nothing better than a residence hall, but we understand some of the other styles of housing, like the classic house for seven or eight people, or an apartment in a specific neighborhood, can be what students value the most.”

When the student body has outgrown the number of beds on campus, and campus housing costs have risen year after year, it’s no wonder that students choose to live elsewhere. One reason that off-campus housing becomes desirable is because it is more affordable. Now, with rents climbing in student neighborhoods, students are running out of affordable places to go.

Photos by Trilby Becker. Varsity at Ann Arbor on 425 E Wahington St. offers studios, 1,2, and 4 bedroom, fully furnished luxury apartments near U-M campus for students wishing to live off campus. Ammenities include a lounge, pool, 24-hour gym and business center.

Photos by Trilby Becker. Varsity at Ann Arbor on 425 E Wahington St. offers studios, 1, 2, and 4 bedroom, fully furnished luxury apartments near U-M campus for students wishing to live off campus. A 429 sq. ft. studio apartment is $1,940/month. One bedroom in a 4-bedroom, 1,102 sq. ft. apartment is $1,149/month. Amenities include a lounge, pool, 24-hour gym and business center.

Small City, Big Inequality

A few factors set the University of Michigan apart from similarly sized schools. First, the Ann Arbor’s metro area is relatively small compared to University of Michigan’s student body. For example, as with U-M, 68% of Ohio State’s student population lives off-campus. Columbus’s housing market is an order of magnitude larger than Ann Arbor’s, however. According to the Department of Housing and Urban Development, Ohio State students comprise a mere 2% of their city’s housing market. Therefore, due to the high student to entire population ratio, every dollar U-M invests in on-campus student housing would have a far greater impact on the local housing market than a similar investment would at Ohio State in Columbus.

Ann Arbor is small compared to its local student population and students who are new to the area tend to come from far richer families than those who live in town. Ann Arbor’s median household income barely scrapes $60k per year, according to census data. The New York Times reported in 2017 that the University of Michigan’s median student household income, on the other hand, was $154k in 2015. The difference is stark. U-M students from wealthy families drive up housing costs beyond what local wages can support.

The Lives Of The Not-Rich

The housing market has responded to the influx of wealthy students by building luxury student highrises. Financial aid is meant to fill in the affordability gaps, but many students’ coverages fall short. Federal Student Aid mandates that only students who come from families making less than $25,000 a year can receive full coverage of their housing and tuition. This calculus does not take into consideration the financial burdens that make it impossible for many families earning $25,000 or more to either support their students directly or cosign their loans. These students then need to work and find cheaper rent, often far from campus, to afford attending U-M.

Zach Tingley, a senior at U-M, noted that the struggle to keep up with housing costs doesn’t stop when you receive aid. Zach was required to take a full course load in order to accept his financial aid, so the summer after his freshman year, he headed back to his hometown in Ohio to work a full-time summer job in order to save up for a security deposit for the fall. While his well-off classmates sought internships or participated in study abroad programs, Zach worried how he was going to find a place to live. Because the kind of housing that Zach could afford was far from campus and therefore less desirable, he was unable to find a subletter for the summer. He did find an internship, but all of the aid the University provided to support him during the summer went to pay the rent of his off-campus apartment that remained empty.

Zach Tingley, a senior at U-M, receives financial aid but long hours spent working to keep up with high rent and living expenses interfere with his education. Photo by Julia Moss.

Zach Tingley, a senior at U-M, receives financial aid but long hours spent working to keep up with high rent and living expenses interfere with his education. Photo by Julia Moss.

Just Move To Ypsilanti, Then

Moving out of town in search of cheaper rent is only a partial solution to the financial burdens of high Ann Arbor rents, and it causes other problems for the environment and the community at large. Ann Arbor’s Climate Action Plan indicates that emissions from commuting vehicles are responsible for nearly one quarter of all pollution in Ann Arbor, and this burden has increased as more people commute from out-of-town. Transportation costs are often the second highest expense for households according to the county’s affordability study, and costs only increase the further you live from your school or employer. Additionally, living off campus and holding down jobs to keep up with expenses comes with a steep opportunity cost in lost study time and lost ability to participate in campus life. It’s no wonder that the New York Times reported that University of Michigan students have been shown to be the least likely in the Big Ten to be economically mobile. The lack of affordable on-campus student housing perpetuates the very inequality that higher education is expected to help economically disadvantaged students overcome.

Squeezing lower income households out of Ann Arbor takes inequality to the streets. Receiving priced out people from Ann Arbor, Ypsilanti’s gentrification intensifies, “the imbalance in income, education, and opportunity…along with the socioeconomic segregation that goes with it will hamper regional economic growth potential in the area” according to Ann Arbor’s Housing Affordability and Equitability Analysis. When Ann Arbor residents move their houses, but not their jobs, to Ypsilanti, they recreate the circumstances that helped to push them out of Ann Arbor: housing prices rise to meet the demand of a population that brings home far more money than those people who both live and work in the city.

What Should We Expect From Our Public Institutions?

Councilmember Ali Ramwali of Ann Arbor’s 5ifth Ward said that “The University’s role in the current housing market is overstated.” He thinks that Ann Arbor’s high housing costs are a result of “nationwide inequality brought on by lending practices which disfavor middle and working-class people,” in addition to a lack of investment in affordable housing by the Federal government. Further, “Ann Arbor’s Downtown Development Authority could do more to address the problem,” he states. Rather than create new parking, Ramwali suggests they borrow money to build much-needed affordable housing.

Jennifer Hall, Executive Director of the Ann Arbor Housing Commission, believes the City could float revenue bonds on behalf of the housing commission that would have much lower financing costs than what the City has to pay to a private lender to borrow funds. According to her research, over the course of 30 years, Ann Arbor will be paying $6.5 million dollars in fees and interest for both our construction loans and long-term mortgages that could otherwise pay for supportive services or additional affordable housing.

Inclusionary zoning would require developers to include units of affordable housing in new construction projects, but that zoning legislation has to pass at the State level, and is not favored by Republican lawmakers.

Across the country, urban housing costs outpace the rate of cost-of-living wage adjustments. Systemic changes need to occur in the way that cities fund and build affordable housing. If we feel that City government and developers should help create a more equitable housing market, why should the region’s largest public institution not also share in this responsibility? For Washtenaw County to realize its potential as a prosperous, equitable, and environmentally sustainable place to live, and for middle-class U-M staff and students to thrive, the University of Michigan needs to consider creating more affordable housing units for its own community.

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