Michigan’s housing market continues to experience a structural shortage, even as early signs of
inventory recovery appear across the state. Recent reporting from Nick Manes of Crain’s Detroit
Business highlights that Michigan still has 35% fewer homes for sale compared to November 2019, a
staggering deficit that underscores long-term supply pressures and elevated pricing dynamics.
While inventory levels have increased roughly 11% year-over-year, the broader picture reveals
lingering constraints driven by pandemic-era “golden handcuffs.” Many homeowners locked into
historically low mortgage rates remain hesitant to sell, restricting the flow of new listings despite
softening demand and higher borrowing costs.
How Michigan Compares Nationally
The challenge is significant, but not unique among Great Lakes states. As Manes notes, Illinois leads
the nation with a 57% decline in for-sale inventory compared with pre-pandemic levels. Ohio,
Wisconsin, and Pennsylvania remain down by at least 25%, while Indiana stands out as an outlier,
down just 4% over the same period.
In contrast, states like Florida, Texas, and Arizona now boast higher inventory than in 2019—an
outcome largely driven by robust new construction and shifting migration patterns.
Michigan’s Growing Need: 141,000+ Housing Units
According to the Michigan State Housing Development Authority, the state remains short more than
141,000 housing units. This deficit presents a formidable challenge but also a historic opportunity for:
- Builders
- Investors
- Developers
- Rehabilitation-focused buyers
Recent Realcomp II LTD data confirms that metro Detroit inventory reached a five-year high in
November, exceeding 24,500 homes. Seasonal slowing has also made sellers more flexible, creating
additional leverage for well-prepared buyers.
New Construction: A Critical Part of Michigan’s Recovery
One of the most important takeaways from the state’s inventory shortage is the role that new
construction must play in restoring long-term balance. Unlike the Sun Belt—where aggressive building
has increased inventory beyond 2019 levels—Michigan has historically lagged in annual housing
starts.
Today, that gap presents significant upside for the construction and investor community.
For builders and developers, Michigan’s undersupplied market offers:
- Sustained demand for new homes
- Higher valuation potential due to limited competition
- Strong absorption rates in both urban and suburban markets
- Long-term price stability as supply normalizes gradually
As construction labor pipelines strengthen and municipalities continue to encourage development, the
conditions are aligning for builders who can mobilize now.
InterCapital Funding Insight
At InterCapital Funding, we see these market dynamics play out daily. A constrained housing market
doesn’t stop deals—it changes how deals get structured.
To support buyers, developers, and investors navigating tight inventory and affordability pressures, we
provide:
- Creative acquisition financing
- Bridge, DSCR, and rehab capital
- New Construction Loans designed for ground-up and infill development
- Flexible solutions for borrowers considered “unbankable” by traditional lenders
In markets like Michigan—where demand chronically exceeds supply—access to flexible capital
becomes a competitive advantage.
Looking Ahead
Even with slowly rising inventory, Michigan’s housing supply recovery is a multi-year journey.
Builders, acquisition-focused investors, and buyers willing to act during moments of seasonal
softening stand to benefit most.
Let’s Talk Strategy
If you’re considering building, acquiring, or repositioning real estate in Michigan, our team is here to
help you navigate the capital side of the equation.