Home Builders Association says 2021 Michigan residential code will raise costs; signals legal challenge

Dawn Crandall, executive vice president for government relations at the Home Builders Association of Michigan, told the House Subcommittee on Licensing and Regulatory Affairs and Insurance and Financial Services on May 20 that the state’s move to adopt the 2021 Michigan Residential Code will add materially to the cost of building homes and that her organization intends to pursue legal action to stop the change.

Crandall said Michigan’s housing supply is well below need and that regulatory and materials costs have increased sharply. “Michigan truly is in a housing crisis,” she told the committee, citing statewide permit declines since 2005. She said the state needs about 119,000 housing units, and that a new single-family median price in 2025 is roughly $430,000, which raises the income needed to qualify for a mortgage to about $138,000.

The association focused most of its criticism on recent changes to the code adoption process at the Department of Licensing and Regulatory Affairs (LARA) and on provisions in the 2021 Michigan Residential Code (MRC) that the association says are more prescriptive than the 2024 model code. Crandall said the previous process used stakeholder advisory committees; the new process narrows review inside the bureau and, she said, shortens public input. “Their new process was to streamline rules adoptions within the bureau,” Crandall said, and the association asked the Joint Committee on Administrative Rules (JCAR) to send the 2021 code back to LARA and adopt the 2024 code instead.

Crandall listed specific 2021 requirements she said would increase costs: mandatory 2-by-6 exterior framing instead of 2-by-4, R-60 ceiling insulation requirements that she said require additional ceiling support, insulated interior ductwork, one-inch exterior insulated sheathing, and new solar-energy-readiness provisions. She said the 2021 code would also require arc-fault circuit interrupters broadly and contains unclear language on sprinkler requirements. By contrast, she said the 2024 model code uses a point-based compliance approach that allows builders to meet energy goals through a mix of technologies and cited studies the association says show the 2024 model would save 6–8% more energy than the 2021 code.

Crandall told committee members the association filed a notice of intent to sue LARA on May 1 and expects to seek an injunction next week if the adoption proceeds. She also urged the committee and the governor to restore the prior advisory-committee-based promulgation process, either by the governor rescinding Executive Order 2017-3 or by new legislation to codify the older stakeholder process.

The hearing included exchanges on other contributors to housing costs. Crandall cited national figures from the National Association of Home Builders showing regulatory costs account for about $93,870 per home on average (which she described as about 24% of the cost of a new home) and said material prices have risen about 41.6% since the pandemic. She also described workforce constraints: she said Michigan has roughly 58,011 licensed construction professionals, with a median builder age of about 58 and relatively few licensees aged 18–34.

Committee members asked about remediation of older housing stock, multifamily versus single-family production and local permitting costs. Crandall said both remodeling and new construction are needed and urged lawmakers to evaluate proposed regulations for their cost impacts. The subcommittee approved the minutes of its May 15, 2025 hearing without objection earlier in the meeting; Representative Rob Steele moved the minutes’ adoption and the committee chair recorded the minutes as adopted.

The association requested that the governor reverse the executive order that changed the promulgation process or that the Legislature pass targeted legislation restoring stakeholder advisory committees for residential-code adoption. Crandall said the goal is to preserve health, safety and welfare while avoiding what the association considers “overregulation.”

The subcommittee did not take a formal vote on code adoption during the hearing. Several members asked follow-up questions and expressed interest in additional details on workforce training, rehabilitation of older homes and local permitting effects.