Muskegon Flips Blighted Homes for Low-Income Housing
One Community Update
April 2, 2026
Source: mlive.com
The city of Muskegon is using federal funds to purchase blighted homes, completely renovate them and sell to low-income families.
The work is led by the city’s Community and Neighborhood Services department, which uses federal HOME Program funds to flip one to two homes per year.
The homes are then sold at a subsidized price to an income-eligible family.
Rhonda Kleyn, grants program coordinator, said this allows for new development that doesn’t “lead to gentrification.”
“A lot of times people worry about gentrification because if you’re doing too many new houses it’s going to price the people who already live here out,” Kleyn said. “With this type of program, with the subsidies, and selling it to an income-eligible family, it does not have that impact on the community, which is good.
The program receives between $200,000 and $250,000 per year from the federal grant program, and funds from the sales of the homes go back into the Muskegon program’s budget
The city buys foreclosed, abandoned properties through the Muskegon County Land Bank.
“These are blighted properties that we’re buying,” Kleyn said. “They’re properties that it’s not very likely that anyone is going to purchase.”
The home renovation program is just one of many ways the city is finding ways to create more housing.
A home at 1698 Wood Street just went on the market after undergoing major renovations funded by the city. An invite-only open house was held Tuesday, March 31, for community stakeholders, officials and city staff.
The single-family house that was previously split into two units now is 2,014 square feet and has four bedrooms, two bathrooms, a bonus living area and an unfinished basement.
There is a garage accessed by an alley behind the home and small backyard.
The rehabilitation included major upgrades designed to remove health and safety hazards and reduce the need for significant repairs for at least the next 20 years, according to city records.
The home was built in 1920 and required full lead and asbestos abatement.
Improvements also included:
- Brand new plumbing and electrical systems
- Fully inspected and repaired HVAC system
- Removal of all lead and asbestos hazards from the home and garage
- New siding, doors, windows, soffit and fascia
- Brand new kitchen, bathrooms and associated appliances
- ADA-accessible first-floor bathroom
- Removal of old windows on the front porch to create an inviting outdoor setting
- Expanded storage and closet space
- Raised, insulated second-floor ceiling to create code-compliant living space
The house may be listed for its market price of $244,000, according to Zillow, but it will sell for much less than that to an income-eligible buyer, Kleyn said.
The home will be affordable for a family earning up to 80% of area median income, approximately $52,480 annually for a two-person household, according to the Michigan State Housing Development Authority.
“It allows wealth building for someone who has never owned a home before, because when they buy the home they’re going to have immediate equity,” Kleyn said. “It helps somebody who maybe has wanted to buy a house but they can’t get a house that fits their needs at their income level.”
The city can also add down payment and closing cost assistance. Each sale and range of assistance is dependent on the buyer’s situation.
An interested buyer should have a realtor make an offer on the home where it is listed, as well as complete the application process through the CNS
department to verify income eligibility.
“It’s a pretty quick process,” Kleyn said, adding that the department aims to respond to applicants with an approval or denial within 48 hours.
The city has been working on creating more housing for several years.
The Muskegon Scattered Site Infill Housing Brownfield Plan uses tax increment financing to develop vacant lots into single-family homes. It has facilitated the construction of 1,770 units since it began in 2018.
In 2024, the city passed several changes to the zoning law to allow for duplexes, triplexes and accessory dwelling units in all residential neighborhoods.
It also approved the changing of some design requirements to more easily allow the conversion of single-family houses into duplexes and triplexes.
The city reduced lot sizes, making the minimum square footage of a lot 3,000 square feet in residential zones and the minimum lot width 30 feet in every residential zone.
That allowed, in some cases, for two homes to be built on a lot where previously only one could be built, or three duplexes where previously only one duplex could be built.
The city was nationally recognized for its efforts when it was a top three finalist for the 2025 Ivory Prize for Housing Affordability.
In September 2025, the city launched the ARP Program to utilize $1 million in HOME American Rescue Plan federal funds to specifically develop duplex housing units.
City leaders are now considering splitting around 22 city-owned lots across the city and constructing 40 to 50 additional units for sale.
In the current housing economy, city officials found that private builders struggle to turn a profit in building a house that will sell at or below $200,000, which is a need in Muskegon.
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