Tag Archives: Michigan Housing

Housing Prices Begin to Stabilize, CPI Takes A Dip in Metro-Detroit

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Michigan’s unemployment continues to decrease, for the tenth straight month, and the labor force in the state continues to grow. This year is looking much rosier than in 2020 when great uncertainty riddled the state, and the country. With job recovery following the peak of the pandemic, and an increase in revenues from the sales and use tax and federal funding the state is predicting about a $5 million surplus. While such a surplus can viewed as a sign of improved economic times, we must also recognize inflation is on the rise, and uncertainty still looms with COVID and the war in Ukraine. Recognizing that inflation is hitting the homes of most, if not all, Gov. Gretchen Whitmer was proposed sending $500 to working Michigan families in attempt to help ease the strain on our pockets. The Republic led majority legislature is discussing a $2.5 billion plan that would cut taxes. What will happen remains unknown, especially as the project surplus is just an estimate.

But the data below does tell that story that Michigan’s economy is on the rise while the costs of goods and services is also on the rise.

The chart below provides a more detailed look at how unemployment rates are currently, compared to year ago, at the local level. Across all seven counties in Southeastern Michigan unemployment rates were lower in July of 2022 as compared to July of 2021. Wayne County experienced the largest decrease in that year, with the unemployment rate decreasing by 4.9 percent. While Wayne County had the highest unemployment rate in the region in July of 2021 (9.6%), it did not have the highest rate in July of 2022. Rather, Monroe County currently had the highest unemployment rate in the region in July of 2022 at 5.4 percent. Livingston County continued to have the lowest unemployment rate in the region at 2.2 percent.


The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020, 2021 and 2022 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first  chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2022. Currently in 2022, the region’s prices were down 0.2 percent. The highlights for the change include:

•Food prices increasing 1.2 percent for the month of July (prices for food at home increased 1.5 percent while prices for food outside of the home increased by 0.8 percent)
•Gas prices declining 8.8 percent, which contributed to the energy index decline of 5.7 percent
•Overall, prices without considering food and energy prices, rose by 0.3 percent from the month prior.

When examining the second chart, which shows how prices changed on a year-to-year basis,  we see how prices remain higher than previous years but that there was a decline in the CPI for the month of July between 2021 and 2022.

In July of 2022 the CPI was reported to be 8.6 percent above what it was the year prior (this is lower than the 9.5 percent increased experienced between June of 2021 and 2022). Contributing factors to the continued increase in the CPI include:

•Food prices increasing 12.4 percent over the last year
•Energy prices increasing 34.1 percent over the last year.
•New and used motor vehicles increasing 8.4 percent
•And household furnishings and operations increasing 10.8 percent.
While home prices in Metro-Detroit continue to increase from one month to the next, the rate at which they are increasing is beginning to taper off. According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold was $172,560 in July of 2022; this was a mere $170 higher than the average family dwelling price in June. While the month-to-month increase has slowed down, a look at data from year’s prior is a reminder just how much the average price of a home has increased. Between July of 2022 and 2021 the average price increased $19,960 and between July of 2022 and 2014 the price increased $75,220.


Michigan’s Economy Pushes Forward As COVID Recovery Continues

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According to recent data compiled by Bloomberg, Michigan’s economy has out-performed every other state’s in the last year based on equally weighted measures of employment, personal income, home prices, mortgage delinquency, state tax revenue and the stock market performance of its publicly-traded companies. One example of this is how the number of workers employed in Michigan has risen faster than the average number US of workers employed in the last year. Since April of 2020 the number of non-farm payrolls increased by 25 percent, according to the Bureau of Labor Statistics; the US average increased by 14.3 percent and Michigan lead every state in the nation with that 25 percent increase. Another example is how the bond ratings in the state have stood out compared to other state’s. Michigan’s AA-rated bonds returned 5.6 percent (income plus appreciation) since April 2020, outperforming neighboring Wisconsin (4.3%), Indiana (4.7%) and Ohio (4.7%) as well as the entire municipal market (5.3%), according to data compiled by Bloomberg. Additionally, bonds issued by the Michigan Strategic Fund returned a 15 percent interest rate and bonds issued by Detroit Downtown Development project returned a 14 percent interest rate, according to data compiled by Bloomberg. Closer inspection of this would probably also indicate that these bonds are carrying higher than market rates because of Detroit’s past financial challenges.

Another example highlighted by Bloomberg is how Michigan’s unemployment rate has recovered since the pandemic. The chart below shows the unemployment rates for Michigan and Detroit since January of 2020.

In December of 2021 the unemployment rate for the State of Michigan declined to 5.6 percent from the 5.9 percent it was reported at for November of 2021. In April of 2020, when Michigan first began experiencing the effects of the pandemic, the unemployment rate was reported at 23.6 percent.

For the City of Detroit, the unemployment rate for December of 2021 was 9.3 percent, an increase from the 8.4 percent it was reported at the month prior. When the pandemic first began Detroit’s unemployment rate was 38.4 percent and in December of 2020 the Detroit unemployment rate was 20.3 percent, meaning there has been a significant decrease in the local unemployment rate in the last nearly two years.

Digging deeper into the regional unemployment data, we see that each county in Southeastern Michigan had a lower unemployment rate in December of 2021 than December of 2020. Wayne County had the largest decrease over that year with a 7.3 unemployment rate decline. In December of 2020 Wayne County had a 12.7 percent unemployment rate and in December of 2021 it was reported at 5.4 percent. However, despite having the largest decline in its unemployment rate, Wayne County still reported the highest unemployment rate of the region in December of 2021 at 5.4 percent; Livingston County had the lowest at 3 percent.

The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020 and 2021 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first  chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2021. Currently in 2021, the region’s prices were  up 0.8 percent in January, with higher prices for new and use motor vehicles (up 1.3 percent), household furnishings and operations (up 1.7 percent) and apparel (up 3.3 percent) being large contributors to the increase, without considering food and energy prices. Additionally, food prices increased 1.9 percent. The month-to-month changes reflect how pricing has changed one month to the next while the year-to-year CPI index reflects such changes on an annual basis, while considering each month.

When examining the second chart, which shows how prices changed on a year-to-year basis,  we see how prices continued to increase in 2021, with the December year-to-year CPI being the highest increase shown below. When examining both the month-to-month and year-to-year comparisons, the year-to-year data gives a clearer picture on just how much pries have increased in the last year. In December of 2021 the CPI was reported to be 7.5 percent above what it was the year prior. Contributing factors to the continued increase in the CPI include food prices increasing 8 percent over the last year and energy prices increasing 25 percent over the last year. Additionally, new and used motor vehicles increased 24.8 percent, shelter increased 4.6 percent and household furnishings and operations increased 11.6 percent.

While Michigan’s economy may be recovering since COVID first hit, the State’s housing market is not exempt for the increasing prices being witness across the country. Home prices continue to increase, as has already been indicated by the increasing CPI. In Metro Detroit, according to the Case-Shiller Home Price Index, the average price of single-family dwellings sold was $161,880 in December of 2021; this was $2,290 higher than the average family dwelling price in November. The December 2021 price was an increase of $20,220 from December of 2020 and $64,900 from December of 2014.

CPI Soars for Midwest Region

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In August of 2021 the unemployment rates for the State of Michigan remained steady from the previous months while the City of Detroit’s unemployment rate took a dip, following a slight increase the month prior. The State of Michigan reported an unemployment rate of 4.4 in August, which was just below the 5 percent unemployment rate reported in July. Since January of 2021 the State’s unemployment rate has not gone above 6.1 percent.

For the City of Detroit, the unemployment rate for August of 2021 was 8.4 percent, which is 1.7 points lower than the July unemployment rate and 10.8 points lower than the August 2020 rate.

Both data sets show that the unemployment rates in Michigan and Detroit are stabilizing to pre-pandemic rates.

The chart above shows unemployment rates beginning to level off and the chart below shows a deeper story—just how drastically unemployment rates have dropped in a year. Each county in Southeastern Michigan experienced an unemployment rate decrease between August of 2020 and August of 2021, with Wayne County experiencing the largest decrease at 8.5 points. In August of 2020 Wayne County had an unemployment rate of 13.3 percent and in August of 2021 it decreased to 4.8 percent. Monroe County had the smallest change in the last year with it recording an unemployment rate of 6.4 percent in August of 2020 and a rate of 5.2 percent in August of 2021. In August of 2021, Monroe County also had the highest unemployment rate regionally. Livingston County reported the lowest unemployment rate in August of 2021 at 2.4 percent while Washtenaw County reported the lowest unemployment rate in August of 2020 at 5.8 percent.

The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020 and 2021 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first  chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2021. Prices in the Midwest region fell to their lowest in April of 2020, a -1.1 percent decline from the month prior; this was just as the pandemic was beginning. Just a month later though they increased by 0.8 percent. Currently in 2021, area prices are up 0.2 percent between August and September. According to the Bureau of Labor Statistics, food prices increased 1 percent between August and September of 2021, and energy prices increased 0.9 percent. Categories that were higher included shelter, apparel, household furnishings and operations.

When examining the second chart, which shows how prices changed on a year-to-year basis,  we see how prices in nearly the entire year of 2020 declined below what they were in 2019 (which was a fairly stable year) and how in 2021 the CPI has been lingering between about 5.5 and 5.9 percent since May. Of course, with the steep decline in 2020 due to the pandemic, we are likely to see a higher CPI in 2021 as everything begins to stabilize. However, some categories are experiencing rather large leaps. For example, in September of 2021 the CPI was up 5.7 percent from a year ago. One of the expenditures that has experienced a large increase in the CPI categories is gas services. Utility services are up 34.2 percent from a year ago and gasoline (motor fuel) is up 45.6 percent from a year ago. Under food and beverages, meats, poultry, fish and eggs experienced the highest increase at a 7.4 percent increase from a year ago, and housing experienced a 5.1 percent increase.
Home prices are being driven up by the demand for housing. In Metro Detroit, according to the Case-Shiller Home Price Index, the average price of single-family dwellings sold was $154,160 in July of 2021; this was $1,560 higher than the average family dwelling price in June. The July  2021 price was an increase of $21,700 from July of 2020 and $56,030 from July of 2014. Home prices have continued to increase year-after-year but the recent average price of single-family dwellings sold in the Metro-Detroit area has increased at a higher rate than in previous years, and it appears it may not be slowing down any time soon.

Gap Between Wages and Housing Affordability Grows in Southeastern Michigan

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The eviction moratorium in place by the Centers for Disease Control ended July 30, and while programs funded through COVID Emergency Rental Assistance program are in place there is a deeper issue to be examined: affordable housing and a national living wage. According to data from the National Low Income Housing Coalition even if there weren’t a pandemic, the ability to obtain affordable housing and the ability to earn an hourly rate to afford housing continues to grow farther apart. In Michigan, according to the report, the average worker needs to earn $18.55 to afford a two-bedroom rental home at fair market value.

The average rule of thumb is that those who rent should spend about 30 percent of their income on their rental unit. In 2019, according to the American Community Survey, the average resident living in Wayne and Monroe counties was already living above that. According to the Census Bureau, the average percentage of gross income spent on rent in Wayne County was 32 percent and in Monroe County it was 30.7 percent. Macomb, St. Clair and Washtenaw counties were all at the 30 percent threshold (29.3%, 29.7% and 29.8%, respectively). Oakland County had the lowest percentage of gross median income spent on rent at 26.8 percent.

Further expanding on the gap between wages and access to housing, the National Low Income Housing Coalition released additional data drilling deeper into the hourly rate an individual would need to make in each county to afford a two-bedroom rental home (at fair market value) and what the current estimated hourly wage rate is for rent.

Washtenaw County has the highest housing wage rate in Southeastern Michigan at $24.31; this is the hourly amount an individual would need to make to afford a two-bedroom rental there. However, the current estimated hourly renter wage in Washtenaw County is $16.92; that is a $7.39 wage gap between current wage conditions and what is needed for local affordable housing security.

Livingston County has the largest gap between the average estimated renter wage and the hourly wage needed to secure a two-bedroom home at fair market value; that gap is $8.51. The current hourly renter wage in Livingston County is $12.26 and the amount needed to secure a two-bedroom home is $20.77.

Monroe County has lowest hourly wage needed to secure a two-bedroom home at $17.29 and the current estimated average hourly renter wage is $12.18, meaning there is a $5.11 gap.

The smallest gap between the hourly wage needed to secure a two-bedroom home and the current estimated average hourly renter wage is in Oakland County; that gap is $1.39. In Oakland County the average estimated current hourly renter wage is $18.78 and the hourly wage needed for a two-bedroom rental home is $20.17.

As the data shows, each county in Southeastern Michigan (and throughout the state), has a gap between the wages individuals earn and what it costs to obtain a home on the rental market. This gap means that many need to work more than 40 hours a week, sometimes closer to two full-time jobs.

In order to bridge this gap many changes need to occur; the two glaring ones would be additional affordable housing options added to the market and an increase in the minimum wage. The minimum wage in Michigan is $9.45, and it was not increased to $9.87 in 2021 because the average unemployment rate for 2020 was more than 8.5 percent. However, there have been pushes both nationally and state-wide to increase the minimum wage to $15 an hour—but that has yet to widely come to fruition. In 2019 though Oakland County did adopt a $15 an hour minimum wage for County employees and Oak Park recently did the same for City employees. As businesses continue to try to attract and retain employees we are also seeing increases in the wages they are offering. However, while individual business and local governments implement living wages policies nothing is guaranteed without broader policies.

Rental Prices in Southeastern Michigan Continue to Rise

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The rental market in Southeastern Michigan is mirroring that of the home-buying market. With low supply and rising prices, being further driven up by high demand, many are finding it difficult to secure a rental home, especially one they can afford, according to various news sources. 

According to Re/MAX of Southeastern Michigan, there are fewer rental units on the market than homes for sale. There were 2,480 single-family homes for rent from January through April, across 18 counties in central and southeastern Michigan, according to Realcomp. That number has decreased for two consecutive years, with 3,090 rental homes being available the same period in 2020, and 3,514 through the same period in 2019. 

Below shows the percentage of vacant rental units available in 2019 by county in Southeastern Michigan, according to the American Community Survey. As shown, Oakland County had the highest percentage of vacant rental units at 23.8 percent, followed by Macomb County at 22.9 percent. St. Clair County had the lowest available rental stock at 7.3 percent. As mentioned above though, available rental stock across the region, and state, has decreased, increasing demand and making it more difficult and competitive for individuals to find rental units. According to Re/MAX, another factor driving low rental unit stock is that would-be homebuyers are remaining in rentals longer due to the low stock and high price of homes for sale.

According to a recent Detroit News article, rental prices have increased upwards of 20 percent in the last year. According to the 2019 American Community Survey, Washtenaw County had the highest median gross rent at $1,114, followed by Oakland County with a gross median rent of $1,040 and Livingston County with a gross median rent of $1,053. These were the only area counties with gross median rents above $1,000 but with rental prices increasing upwards of 20 percent throughout the region, others, such as Macomb County (2019 median rent of $962) will be above that threshold. 

According to the Detroit News, which used ApartmentGuide.com as a source, the average rent for a one-bedroom apartment in Detroit rose from $1,332 to $1,516 between April 2020 and April 2021, and a two-bedroom apartment in Detroit rose from $1,764 to $2,319. In Farmington Hills, which is also in Wayne County, the average rent for a one-bedroom increased from $1,134 to $1,289 from April 2020 to April 2021, and a two-bedroom increased from $1,442 to $1,655. The City of Troy experienced the largest year-to-year change at 63.3 percent, according to the data, while Southfield experienced a 33 percent change and Rochester Hills experienced a 30 percent change. Ann Arbor, Grand Rapids, Lansing and Ypsilanti, all college towns, experienced decreases in average rental prices between 2020-2021, likely due to the decreased numbers of students needing housing because of the COVID-19 pandemic.

With increased rental unit pricing comes the concern of affordability. The average rule of thumb is that those who rent should spend about 30 percent of their income on their rental unit. In 2019, according to the American Community Survey, the average resident living in Wayne and Monroe counties was already living above that. According to the data, the average percentage of gross income spent on rent in Wayne County was 32 percent and in Monroe County it was 30.7 percent. Macomb, St. Clair and Washtenaw counties were all at the 30 percent threshold (29.3%, 29.7% and 29.8%, respectively). Oakland County had the lowest percentage of gross median income spent on rent at 26.8 percent.

Increasing rental prices, driven by lack of supply, will affect thousands of people throughout the region. According to the 2019 American Community Survey, in Wayne County, 38 percent of occupied housing units in the county were occupied by renters. In Washtenaw County that percentage was 39, but it likely decreased in 2020 and 2021 due to the lack of students on college campuses because of the pandemic. Livingston County had the lowest percentage of occupied housing units occupied by renters at 15; all other counties in the region had percentages above 20.

The low rental stock and increase of rental prices is now drawing even greater concern as the Centers for Disease Control and Prevention’s moratorium on some evictions is set to end June 30. According to Michigan’s 2-1-1 service, which is a United Way service that connects individuals with various agencies to provide assistance, 21,318 inquiries were made between March 5, 2020 and June 9, 2021 about rental assistance. Furthermore, according to the Census Bureau’s Pulse Survey, about 250,000 Michigan residents said they were behind on rent or mortgage payments as of April 26, 2021.  In March of this year, Gov. Gretchen Whitmer approved allocating about $282 million in federal rental aid, $220 million of which is for emergency rental assistance. Michigan also received $660 million in rent aid from Congress in December of 2020, but how it can be allocated must be approved by the Michigan legislature. There may also be another round of funding of about $223 million to come to Michigan from the federal government, according to the Michigan State Housing Development Authority.