Learn more about the housing market in Michigan

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

In this article, we’ll cover everything you need to know about the current housing market in Michigan, from median sale price to housing supply and rental costs. 

Michigan Housing Market Overview 

The Great Lakes State’s iconic license plate slogan, “Winter-water wonderland,” is both a tribute to the state’s civil rights history as well as its natural beauty. Michigan is the only U.S. state to border four Great Lakes, attracting residents and visitors each year for its outdoor opportunities, countless lakes and waterways, college sports, and rich civil rights and automotive history. 

Michigan also has a diverse housing market, with both highly affordable homes as well as luxury properties in the north. Michigan’s affordable options are located mainly on the western side of the state (e.g., Kalamazoo, Lowell, etc.) as well as in the state’s largest city, Detroit. At the same time, Michigan’s unique water features and landscapes in the Upper Peninsula attract luxury investors, vacationers, and second home buyers. In fact, in six Michigan counties, more than half the housing stock consists of second homes. 

Michigan’s diverse housing options strike a unique balance: Affordable areas like Grand Rapids and Kalamazoo bring the state’s median home value lower than the national average, while competitive markets like Ann Arbor and Grosse Point (as well as higher-priced luxury properties in the UP with less demand) fuel the market and cause substantial rises in median home values.  

Even though Michigan’s housing market retains options at both ends of the spectrum, prices are rising in general in the state. Broadly speaking, Michigan is a seller’s market due to low inventory and rising prices, as is currently the case for most of the U.S. Forbes reports that there doesn’t seem to be a housing boom on the horizon in Michigan to increase inventory and ease demand, as rates of new construction are slower in the state. High mortgage rates and prices will likely keep many would-be homeowners from submitting applications in Michigan. 

One point of encouragement for Michigan homeowners is the resurgence of several Detroit neighborhoods. The median listing price for Detroit homes in general is only about $90,000 as of April of 2024. Not only is Detroit one of the country’s most affordable cities, but several of its neighborhoods have seen appreciation and price increases, including North End/Milwaukee Junction, Core City, and Wildemere Park. These neighborhoods and others are helping Detroit experience an economic revival, including emerging businesses, diversification of downtown areas, and potential upsides for homeowners, too. 

Michigan Housing Market Trends 

To understand the Michigan real estate market, it’s important to keep up with trends. Let’s look at some key ones in Michigan: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median home price in Michigan is $255,500, according to Redfin’s monthly housing data from April 2024. This median price is 6% higher than it was last April in Michigan. Keep in mind, however, that the median price represents only the 50th percentile of home prices in the state. More expensive cities are much higher on this curve. In Ann Arbor, where homes are very competitive, the median home price is $527,450. Additionally, more than half of homes in Ann Arbor sell above listing price. 

Number of Homes Sold in April 2024 

9,490 homes were sold in Michigan in April of this year, up 12.3% from last year according to the Redfin dataset. This metric gives us a good picture of the current sales volume in Michigan, which is quite high. However, keep in mind that this number might be inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median DOM 

DOM is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Michigan is 24 days. This means on average, homes in Michigan sell less than a month after being listed. Compared to other states, this quick turnaround time demonstrates that Michigan’s market leans more toward the competitive seller’s market side. 

New Supply Statistics 

Increased housing inventory leads to more housing opportunities and eases the financial burden of renters and homeowners. On average, there were about 2.16 new residential construction permits per 1,000 people in Michigan in 2021. Inventory remains tight in many states, including Michigan, but many hope that the completion of post-pandemic projects in 2024 will ease demand and open more options for buyers. 

Property Tax Rate 

The average property tax rate in Michigan is 1.38%, according to Rocket Mortgage. This places Michigan’s current average property tax rate as the 14th highest in the U.S. However, keep in mind that property taxes vary widely depending on the specific county of Michigan and the value of the home. 

Foreclosure Rate in Q1 of 2024 

In the first quarter of 2024, 1 in every 1,435 Michigan homes experienced a foreclosure filing (according to recent data from ATTOM). Based on this data, Michigan’s foreclosure rate is about average compared to other states. 

Hottest Local Markets in Michigan 

Michigan is the tenth most populous U.S. state, but about 80% of its residents live in the Southern half of the lower peninsula. Southeastern and Southwestern Michigan include many cities with good housing market prospects for the remainder of the year. 

Let’s review a few of these cities below. Other competitive neighborhoods in Michigan include Huntington Woods, Jenison, Garden City, Westwood, and Hudsonville. 

1. Grand Rapids Metro Area

Although the Grand Rapids metro area includes many affordable neighborhoods, others see prices and appreciation jumping. The current median sales price in Grand Rapids is $300,000, much more than the state median, and more than 63% of properties sell for over listing price. Homes here last only six days on the market on average, demonstrating just how competitive the Grand Rapids housing market has become. 

Grand Rapids neighborhoods seeing high competition include Walker, Wyoming, and Northview. 

2. Lansing

Lansing is one of the best markets for residential real estate investing in Michigan. It has been reported that properties here have appreciated almost 60% over the past five years on average. Additionally, the median sales price in Lansing has grown 15.5% year-over-year since April of last year. 

3. Ann Arbor

Ann Arbor is a robust seller’s market with a median home sale price of nearly $527,500. Home to one of the nation’s top three most prestigious universities, Ann Arbor’s research and education presence have a strong effect on the housing market. With high-incomes, low unemployment, and a flourishing student housing industry, over half of all homes here sell for more than their listing price. 

Economic Factors Impacting the Michigan Housing Market 

A holistic view of Michigan’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

High mortgage rates are a continuing challenge for would-be homeowners in the U.S. Michigan’s average rate for 30-year mortgages in June of 2024 is 7.00%, slightly less than the national average. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “locked in” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current one on their next property. Prospective buyers in Michigan should monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Michigan. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income. 

Population Changes and Demographics 

Michigan’s population growth last year landed in the net positive for the first time in many years, according to data from the U.S. Census Bureau. Additionally, more than 23,000 people moved to Michigan from other countries in 2023, covering for a net loss of domestic migration. 

Population trends, employment growth, and other demographics can impact the housing market at any given time.  

Michigan Housing Market Forecast 2024 

Michigan sits in a promising position when it comes to real estate this year. West Michigan is considered one of the fastest growing residential markets in the United States, with Grand Rapids ranking ninth on Realtor’s Top 10 Housing Markets list for 2024. Other cities like Ann Arbor and Grosse Pointe have extremely competitive housing markets, with homes in the former selling for more than double Michigan’s median price on average. 

Experts seem to agree that due to Michigan’s diverse cities and markets, a state-wide forecast is difficult to pin down. Market outlooks vary across the state, with opportunities both for investors to find appreciation and buyers affordability.  

There’s something for everyone in Michigan’s housing market, even as it struggles with the same problems as the rest of the country: High prices, interest rates, and demand. Michigan residents, analysts, and prospective homeowners will continue to monitor high interest rates and other housing trends throughout the rest of the coming year. 

Likelihood of Michigan Housing Market Crash  

A Housing market crash in Michigan is unlikely. Unlike during the previous crash, demand is still much higher than supply in Michigan due to limited inventory. It does not appear to be the case that inventory will outpace demand any time soon, lowering the chances of a Michigan housing market crash drastically. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at the housing market Michigan is in currently, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Michigan Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Michigan’s current rental market, with key trends from Zillow: 

Michigan Rental Market Key Trends 

• Median rent: $1,350 (note: This is $797 higher than the national median) 

• Month-over-month rent change: $0 

• Year-over-year rent change: +$50 

• Available rentals: 7,862 

Conclusion 

The housing market in Michigan in 2024 is marked by a blend of affordability and appreciation, making it crucial for potential buyers and sellers to stay informed about market trends. Whether you’re looking to purchase a home soon or sell your property in Michigan, the macro- and micro- economic trends outlined above will affect your decision-making. Market dynamics like changes in home prices, inventory levels, and interest rates will continue to be critical for stakeholders in Michigan real estate.