Michigan – “Affordable” is the Name of the Game!
There may not have been a state hit harder by the recession than Michigan. After all, this is a state that lives and dies by the auto industry, and taxpayers spent more than $60 billion bailing out automakers! Ever since, Michigan has constantly wound up near the top of “Most Miserable Housing Market” lists.
What about now, though? After all, it’s been five years since the housing bubble burst and America sank into recession – taking the auto industry down with it. What can Michigan expect now?
Well, if you’re looking for affordable housing, Michigan is the place to be!
Homes for sale in Michigan are some of the cheapest in the country. Part of the reason is that demand here is low. After all, Michigan is also home to some of the highest unemployment in the country (as of December 2012, the unemployment rate in Michigan was 8.9% and spent much of 2012 climbing). As a result, many people simply don’t have the means to go out and buy homes.
Realtors in Michigan aren’t expecting to see a surge in first-time buyers anytime soon, either. That’s because 11.5% of millenials (or, 18 to 29-year-olds) here are unemployed. That’s the highest the rate has been since World War II. As a result, many of Michigan’s older homeowners are stuck, since they traditionally would sell their larger homes to younger buyers and downsize to smaller homes.
Despite the dismal unemployment numbers, sales prices in Detroit actually started to go up towards the end of 2012. (In December 2012, the median sales price was $130,000. In December 2011, it was $105,000.) That’s largely due to the fact that the inventory here is very low. As a result, what little demand there is drives up the prices!
One thing that will really work in Michigan’s favor this year is Congress’ extension of the Mortgage Debt Forgiveness Act. By giving struggling homeowners the option of doing short sales (instead of forcing them into foreclosure), the homes for sale in Michigan won’t be dragged down by foreclosures being sold at bare-bones prices.
Interestingly, Detroit is bucking a big trend when it comes to its apartments for rent. Unlike most of the country, Detroit’s rent prices didn’t skyrocket in 2012. Instead, they stayed relatively flat. (As you might expect, though, Downtown and Midtown are still the most expensive places to rent.) In the rest of Wayne County, the average rent actually decreased 0.1% throughout the year!
The same can’t be said for the apartments for rent in Michigan’s suburbs. Those monthly rent prices went up 4%. Still, though, it’s not nearly as bad as what other parts of the country saw – many of which dealt with record rent prices in 2012.