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Best Cities for Homeownership in Michigan

Buying a home is both a lifestyle choice and an investment; and based on the most recent numbers, Michigan homeowners are seeing a major return on their investment.  According to the Federal Housing Finance Agency, Michigan ranked ninth in 2018 for home price appreciation, with prices rising 7.35%, versus 5.73% nationally.

To determine the cities in Michigan where homeowners are getting the most value out of their homes, LendingTree looked at data collected by the U.S. Census Bureau in 2013 and 2017 for both metropolitan and micropolitan (between 10,000 and 50,000 residents) statistical areas. We studied 35 areas according to some of the qualities homeowners consider important, such as home appreciation rates, overall housing costs (for expenses such as mortgages, insurance, taxes and utilities), average commute times and unemployment rates. Together, the data provide a look at both financial well-being and the quality of life in Michigan. Here is what we found:

Key findings

  • The Grand Rapids-Wyoming metro area is the best place in Michigan for homeownership. It has a high median home value ($159,400), low unemployment (5.3%), increasing home values from 2013-2017 (11%) and decreasing housing costs from 2013-2017 (-4.22%).
  • The Ann Arbor metro area ranked as the second-best place in Michigan for homeownership. It has the highest median home value of all cities surveyed ($237,200), low unemployment (5.4%) and increasing home values from 2013-2017 (16.05%).
  • The Alma micro area is the worst place for homeownership in Michigan. It has the lowest median home value ($95,300), moderate unemployment (7.4%) and increasing housing costs from 2013-2017 (0.63%).

The best cities for homeownership in Michigan:

1. Grand Rapids metro area

Michigan’s second-largest city nabbed the top spot on our list; between 2013 and 2017 it saw both a healthy, 11% rise in home values and a 4.22% drop in housing costs. In 2017, Grand Rapids also happened to have the lowest unemployment rate (5.3%) of any top 10 city on this list, a distinction that may be due to major employers, such as high-tech office furniture companies Steelcase and Herman Miller, having offices in the city. Homes here had a median value of $159,400 in 2017. Residents had an average commute time of 21.8 minutes, so they beat Detroit residents by five minutes.

2. Ann Arbor metro area

This college town, which is home to the massive University of Michigan, had a median home value of $237,200 in 2017, the highest of all cities surveyed. Homes here appreciated 16.05%, while housing costs dropped 3.41%, between 2013 and 2017. Ann Arbor’s unemployment rate of 5.4% was on the lower end for Michigan.

3. Marquette micro area

This city on the shore of Lake Superior in Michigan’s Upper Peninsula saw home values rise 9.82% between 2013 and 2017. In 2017, a home in Marquette had a median value of $152,100, and residents had one of the shortest average commute times (17.6 minutes) for a top 10 city on our list. Oddly, Michigan cities on our list mostly saw housing costs go down from 2013 to 2017, but Marquette saw costs rise nearly 5%.  

4. Monroe metro area

South of Detroit, and on the western shore of Lake Erie, Monroe saw the biggest drop in housing costs for any top 10 city: down 6.95% between 2013 and 2017. Still, homes appreciated a respectable 5.95% during the same time. The median home value here was $156,700 in 2017, and the 5.9% unemployment rate was low at the time relative to other cities in Michigan. However, the average commute time of 24.5 minutes was the second-longest of the top 10 cities.

5. Lansing-East Lansing metro area

Home to Michigan State University and Lansing Community College, the Lansing area had the highest unemployment rate for a top 10 city, 7%. Still, homes here grew in value by 6.27% from 2013 to 2107, while housing costs decreased 5.46%. The median cost of a home in 2017 was $145,700. Even though Lansing is Michigan’s capital, residents in this area had to travel only an average of 21.2 minutes to get to work.

6. Adrian micro area

Residents of Adrian, which is about 72 miles southwest of Detroit, saw both a healthy rise in home appreciation between 2013 and 2017 (8.47%) and an appealing drop in housing costs (5%). A home here in 2017 had a median value of $133,200, versus $167,000 in Detroit. However, commuters took just as long to get to work, an average of 26.8 minutes. Adrian had a far lower unemployment rate, 5.9% versus 8.1%.

7. Houghton micro area

This small town, seemingly surrounded by water, is in a tucked-away corner of the Upper Peninsula. Despite its remote location, home values here grew an impressive 16.35% between 2103 and 2017, the third-highest jump for any city surveyed. Still, in 2017, Houghton had the second-lowest home values ($116,700) for a top 10 city; and unlike most parts of Michigan, housing costs here grew during 2013-2017. Houghton had a moderately high unemployment rate of 6.7% in 2017, but commuters took just 16 minutes on average to get to work, the shortest time of any Michigan city.

8. Iron Mountain micro area

This micro area, near the Wisconsin border, was once a prominent mining center. As in Houghton, home values here saw impressive gains between 2013 and 2017, and Iron Mountain’s surge of 17.04% was second-highest after Detroit. Still, in 2017, the median home value of $110,600 was the lowest on this list. The unemployment rate then was 6.1%, and the average commute time was just 17.4 minutes.

9. Traverse City micro area

Traverse City is the anchor in this four-county area in Northern Michigan. From 2013 to 2017, median home values went up 8.09% and housing costs dropped 1.15%. In 2017, the unemployment rate was a moderate 6%, and residents had an average commute time of 22.1 minutes. After Ann Arbor, Traverse City had the second-highest median home value, $179,100.

10. Kalamazoo-Portage metro area

Of the 10 areas on this list, Kalamazoo and Traverse City had the most similarities. Between 2013 and 2017, residents in this part of southwestern Michigan saw home values grow a median of 7.07% and housing costs drop 1.97%. Kalamazoo had a slightly higher unemployment rate in 2017 (6.6%) but also a slightly shorter average commute time (21.2 minutes). The biggest difference between the two cities? Kalamazoo had a median home value of $148,500, more than $30,000 less.

Homebuying tips for Michigan:

It’s clear many Michigan homeowners have had some good investment news lately. Between 2013 and 2017, home values grew between 5.95% and 17.04% for the Michigan cities on our top 10 list, and most of those cities also saw encouraging drops in housing costs during the same time period. Those are strong numbers for homeowners already invested in the state.

Still, homeowning prospects are clearly better in some parts of the state. In Detroit, for example, values grew by almost 20% between 2013 and 2017, while housing costs dropped almost 5%. But in 2017, the unemployment rate was 8.1%. As a result, Detroit was ranked 11th in our listing.

Home prices are continuing to rise in Michigan. For example: In 2018, the median price in Grand Rapids rose 9.1%, and it rose 8% in Ann Arbor, according to the National Association of Realtors. This gave these cities median home price of $193,100 and $272,100, respectively. Those are large jumps from the numbers reported in 2017.

If you’re looking to move into one of the top 10 areas above, keep in mind that the home value is going to directly affect how much money you need for a down payment. The general wisdom is to put down 20% of a home’s value; but if this might be difficult to do, consider looking into a federal program such as those offered by the VA or FHA.

The state of Michigan offers homebuyers help, too. For example, the Michigan State Housing Development Authority (MSHDA) offers first-time buyers fixed-rate mortgages that also come with $7,500 in down payment assistance. MSHDA also offers housing education classes and a mortgage credit certificate program to help homeowners get a federal tax break on mortgage interest payments.

Methodology:

The methodology for this study was simple and straightforward.

1: Collect metropolitan statistical areas (“MSAs”) and micropolitan statistical areas from the U.S. Census Bureau using 2017 population data.

2: Each MSA and micropolitan statistical area was ranked on a scale from 35 (Best) to 1 (Worst) for five different metrics. Those metrics are:

Median Home Value (35-Highest Value, 1-Lowest Value)

Unemployment Rate (35-Lowest Rate, 1-Highest Rate)

Average Commute Time (35-Shortest Time, 1-Longest Time)

Median Home Value Appreciation (2013-2017) (35-Greatest Appreciation, 1-Smallest Appreciation)

Median Change in Yearly Housing Costs (2013-2017) (35-Smallest Cost Change, 1-Greatest Positive Cost Change) — The formula for this metric is:

(((Monthly Housing Costs for 2017 *12)+(Real Estate Tax for 2017))/ ((Monthly Housing Costs for 2013 *12)+(Real Estate Tax for 2013))-1)

3: An average score was then calculated for each MSA based upon the scores received for each metric.

4: The MSAs and micropolitan statistical areas were then ranked on a scale of 1 (Best) to 35 (Worst) based on their average scores.

5: All metrics were ranked equally.

Data:

All data were obtained from the U.S. Census Bureau. More information on where the data came from is provided below:

2017 Median Home Value, Monthly Housing Costs, Real Estate Taxes

  • Filtered for all MSAs
  • Then filter for Financial Characteristics for housing units with a mortgage – 2013-2017 American Community Survey 5-Year Estimates

2017 Unemployment Rate and Median Commute Time

  • Filtered for all MSAs
  • Then filter for Selected Economic Characteristics – 2013-2017 American Community Survey 5-Year Estimates

2013 Median Home Value, Monthly Housing Costs, Real Estate Taxes

  • Filtered for all MSAs
  • Then filter for Financial Characteristics for housing units with a mortgage – 2013-2017 American Community Survey 5-Year Estimates
 

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