Michigan’s housing market underwent significant changes from 2018 through 2023. For households earning under $250,000 annually – essentially the vast majority of Michigan families – buying a home during this period meant navigating rising prices, tight inventory, and shifting preferences. Find out what types of properties budget-conscious Michiganders purchased, whether they upsized, downsized, or relocated within the state, how trends differed by region, and how renting compared.

Overview: Rising Prices and Tight Supply (2018–2023)

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Michigan home prices climbed steadily in 2018–2023, outpacing income growth and national trends. The median sale price in the state rose by over $75,000 between July 2018 and July 2023 – a major increase driven by strong demand. Home prices jumped 84% from 2013 to 2021, far above the national average growth of 48% in that period. By 2022, the median home value in Michigan had reached about $224,400, up 50% from $150,000 in 2012.

Several factors fueled this surge. Record-low mortgage interest rates in 2020–2021 (below 3%) gave buyers extra purchasing power, and many households, flush with savings and stimulus funds, entered a “home-buying frenzy.” At the same time, the supply of homes for sale remained extremely tight. Michigan had only about a 2-month supply of homes in 2023, far below the 5–6 months considered a balanced market.

Affordability became a serious concern for many Michigan buyers. Even though Michigan’s home prices are generally below the U.S. median, by 2023 many households earning under $250k found it difficult to afford a home in desirable areas. Mortgage rates spiked above 6–7% in 2022–2023 (the highest in ~20 years), which significantly increased monthly payments and squeezed budgets.

Despite the challenges, Michigan’s homeownership rate remained relatively high at around 73–74% during 2018–2023. That means roughly 3 in 4 Michigan households own their home, well above the ~66% U.S. average.

What Types of Homes Are Michiganders Buying?

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Single-Family Dominance

For households under $250k income, single-family houses are by far the top choice. In 2021, an estimated 85.3% of all home purchases in Michigan were detached single-family homes, significantly above the national average of ~76%. Michigan has a long tradition of single-family homeownership, and most buyers in this income range gravitate to these homes for the space and privacy.

The preference for single-family homes grew even stronger during the pandemic. In 2019 (pre-COVID), about 75–78% of Michigan home sales were single-family. But by 2020–2021, as remote work and social distancing took hold, buyers showed a renewed preference for standalone houses with more space, pushing single-family homes to 85%+ of purchases in 2021.

Condominiums and Townhomes

Condominiums and townhomes remain an important slice of the market, especially in certain locations and for certain buyers. In downtown areas of cities like Detroit or Grand Rapids – or close-in suburbs like Royal Oak – condos and attached townhouses attract professionals and downsizing seniors who want lower maintenance. These attached units made up roughly 10–20% of purchases in recent years.

Condos are often cheaper than single-family houses in the same area, making them a more budget-friendly entry point for first-time buyers. For example, a condo might sell for $180,000 in a market where single-family homes average $250,000.

Manufactured Homes

Manufactured homes (mobile homes) are another option for budget-conscious buyers in Michigan. The state actually ranks among the top in the nation for manufactured housing: nearly 19% of new single-family homes in Michigan are factory-built manufactured homes. These homes, often located in land-lease communities or rural areas, tend to be significantly less expensive (the average new manufactured home costs around $125k nationally).

Michigan’s rural and small-town buyers sometimes choose double-wide manufactured houses as an affordable path to homeownership. While manufactured homes are only a small portion of overall sales, Michigan’s high usage (6th highest state) shows they are a noteworthy segment, especially in lower-cost counties.

Upsizing vs. Downsizing: How Buyers Move

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Younger Families and Move-up Buyers

Younger families and move-up buyers largely focused on upsizing – buying larger homes than their previous ones. With historically low interest rates through 2021, many existing homeowners took the opportunity to “trade up” to a bigger house while keeping mortgage payments manageable. This upsizing trend was supported by substantial home equity gains: homeowners who bought around 2012–2015 often saw their home’s value rise dramatically by 2020.

Many Gen X and older millennial homeowners upsized in the pandemic era, seeking extra bedrooms, a dedicated office, or a larger yard as both work and schooling moved home.

Empty Nesters and Retirees

Empty nesters and retirees – typically Baby Boomers – often consider downsizing to a smaller home or condo. However, a striking trend in recent years has been that fewer Boomers are downsizing than expected. National analyses found that older Americans are staying put in their large homes longer, contributing to a shortage of family-sized homes on the market.

Many Michigan Boomers who might have downsized discovered that buying a smaller place didn’t make financial sense in the current market. If they have a low property tax base or a sub-3% mortgage on their current home, moving to a smaller condo could increase their costs due to high prices and interest rates for the new home. This means fewer starter and mid-sized homes being freed up for younger buyers, adding to the inventory crunch.

First-Time Buyers

First-time buyers (often younger millennials and Gen Z) typically start small, but by definition they aren’t downsizing (since they didn’t own before). This group was hit hardest by high prices – in fact, the national share of first-time homebuyers fell to just 26% in 2022, the lowest on record. That suggests many would-be first-timers in Michigan remained renters or stayed with family, unable to buy their first home. Those who did buy often had to compromise: purchasing smaller homes or fixer-uppers, or moving farther from city centers to find something in budget.

Relocating Within Michigan and Second-Home Purchases

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Pandemic-Era Relocation

During 2020–2021, the rise of remote work enabled some Michiganders to relocate from expensive or dense areas to more affordable or spacious parts of the state. Michigan’s population data show a reversal of long-term trends: rural counties saw net population gains from 2020 to 2023 via domestic migration, while urban counties saw slower growth or even slight declines during the height of the pandemic.

The Michigan state demographer found that rural counties had a net domestic migration rate of +17.5 per 1,000 residents from 2020–2023, indicating an inflow of movers. Popular relocation targets within Michigan included scenic regions like northwest Lower Peninsula (Traverse City area) and southwest Michigan, as well as outer suburbs that offered more house for the money. By 2023, as offices reopened, this rural migration boom waned.

Affordability-Driven Moves

Within-state moves were often driven by affordability. Michigan is unique in that its largest city (Detroit) is not the most expensive market – in fact, Detroit’s housing is quite affordable compared to places like Ann Arbor or some suburbs. Some households relocated from higher-cost counties to lower-cost ones. For instance, a family priced out of Oakland County might move to Macomb or farther-out counties to afford a home.

Second Homes and Vacation Properties

Michigan has a rich tradition of vacation cottages “up north” and lakefront cabins. For upper-middle-income households (approaching that $250k bracket), purchasing a second home was a notable trend in the early part of this period. Nationally, vacation home sales surged during the pandemic – the first half of 2021 saw a 46% jump in second-home purchases compared to pre-pandemic levels.

Michigan was a hotspot for this boom, ranking among the top states for vacation-home demand in 2020–2021. Small vacation-friendly cities like Sturgis, MI saw second-home purchases increase over 20% in that time. Michigan’s countless inland lakes and its Great Lakes shoreline made it a magnet – the National Association of Home Builders noted Michigan is one of 8 states that collectively contain half of the nation’s second homes. In fact, six Michigan counties have at least 50% of their housing stock made up of second homes.

However, by 2022–2023 the second-home trend cooled. Higher interest rates and economic uncertainty hit luxury and discretionary purchases first. Michigan realtors reported a decline in second-home sales in 2023. Areas like Emmet County (home to Petoskey and popular vacation spots) saw prices dip ~12% year-over-year in 2023, a sign that the pandemic vacation-home premium was easing.

Regional Differences in Homebuying Trends

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Southeast Michigan

Detroit Metro: The Detroit area contains a huge share of the state’s population and saw some of the most dramatic housing dynamics. Paradoxically, Detroit City remained one of the most affordable markets – in August 2023 the Detroit Board of Realtors reported an average sales price of just $102,947 in the city.

From 2018 to 2023, savvy buyers purchased Detroit city homes at bargain prices, sometimes under $50k, especially earlier in the period. The trend in Detroit has been highly localized: certain neighborhoods experienced an explosive rebound in values, while others stagnated. A report by Detroit Future City showed that from 2012–13 to 2020–21, median sale prices in some Detroit neighborhoods rose by 1000–3000% as they went from near-worthless to rehabilitated.

Detroit Suburbs: In contrast to the city, many suburbs in Southeast Michigan saw strong price growth and tighter supply. Desirable communities in Oakland County (Birmingham, Troy, Novi, etc.) and parts of Macomb became quite competitive. For instance, Grosse Pointe saw average prices jump ~20.6% in one year (2022–2023) – one of the highest increases in the state. Middle-class families earning under $250k found that some inner-ring suburbs were increasingly out of reach as prices climbed.

Ann Arbor and Washtenaw County: Ann Arbor consistently ranks as one of the most expensive areas in the state – often above national median prices. During 2018–2023, Ann Arbor’s demand stayed high thanks to stable university and tech jobs. Many households under $250k could not afford a single-family home in Ann Arbor itself (where median prices often exceed $450k).

West Michigan

Grand Rapids Metro: West Michigan’s largest city, Grand Rapids, and its surrounding Kent and Ottawa counties saw robust growth in 2018–2023. According to local experts, housing metrics in West Michigan outperformed the rest of the state. Home prices in greater Grand Rapids rose steadily, with one study finding Grand Rapids home prices jumped ~18% in 2021 alone. Middle-income buyers in Grand Rapids often had to act fast and bid above asking to win a home.

Lakeshore and Resort Towns: West Michigan also encompasses the Lake Michigan shoreline communities (like Muskegon, Holland, Benton Harbor) and inland vacation spots. These areas experienced a blend of residential and second-home dynamics. During 2020–2021, places like Saugatuck or South Haven had a frenzy of second-home buying. Manistee County on the northwest lakeshore saw prices leap ~24.9% year-over-year in 2023, one of the highest jumps statewide.

Kalamazoo and Southwest: The Kalamazoo area also had a solid run. Kalamazoo’s affordable market attracted first-time buyers and saw relatively steady growth. Notably, Battle Creek (Calhoun Co.) recorded a 20.5% price increase year-over-year by mid-2023.

Northern Michigan and the Upper Peninsula

Northern Lower Peninsula: This region, including areas like Traverse City, Petoskey, Alpena, and surrounding counties, has a dual character – a mix of local communities and heavy vacation-home presence. Traverse City and vicinity saw strong growth through 2020–2022, fueled by people relocating for quality of life and remote work. Counties with high second-home concentrations experienced volatility – when vacation demand was hot, prices soared, but some retrenched in 2023.

Upper Peninsula (U.P.): The U.P. is relatively sparsely populated and traditionally has lower home prices and slower market movement. During 2018–2023, the U.P. saw mild growth – some remote work relocations and retirees moved in, but overall demand is lower than downstate. For a household under $250k in the U.P., owning a home has remained quite feasible – median home prices in many U.P. counties are under $150k.

East Central and “Thumb” Region

Michigan’s east-central cities – Flint, Saginaw, Bay City – have historically struggled with economic declines, and housing there remained quite affordable through 2023. These areas did not see the same frenzy as Grand Rapids or Detroit’s suburbs. Prices crept up but from very low bases.

In the “Thumb” region (rural counties like Huron, Tuscola), populations are shrinking, and housing demand is low; indeed Huron County saw the state’s largest price drop (~-28% YoY) in 2023. These areas remain buyer’s markets – households under $250k have plenty of choices under $100k, though economic opportunities are limited.

Renting vs. Buying: The Rental Trend Comparison

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Michigan experienced rising rents over this period, though not as dramatically as home prices. From 2017 to 2022, median rent in Michigan increased about 20.1% – roughly on par with general inflation (~19%) in that timeframe. By end of 2023, a typical two-bedroom apartment in the Detroit metro rented for around $1,050 per month on average, which is relatively low by national standards.

Michigan’s median gross rent is only about 82% of the U.S. median rent, while median household income is ~92% of the U.S. median. This indicates that, statewide, renting was somewhat more affordable relative to incomes than the national norm.

Even so, many Michigan renters are cost-burdened. Across Michigan metros, renters spent about 30% of their income on rent on average in recent years – near the standard affordability threshold. For lower-income renters, this percentage is higher.

For households under $250k income, the decision to rent or buy became a tough calculus. Record-low interest rates in 2020–21 made buying very attractive – mortgage payments on a median-priced home were often comparable to rent. For example, in 2021 a $200,000 house with 3% down could have a monthly mortgage around $1,000 (principal & interest), similar to rent for a 2-bedroom. By 2023 with higher rates, that same house’s payment might be $1,500+, making renting look more financially reasonable again.

Overall, renting provided a comparative shelter from the extreme price inflation of the buying market, but renters didn’t escape cost increases. Given Michigan’s relatively low rents, some households under $250k reasonably opted to continue renting and wait out the frenzied buyers’ market of 2020–2022.

2018–2023 vs. 2008–2017: How Do the Trends Differ?

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The differences between these periods are stark, highlighting how Michigan’s market flipped from bust to boom:

Home Prices

In 2008, Michigan was reeling from the housing bubble burst and the auto industry crisis. Home prices had plummeted from mid-2000s highs. From 2008 through about 2012, Michigan’s median home prices were depressed. By contrast, 2018–2023 was a period of price expansion to record highs. The trajectory shifted from decline (2008–2011) to gradual recovery (2012–2017) to rapid appreciation (2018–2023).

Market Conditions

The late 2000s were a buyer’s market – there were lots of homes for sale (including many foreclosures) and not enough qualified buyers. In contrast, 2018–2023 saw an acute seller’s market with historically low inventory (often <3 months supply).

One reason is new construction dried up after 2008 and never fully returned. The average number of building permits in 2016–2020 was less than half the average from 1986–2006. So the 2008–2017 period, especially early on, had an oversupply hangover from the overbuilding of the early 2000s, whereas 2018–2023 suffered from undersupply due to a decade of underbuilding.

Homeownership and Foreclosures

Michigan’s homeownership rate was extremely high in the early 2000s (77% in 2006), but it fell after the crash. From 2008 to 2016, many Michigan families lost homes to foreclosure or became renters. Homeownership in Michigan dropped from about 75.9% in 2008 to ~72.8% by 2016.

By contrast, during 2018–2023, homeownership edged up slightly (to ~74%), as the economy was stronger and some returned to owning. Foreclosure rates in 2018–2023 were very low historically (aided by forbearance programs during COVID), whereas 2008–2012 had sky-high foreclosures.

Buyer Profile

In 2008–2012, those who were buying in Michigan were often investors or bargain hunters, since regular buyers struggled with tightened credit. In 2018–2023, by contrast, investors still participated but faced stiffer competition from traditional buyers, and first-timers found it harder to buy despite low interest rates, simply because of high prices and competition.

Economic Context

The 2008–2010 recession hit Michigan extremely hard – unemployment spiked (well over 10%), incomes stagnated, and population was declining. Fast forward to 2018–2020, Michigan’s economy was relatively healthy (unemployment in the 4–6% range pre-pandemic), and during the pandemic, low interest rates nationally fueled housing even as the economy briefly slumped.

The mood of the housing market in 2008–2012 was pessimistic and fearful, whereas in 2018–2021 it was exuberant, turning a bit cautious by 2023 with talk of interest rates.

Conclusion

Michigan’s 2018–2023 housing trends differ greatly from 2008–2017. The earlier decade was marked by a crash and gradual recovery: falling then rebounding prices, high foreclosures, and cautious buyers. The recent period was almost the mirror image: rapidly rising prices, historically low supply, and buyers scrambling amid a boom.

For households under $250k, the 2008–2012 window was actually a time of opportunity to buy cheap (if one had a stable job and good credit), whereas 2018–2023 required much more financial muscle to become a homeowner. Many who bought a house around 2010 in Michigan saw their home double in value by 2022, illustrating the turnaround.

The state entered 2024 with housing still expensive and inventory scarce – a very different set of challenges than those following the Great Recession. Policymakers and families alike are now focusing on how to increase affordable housing supply and maintain homeownership accessibility in this new era.

References

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