Rent in metro Detroit is still rising
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The average asking rent in metro Detroit was $1,296 in the fourth quarter of 2022 — up 8.4% from a year earlier.
Why it matters: Many would-be home buyers chose to rent longer last year, sustaining apartment demand, according to economic research firm Moody's Analytics. But folks are hitting their spending limit.
- For the first time in over two decades, U.S. households now have to spend 30% of their income on average rents.
By the numbers: A Michigan household needs to earn $19.10 an hour, or nearly $40,000 annually, to afford a fair-market-rent two-bedroom, according to a National Low Income Housing Coalition report.
- In metro Detroit you need to earn more — $20.85 an hour — to afford a fair-market two-bed ($1,084 a month).
- But minimum wage is just $10.10, while metro Detroit renters earn an hourly mean wage of $21.18.
Zoom in: The city's affordable housing crisis is particularly severe. The number of Detroiters who spent more than 30% of their income on rent (considered "cost-burdened") is also on the rise since 2019 after falling since 2010, according to Detroit Future City.
- In the city, 60% of renters were cost-burdened as of 2021, the most recent year available, and 34% were "severely" burdened — spending over half of income on housing.
- "Given that incomes remained steady, the increase in cost-burden was driven largely by a 9% decrease in the share of rental housing units that rent for less than $1,000 per month," Detroit Future City writes.
Between the lines: Rising construction costs have led the state to give affordable housing developments that already received tax credits in 2019 more financing to help fill in gaps, Crain's reported last year.
What they're saying: "We have not kept up in building the supply (of housing) really since the Great Recession hit," Luke Forrest, executive director of the Community Economic Development Association of Michigan, tells Axios.
- "You've got to lower (building) costs as much as you can and we do have to do (public) subsidies … Michigan as a state, we just don't spend a lot of public dollars relative to other states on housing."
Zoom out: There's good news in some cities. Rents are already falling in places near the epicenter of the pandemic home-price boom, including Las Vegas, New Orleans, Atlanta and Phoenix, Axios' Matt Phillips reports.
Yes, but: Experts tell the Wall Street Journal that most cities will "remain undersupplied with the kind of affordable units that see the highest demand."
What we're watching: If Detroit's efforts to preserve and create new affordable housing will have a meaningful, long-term impact on the crisis — or fall short of meeting widespread need.