Rent vs buy in Michigan
With today's numbers over 7 years, renting wins in 15 of the 24 cities of 50,000+, buying wins in 7, and 2 are toss-ups.
In Michigan's cities, rent or buy
| City | Verdict | 7-year result | Break-even (up to 30 yrs) | Typical home | Rent /mo |
|---|---|---|---|---|---|
| Sterling Heights | Rent | renting wins by $32k | year 17 | $304,835 | $1,567 |
| Livonia | Rent | renting wins by $26k | year 14 | $312,136 | $1,699 |
| Westland | Rent | renting wins by $7k | year 9 | $211,230 | $1,301 |
| Kalamazoo | Rent | renting wins by $33k | none in 30 years | $238,251 | $1,216 |
| Royal Oak | Rent | renting wins by $8k | year 9 | $328,150 | $1,962 |
Sources: Zillow Home Value and Observed Rent indexes. The verdicts come from our rent vs buy method, which assumes 20% down over 7 years.
What Michigan shows
In Michigan, renting wins in 15 of the 24 largest cities, and buying wins in 7. Your decision rests on how local home prices compare with rent. A typical home in Detroit runs $74,742, and monthly rent is $1,328. There, buying wins by $72k over 7 years, and you break even in year 1. In Flint, buying comes out ahead by $39k on a $64,412 home and $927 rent, and you break even in year 2.
Once you pass the $264k state typical home value, the math flips on you. Monthly rent on a $303,937 home in Grand Rapids comes to $1,602. Renting comes out $20k ahead there, and break even doesn't arrive until year 12. In Ann Arbor, high prices stretch that gap wider. Monthly rent there runs $2,026 for a $517,346 home. Renting comes out ahead by $124k, and buying never breaks even within 30 years.
Your budget gets pulled in different directions by statewide numbers. Here, only 27% of households rent, compared with 35% in the US. Nationally, median rent is $1,413 a month, while here it runs $1,129. Buying means a 1.25% property tax, above the 0.94% US rate, which slows your payback. Still, homeowners insurance costs you $1,084 a year, better than the $1,308 US norm. On top of that, home prices have climbed 7.4% a year for the last 10 years, faster than the long run pace of 3.8% a year.
Our take: in Michigan, let the price tag in your city decide. Where you'll break even fast, buy in a cheap city; where prices outrun your rent, rent.