Report: Detroit, Flint, Warren ranked in top 10 for housing affordability

Flint, Detroit and Warren are among the top 10 most affordable cities for home buyers in the nation, according to a WalletHub report.

Detroit ranked highest in the report among 68 cities that have populations that exceed 300,000. Flint won the small cities category, which included 133 cities with population less than 100,000.

However, they also ranked in the top 10 in categories that aren’t quite so favorable.

Median sales price of homes rose from $313,000 in the first quarter of 2019 to $436,800 in the first quarter of 2023, according to the report. The rate for the average 30-year fixed mortgage rate rose from a historic low of 2.65% in January 2021 to 6.39% this month, leaving many consumers wondering if they can afford to buy a home.

WalletHub ranked 300 U.S. cities across 10 metrics, including tax rates and vacancy rates. A score of 100 reflected the most favorable conditions for home affordability in the city proper.

Housing Affordability, or median house price divided by median annual household income, received the highest weight. The median list price per average home square footage received the second-highest portion of the score. Other factors were maintenance costs as share of income, average cost of homeowner’s insurance, cost of living, real-estate tax rate, rent-to-price-ratio, median home-price appreciation, quarterly active listings per capita and vacancy rate.

Flint ranked second. Montgomery, Alabama, was the sole city that was more affordable. Detroit was fourth, and Warren was sixth. Detroit ranked fourth and Flint ranked fifth in the housing affordability report.

However, Flint was also the least affordable for maintenance, while Detroit was the fourth least affordable in that measure. Detroit has the third-highest vacancy rate, while Flint has the fifth highest.

Flint and Detroit tied with other cities for the highest rent-to-price ratio. Flint’s rent-to-price ratio, 26.64%, is 16 times higher than that of Santa Monica, California, which has the lowest, 1.66%.

The other Michigan cities that were among the top 50 in the county were Grand Rapids (13th), Livonia (24th), Dearborn (27th) and Lansing (49th).

Eight of the 10 least affordable cities for homebuyers are in California, according to the report. Santa Barbara is the least affordable in the nation.

University of Central Oklahoma finance and real estate Professor J. David Chapman said in the report that 2023 will be a transition year to a more normal marketplace for housing. Housing price inflation will remain, however, because of materials and labor costs inflation. The country will retain an affordable housing crisis, as there continues to be huge demand for housing at the bottom of the pricing sector.

“The bottom will remain less affordable and tough to buy, the middle will normalize, and the higher-priced homes will likely be bargains,” he said.

State and local authorities should change code to enable higher density to counteract higher land prices. Options include accessory dwelling units, which allow more than one dwelling on a single lot; reducing setbacks between dwellings; and establishing duplexes, triplexes, fourplexes and apartment allowances. Policymakers can change building code and zoning or establish variances at City Planning Commission and City Council.

Development of “overlay districts,” which are a planning tool to regulate land use in a particular geographic area atop an existing base zoning district to provide additional regulations, restrictions, or allowances that address specific issues or concerns, is the best method, according to Chapman. Government policies and programs like rent control laws, subsidies for developers to build affordable housing, tax incentives for landlords who offer affordable units and direct financial assistance for low-income individuals and families are also possible but less desirable, since a market approach is nearly always better.

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