Building in Metro-Detroit Beginning to Slow

  • The State and City of Detroit’s unemployment rates decreased at the monthly and annual levels;
  • Regionally, August 2018 unemployment rates are lower than the prior year, with the exception of Macomb and Wayne counties;
  • Housing prices continue to rise in Metro-Detroit.
  • New building permits being pulled regionally decreasing

In August of 2018 the unemployment rate for the State of Michigan was 4.1, a small decrease from the July unemployment rate of 4.2, according to the most recent data provided by the Michigan Department of Technology, Management and Budget. The State unemployment rate for August of 2017 was 0.5 points above what it was in August of 2018.

The Detroit rate was 0.2 points lower in August of 2018 than in August of 2017. Also, the August 2018 unemployment rate for Detroit was 1.7 points lower than what it was the previous month (July 2017).

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for August of 2017 and 2018. In August of 2018 Wayne County had the highest unemployment rate at 5.3, with Monroe County having the second highest regional unemployment rate 4.5. These two counties were the only two in the region to have unemployment rates at or above 4.5 in August of 2018. Conversely, Oakland, Washtenaw and Livingston counties all had unemployment rates at or below 3.5 in August of 2018.

Regionally, Livingston County had the lowest unemployment rate in August of 2018 at 3. Livingston County also had the lowest unemployment rate in August of 2017 at 3.6 while Monroe County had the highest unemployment rate in August of 2017 at 5.7.

When comparing 2017 and 2018, Wayne and Macomb counties are the only two where the unemployment rate was higher in 2018 than in 2017. For Macomb County, in August of 2017 the unemployment rate was 3.9 and for 2018 it was 3.8. For Wayne County there was also a 1.0 difference, from 4.3 in 2017 up to 5.3 in 2018.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $124,240 in July 2018; this was $510 higher than the average family dwelling price in June. The July 2018 price was an increase of $7,160 from July of 2017 and an increase of $15,070 from July of 2016, an increase of $20,900 from July of 2016 and increase of $26,110 from July of 2014.

While home prices have been growing in Southeastern Michigan, a recent Detroit News article detailed how construction is slowing down, largely in part due to land and labor shortages and the associated costs. Also according to the article, August housing permits for single-family home construction decreased by 1.8 percent statewide compared to this time last year. This 1.8 percent increase was nearly the same as it was at this time last year (from 2016 to 2017), but for 2016 that annual increase was about 10 percent, according to the article.

The chart below highlights how around 2011 the number of single family home building permits issued in each county in the region began to increase, spiking in about 2013. Then, more recently, Oakland, Wayne, Monroe and St. Clair counties experienced another increase in the number of permits pulled in 2017. However, the 2018 numbers, which are not complete for the year, do indicate that year end numbers will not compare with 2017. With only three months left in the year, and construction season slowing down for winter, it is likely many, if not all the counties in the region will not increase the annual number of building permits pulled over 2017.

Despite some regional housing growth, the Detroit News article indicated that affordable single family homes, particularly ones geared toward first-time buyers, are lacking in inventory in the region.

Wayne County Has Highest Average Payment for Food Stamps

In Southeastern Michigan, Wayne County had both the highest average payment per person for the state’s food assistance program and the highest number of both adult recipients and child recipients, according to 2018 from the Michigan Department of Health and Human Services. The Michigan Food Assistance Program is a temporary food assistance program for eligible low-income families and individuals; the program is administered through the U.S. Department of Agriculture. At the federal level this program is referred to as the Supplemental Nutrition Assistance Program (SNAP).

According to the data, thus far in 2018 Wayne County had 244,821 adult recipients of the state’s food assistance program and 178,744 child recipients. Wayne County also had the highest average food assistance payment per person at $132. Macomb County had the second highest number of recipients in 2018, according to the data. In 2018 Macomb had 62,109 adult recipients and 39,179 child recipients. However, Macomb County did not have the second highest average food assistance payment per person. Rather, Oakland County had the second highest average payment at $124. Livingston County had the lowest total of both adult and child recipients (4,449 and 2,652 respectively) and the lowest average payment per person at $119. According to the Center on Budget and Policy Priorities, the average monthly Food Assistance Program payment to Michigan residents in fiscal year 2017 was $125; Wayne County was the only county in the region above this average. Average payments are based on how close to, or below, the poverty line an individual or family are. The higher poverty level of an individual or family means they will likely receive more funding for food assistance.

The maps below further demonstrate why Wayne County had the highest number of Food Assistance Program recipients. Despite the data below being from 2016 (the state did not have data at the municipal or Census tract level and the most recent data from the Census is from 2016), the first map below highlights how Detroit, Highland Park, Inkster, Ecorse and Lincoln Park all have more than 29 percent of the cities’ households receiving food assistance. Outside of the Wayne County, the only other communities with more than 29 percent of its households on the food assistance program were Pontiac in Oakland County and Port Huron in St. Clair County.

In 2016, 42 percent of residents were on the Food Assistance Program (also known as SNAP/Food Stamps) in Detroit, with the concentrations being along some of the City’s main corridors, including Gratiot and Grand River avenues. There were more than 30 Census tracts where between 58 and 83 percent of the families living there were on the state’s food assistance program; these Census tracts were spread throughout the City. On the other hand, there were only about a dozen Census tracts in the City where 22 percent of the families living there were on the food assistance program; these Census tracts were right along the Detroit River and on the City’s northwest side.

As the data in this post shows, the State’s food assistance program is used by thousands of families in the region. With the state’s new requirement that individuals on the food assistance program must work it will be interesting to see how and if the program numbers shift.

Detroit Housing Prices Continue to Rise

  • The State and City of Detroit’s unemployment rate increased at the monthly and annual levels;
  • Regionally, June 2018 unemployment rates are higher than the prior year, with the exception of Monroe and Washtenaw counties;
  • Housing prices continue to rise in Metro-Detroit.

In June of 2018 the unemployment rate for the State of Michigan was 4.3, an increase from the May unemployment rate of 3.8, according to the most recent data provided by the Michigan Department of Technology, Management and Budget. The State unemployment rate for June of 2017 was 0.3 points above what it was in June of 2018.

The Detroit rate was 1.4 points higher in June of 2018 than in May. Also, the June 2018 unemployment rate for Detroit was 1.5 points higher than what it was in June of 2017.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for June of 2017 and 2018. In June of 2018 Wayne County had the highest unemployment rate at 5.4, with St. Clair County having the second highest regional unemployment rate 4.6. These two counties were the only two in the region to have unemployment rates above 4.5 in June of 2018. Conversely, Oakland, Washtenaw and Livingston counties all had unemployment rates at or below 3.5 in June of 2018.

Oakland County and Livingston County were the only other two counties in the region with an unemployment rate below 3.5. Regionally, Livingston County had the lowest unemployment rate in June of 2018 at 3.3. Livingston County also had the lowest unemployment rate in June of 2017 at 3 while Wayne County had the highest unemployment rate in June of 2017 at 5.

When comparing 2017 and 2018, Monroe and Washtenaw counties are the only two where the unemployment rate was higher in 2017 than in 2018. For Monroe County, in June of 2017 the unemployment rate was 4.9 and for 2018 it was 4.4. For Washtenaw County there was also a 0.4 difference, from 3.9 in 2017 down to 3.5 in 2018.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $122,600 in May 2018; this was $920 higher than the average family dwelling price in April. The May 2018 price was an increase of $7,740 from May of 2017 and an increase of $16,060 from May of 2016, an increase of $21,030 from May of 2015 and increase of $26,430 from May of 2014.

Wayne County Experiences Largest Decrease in African American Homeownership

According to data from the American Community Survey, Saginaw County had the highest percentage of African American homeowners of the Michigan counties with more than 10,000 African American households. In 2000, 54 percent of the adult African American population owned a home in Saginaw County. In 2016, 51 percent of the adult African American population in Saginaw County owned a home; this was equivalent to 13,820 households. Overall, there was a 3 percent decrease between the percentage of African American household owners between 2000 and 2016 in Saginaw County. Ingham County also experienced a 3 percent change between 2000 and 2016, from 38 percent to 35 percent, and Washtenaw County experienced the lowest percentage change at 1 percent. In 2000 in Washtenaw County, 39 percent of the African American population owned a home and in 2016 it decreased to 38 percent. It was Wayne County that had the largest decrease between 2000 and 2016 in the percentage of African American homeowners. In 2000 53 percent of the African American population owned a home and in 2016 that decreased to 42 percent. In total in Wayne County, according to the American Community Survey, there were 303,717 households owned by African Americans in 2000 and in 2016 that decreased to 264,759.

According the Urban Institute, where this data was originally presented, the overall percentage of African American ownership in Michigan decreased from 51 percent in 2000 to 40 percent in 2016. Additionally, it was 45-64 age group that experienced the largest loss in homeownership (18%). While the overall loss of homeownership between 2000 and 2016 can be attributed to the Great Recession, the Urban Institute also found that the rise of land contracts and property tax foreclosures contributed to the loss.

 

More Underfunded Retiree Healthcare Plans than Pension Plans in Southeastern Michigan

In Southeastern Michigan more government entities were found to have underfunded retiree healthcare plans than the number of government entities with underfunded pension plans. According to the data provided by the Michigan Department of Treasury there were 50 underfunded retiree healthcare systems of the 183 government entities that had provided their financial information to the State as of June 9, 2018. A government entity’s retiree healthcare plan is deemed underfunded by the State if it is less than 40 percent funded and has an annual contribution greater than 12 percent of government funds.

Of the municipalities that were deemed funded by the State, Rose Township had the highest funding percentage for municipalities at 331 percent. Other municipalities with retiree healthcare funding above 100 percent are:

Municipalities

  • Rose Township: 331%
  • Groveland Township: 197%
  • Algonac: 163%
  • Oakland County: 127%
  • Detroit: 121%
  • Macomb Township: 114%
  • Royal Oak: 107%
  • Pontiac (Police and Fire): 105%
  • Milford: 104%
  • Farmington Hills: 100%

Special Districts

  • West Bloomfield Public Township Public Library: 147%
  • Brighton Area Fire Authority: 109%

While there was about a dozen different Southeastern Michigan government entities with more than 100 percent of the retiree healthcare plans funded, there were also 37 entities that had 0 percent of the retiree healthcare plan funded. However, not all of these entities were deemed underfunded, rather only 18 were. Not all government entities that fell below the 40 percent threshold were deemed underfunded due to the fact they were contributing less than 12 percent of their revenue to fund the plan. For example, the City of Brighton has 11 percent of its retiree healthcare funded, but according to the Michigan Department of Treasury, the city’s annual contribution to the plan is 10.4 percent of the City’s revenue. This is less than the 12 percent trigger point set by the State.

As with pension systems, funding retiree healthcare systems is vital not only to a government entity’s financial healthy, but also to retention and recruitment of employees.

 

Southeastern Michigan Communities Working to Fund Pension Systems

In 2017 the Protecting Local Government Retirement and Benefits Act was passed, with the goal of identifying the systems that are underfunded. According to the State of Michigan, a retirement fund is underfunded if less than 60 percent of the fund is funded, and there is an annual required contribution that is over 10 percent of governmental fund revenues. While 60 percent is the current threshold, there are discussions that eventually that number will continue to increase to 100 percent to more accurately reflect the funded status of a retirement plan. There are also thresholds that determine if a local government entity has an underfunded retiree health care system, an issue we will explore next week.

Currently, in the State of Michigan local government entities are facing, in total, over $18 billion in unfunded liabilities for retirement and retiree healthcare funds, according to the Reason Foundation. This foundation worked with the State of Michigan to develop the Protecting Local Government Retirement and Benefits Act and the reporting system that goes along with it.

The maps below provide details on what local government retirement plans are preliminary funded or underfunded in Southeastern Michigan, as determined by the Michigan Department of Treasury through implementation of the Protecting Local Government Retirement and Benefits Act. These are deemed preliminary due to the fact the new oversight body for determining funded, unfunded and waiver status must still review information submitted. Note, information is not displayed for all local government units in the region because not all units had provided their funding as of June 9, 2018. Additionally, some local government units beyond cities and townships are included in the data provided by the State, such as public safety retirement funds.

Of the 183 local government entities (this includes multiple funds for one municipality) that submitted their retirement funding information to the State for the Southeastern Michigan region, 37 of them were reported as having an underfunded status, or less than 60 percent of the retirement fund being funded. Of those that were reported as being underfunded, the majority of them had 45 percent or more the entity’s retirement system funded. However, there were five entities with 25 percent or less of the retirement system funded. These entities were:

  • Capac (St. Clair County): 24.2%
  • Highland Park General Employee fund: 2%
  • Highland Park Public Safety Fund: 3.7%
  • Highland Park Police and Fire Fund: 6.8%
  • Taylor City Housing Commission Authority: 0%

It should be noted that while the City of Taylor’s Housing Commission Authority retirement fund is underfunded, the City of Taylor’s general employee and police and fire retirement funds met State guidelines to be determined funded.

As part of the newly adopted State legislation related to retirement and retiree health care plans a Municipal Stability Board was created to review the corrective plans that underfunded entities must create and submit to the State. This board is housed under the Michigan Department of Treasury is made up of three individuals appointed by the governor. Corrective plans must be developed and submitted within 180 days of the State determining an entity’s retirement system is underfunded.

 

On the opposite side of the spectrum, while there were far more local government entities that were determined have funded retirement systems, than not, there were several that were more than 100 percent funded. The entities with the highest percentage of funding for their retirement funds were:

  • City of Ferndale (General Employees): 253%
  • City of Dearborn (Chapter 24): 239%
  • City of Pontiac (General Employees); 176%
  • City of Ypsilanti (General Employees) 126%
  • City of Grosse Pointe: 119%
  • City of Troy: 117%
  • Lima Township: 112%
  • City of Grosse Pointe Farms: 111%
  • City of Gibraltar (General Employees): 106%
  • City of Dearborn (General Employees): 104.3%
  • City of Mt. Clemens: 103%
  • Oakland County: 103%
  • City of Gibraltar (Public Safety): 102%
  • Groveland Township: 101%

Funding of retirement plans is vital for all local government entities as underfunded plans can lead to long-term financial troubles for a government entity, not excluding bankruptcy. Additionally, underfunded plans can also affect recruitment and retention of employees.

Unemployment Rates in Detroit,Region Take Recent Drop, Higher Than Previous Year

  • The unemployment rate decreased in Detroit and at the state level(monthly);
  • Regionally, April 2018 unemployment rates are higher than the prior year;
  • Housing prices continue to rise in Metro-Detroit.

In April of 2018 the unemployment rate for the State of Michigan was 4, a decrease from the March unemployment rate of 4.6, according to the most recent data provided by the Michigan Department of Technology, Management and Budget. The State unemployment rate for April was 0.3 point above what it was in April of 2017.

The Detroit rate was 1.3 points lower in April of 2018 than in March. In April of 2018 Detroit’s unemployment rate was reported to be 7.4, this was .3 points higher than in April of 2017.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for April of 2017 and 2018. Monroe County was the only one in the seven county region to have a lower unemployment rate in 2018 than in 2017. In April of 2017 Monroe County’s unemployment rate was 3.7 and in 2018 in dropped slightly to 3.7.

In April of 2018 Wayne County had the highest unemployment rate at 4.3, St. Clair County was only slightly below at 4.2. These two counties were the only two in the region to have unemployment rates about 3.5 in April of 2018. Washtenaw County had the lowest unemployment rate in the region at 2.8. Oakland County and Livingston County were the only other two counties in the region with an unemployment rate below 3.

While Livingston County had among the lowest unemployment rate in the region in April of 2018 it also had the largest increase in its unemployment rate between April 2017 and April 2018. In April 2017 the unemployment rate for Livingston County was 2.4 and in 2018 it increased to 2.9.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $120,020 in March 2018; this was $1,220 higher than the average family dwelling price in February. The March 2018 price was an increase of $16,240 from March of 2016 and an increase of $22,120 from March of 2015 and an increase of $26,240 from March of 2014.

Evictions Highest in Detroit, Inner-Suburbs

In 2016, the City of Harper Woods just northeast of Detroit, had the highest eviction rate in Southeastern Michigan, according to Eviction Lab. Eviction Lab is a nationwide data base created by Princeton University that shows formal evictions that have taken place throughout the country; these formal evictions are ones that occurred through the court system. In Harper Woods, the eviction rate was 9.9 percent per 100 rental units; this was equivalent to 175 formal evictions in 2016. The City of Dearborn Heights, which is just west of the City of Detroit, had an eviction rate of 9.82 percent per 100 rental units, which was equivalent to 502 total evictions.

The Top 5 Eviction Rates (per 100 rental units) in Southeastern Michigan by City were:

  • Harper Woods: 9.9
  • Dearborn Heights: 9.82
  • Bellevue 9.44
  • Ecorse: 9.29
  • Inkster: 8.18

No data was available for the townships in the above map with the very light green.

While inner-ring suburbs ranked the highest for eviction rates in Southeastern Michigan, the City of Detroit had the most evictions in terms of sheer volume. In total, there were 6,664 formal evictions in the City of Detroit in 2016; this was equivalent to an eviction rate of 5.2 percent per 100 rental units.

When examining eviction rates at a Census Tract level in Detroit, the data shows that there were only four Census Tracts with eviction rates above 11 percent. Two of these Census Tracts were located on the City’s west side and the other two were located on the far east side of the City. The majority of the central part of Detroit, and into Southwest Detroit, did not have formal eviction rates above 5.3 percent in 2016, according to the data. The west of the City had the highest concentration of formal eviction rates above 7.7 percent.

Understanding eviction rates for the City of Detroit, and the region, is important because this data further demonstrates how income inequality affects the citizens of Southeastern Michigan. Evictions occur when a rental tenant is involuntary removed from his or her home. Evictions can occur due to the tenant’s inability to pay rent, along with reasons such as property damage and taking on boarders. Clearly though, there is a relationship between income and evictions. For low-income families, a single monetary emergency can mean a missed rent payment, and ultimately eviction. As can be seen in the first map, many of the cities in Southeastern Michigan with a 0 percent eviction rate are those with higher than average median incomes, such as Bloomfield Hills and Birmingham. Detroit, Ecorse and Inkster are among the cities in Southeastern Michigan that do not have such socioeconomic characteristics. Rather, Detroit, Ecorse and Inkster have among the lowest median incomes in the region and some of the highest eviction and poverty rates.

This discussion on eviction rates will certainly be part of our overall poverty review of Southeastern Michigan, which will also examine median incomes, poverty rates, homeowner status and education levels.

To understand the dynamics and consequences of eviction for the poor, see: Evicted: Poverty and Profit in the American City by Matthew Desmond.

 

Union Membership in Michigan Increases

  • The unemployment rate increased at the state level, minimally, and decreased in Detroit (monthly);
  • Union membership in Michigan increased between 2016-2017;
  • Regionally, Washtenaw County’s unemployment rate was the lowest;
  • Housing prices slightly decreased from November to December.

In February of 2018 the unemployment rate for the State of Michigan was 5.2, a slight decrease from the January unemployment rate of 5.3, according to the most recent data provided by the Michigan Department of Technology, Management and Budget. The State unemployment rate for February was 0.1 point below what it was in February of 2017.

The Detroit rate was 2.5 points lower in February of 2018 than in February of 2017. In February of 2018 Detroit’s unemployment rate was reported to be 9.5, this was 0.4 points lower than the month before.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for February of 2017 and 2018. St. Clair County had the highest unemployment rates for both 2017 and 2018 (6.4 and 5.7 percent, respectively). Washtenaw County had the lowest unemployment rates in 2017 and 2018 during the month of February; Oakland County also had the lowest unemployment rate in the region in 2018. In February 2018 the Washtenaw County and Oakland County unemployment rates were 3.6. In 2017, the unemployment rate in Washtenaw County was also 3.6, meaning there was no change from one year to the next. Monroe County’s unemployment rate also remained unchanged between 2017 and 2018; for both years it was reported to be 5.3.

Wayne and St. Clair counties were the only two in the region with unemployment rates above at or above 5.5 in February of 2018. These two counties also had the largest unemployment decreases between February of 2017 and February of 2018. The decrease was 0.7 for both counties. All counties experienced a decrease in unemployment rates, except for those where the rates remained unchanged.

The percentage of the employed workforce with membership in a union increased between 2016 and 2017 in the State of Michigan, according to the Bureau of Labor Statistics. According to the data, 15.6 percent of the employed workforce were members of a union in 2017; in 2016 that number was 14.4. With 15.6 percent of the employed workforce being members of a union, that equated to 658,000 employees; in 2016 606,000 employees were members of a union.

While the total number of union members has fluctuated over the last five years, there has been a significant decrease in the total number of union members since 2007. In 2007, according to the data, there were 819,000 union members, and by 2017 that number decreased to 658,000. The total percentage of the employed workforce that were members of a union was 19.5 percent in 2007. Again, the percentage that was members in 2017 was 15.6.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $117,340 in December 2017; this was $210 lower than the average family dwelling price in November. The December 2017 price was an increase of $7,220 from December of 2016 and an increase of $13,570 from December of 2015 and an increase of $20,360 from December of 2014.

Detroit’s Outer Most Neighborhoods Have Lowest Percentage of Long-Term Homeowners

Of the about 600 Census Tracts in the City of Detroit about 75 of them have more than 40 percent of the residents who have owned their home since 1979 or earlier, according to the most recent data from U.S. Census Bureau. These Census Tracts are primarily located just west of Highland Park, but not in the City’s most westward neighborhoods. There are also several Census Tracts with a high percentage of long-term homeowners just east of Hamtramck. Again though, these neighborhoods don’t extend to the most eastern parts of the City. Homeownership in the Census tracts along the City’s borders primarily peaked between 1990 and 1999, with between 20 and 43 percent of the homeowners in those Census tracts having owned their homes since that decade. Between 2000 and 2009 there was about a handful of Census tracts where between about 50 and 80 percent of homeowners moved in during that decade. One of those Census tracts is located in Southwest Detroit right along the Detroit River. There is also about a handful of Census tracts with 10-25 percent of homeowners having just purchased their home since 2015. The Census Tracts are located in the Corktown, Midtown, North End, Palmer Park and West Village areas, all areas experiencing improvement in housing quality and investment.

There are large areas of Detroit’s outer neighborhoods where large shares of the renters have moved in since 2010. Detroit’s most eastern and western neighborhoods have among the highest percentage of renters who moved into those areas between 2010 and 2014. The City Airport/Kettering neighborhood areas have majority of renters residing in those areas since the early 2000s. The “Poletown” neighborhood just south of Hamtramck has the highest percentage of recent home renters between 2010 and 2014. Higher percentage of recent renters can arguably be attributed to three trends, the first being the increase of people moving into Detroit’s re-developing neighborhoods (Downtown, Midtown, New Center, the West Village-in these areas between 60-90 percent of renters have been there since 2010). The second trend may be the movement of lower income individuals due to evictions and/or inability to afford long-term housing options. The third trend, frequently mentioned by property inspectors and others, is families forced by eviction to become renters of the homes they formerly owned. There are only two Census Tracts in Detroit where more than 20 percent of residents have been renting since 1979 or earlier, one is located just north of Hamtramck, and the other is located near the Woodbridge area. In the vast majority of City Census Tracts it is rare to find substantial percentages of renters remaining in one spot for longer than 35 plus years.

Overall, the data in this post shows that City’s outermost neighborhoods have the lowest percentage of long-term homeowners, and instead higher percentages of recent renters. Next week we will look at how income plays a role in homeowner and rental markets in Detroit.