We’re 59!
The News trumpets A2’s showing on the most recent city ranking: 59th place. The ranking, conducted by an association of home builders, purports to rate cities on housing affordability by calculating “the percentage of homes sold that would be considered affordable for a family who earned the median income for the local area … assuming the family can spend 28 percent of its gross income on housing, among other assumptions.”
Other assumptions — like the assumption that “housing” is synonymous with “owner-occupied housing.”
Even if you explicitly set out to compile an index of housing affordability that ignores those ne’er-do-well renters, this would still be some pretty flawed methodology. For one thing, it assumes that the desire to own a house rather than rent is constant across all regions by comparing the average area income of all residents, including those who rent, with house prices.
Economist Dean Baker writes at his excellent “Beat the Press” blog at The American Prospect:
Politicians routinely hawk homeownership as an end in itself and have pushed policies that are designed to maximize homeownership. (They have also been assisted in these efforts by private foundations that are committed to assisting moderate income families.) This has often meant promoting policies that provide large subsidies to homeowners, and implicitly neglecting renters.
This single-minded promotion of homeownership is now proving to have disastrous consequences for many moderate income families that bought homes at the peak of the bubble … This is what happens when sound policy is subjugated to political ideology. For many people, in many circumstances, homeownership is a good idea. But it is not everywhere and always better for people to own than rent.
Well, I think it is nothing to be proud of that the housing values have dropped so much. Likely this’ll be the spin before second quarter housing data for the area is released soon.
posted by Emilia on July 7th, 2007 at 8:28 pmI didn’t think Ann Arbor was a big moderate income area as the housing market got really expensive a few years back, so to buy in you needed a fairly good income. My understanding is that it was the subprime lending situation that is taking the hit, which was about banks making money off the mortgages and then selling them, and not really making sure that the buyers had the ability to afford payments as they rose-with their ARMs. Caveat empor.
so… they demonstrate that the median family income in ann arbor is almost eighty thousand dollars per year, which is probably two to three times higher than most other localities in michigan at best. eighty thousand dollars per year is probably, what, 90th percentile of personal incomes nationwide? oh yeah, if housing is affordable for the richest ten percent, then everything must be just peachy.
not to mention that they’ve really gotta be stretching on that 190k figure. by ann arbor do they mean saline or dexter, or are they talking about all the dilapidated shacks and trailers parks on the south and east sides of town? what they aren’t telling you is that while you can get into a “house” for less than 200k, these are the sort of houses that will sell for half that price anywhere else in the state. i strongly doubt anyone can find what people usually consider to be a two hundred thousand dollar house in this town for anywhere near two hundred thousand dollars. hell, i feel as if you can’t hardly find a two bedroom condo here for less than a quarter mil.
posted by stc on July 9th, 2007 at 3:37 pmThe numbers from the article are for all of Washtenaw county, shacks and all.
There is nothing to cheer about. The same data show that Ann Arbor (#59) is less affordable than Lansing (No. 2), Saginaw (No. 4), Bay City (No. 5), Battle Creek (No. 12), Detroit-Livonia-Dearborn (No. 13), Monroe (No. 14), Grand Rapids (No. 20), and Warren-Troy-Farmington Hills (No. 31).
If I had money I’d buy in Grand Rapids.
posted by Jeff Dean on July 9th, 2007 at 5:50 pmstc, that depends entirely on your definition of “what people usually consider to be a two hundred thousand dollar house” in Ann Arbor. Three bedrooms, mature trees, new kitchen, new furnace, central air? I’d be glad to sell you mine for $200k.
The value of a any piece of residential property is mostly a function of the number and availability of middle-class jobs within commuting distance. People who move here from east or west coast metro areas (where jobs are relatively abundant) are shocked by how cheap houses are here. I’m sure Kokomo, #1 in housing affordability, is a nice town, but try moving there and getting a professional job in some arbitrary field.
posted by Larry Kestenbaum on July 10th, 2007 at 10:26 amyou do have a point, larry. i’m showing my roots! having grown up in the relatively more blue-collar kalamazoo area, i can never shake the feeling that i’m getting ripped off here on the east side of the state.
the thing about kokomo is that, the cost of living is so cheap, you probably don’t even need to have a professional job to survive
besides, you could drive twenty minutes into indianapolis where i am sure there is lots of professional employment to be had.
ann arbor is just a boutique city. the property values here are so far in the stratosphere, i think they almost defy logic. the city works very hard to keep rents and property values up by restricting development and implementing measures such as the green belt while concurrently, there is a fine crop of folks here who have consumed some sort of kool-aid which induces them to think that the “culture” of this city is worth paying some sort of price premium for.
well, that, or the fact that the university makes it so difficult to drive a car to work, all these high-paid professors have no choice but to live within walking or bicycling distance to their workplace.
i don’t get it.
posted by stc on July 10th, 2007 at 4:52 pmIf the affordability numbers are county-wide, then Ypsi’s part of that. Hard to believe. For the price of what we paid for our house, the only things available in A2 were small, “garden-level” condos far enough out of downtown to not really matter that it was in A2. To buy a comparable house on a smaller lot in a similar neighborhood would have literally cost twice as much. (Okay - my sample size is only 2 or 3 houses in A2, but we did look.)
I love that I can Ypsivangelize here and on AU simultaneously…
posted by Murph on July 10th, 2007 at 7:05 pmWhen I was looking for a house, I had a realtor that kept pushing me to Ypsi, Chelsea, etc by saying “Oh, you can buy so much more house than in Ann Arbor!” Well my wife and I worked in Ann Arbor, our friends lived here, we wanted to be able to walk or bike to work, and we really didn’t want “more” house so we tolerated all the Normal Park stuff he showed and finally we had to find a house in Ann Arbor ourselves.
Yes, it is a smaller house but I bike to work, see our friends, hit downtown, my kid walks to school. And hey, my energy bills and carbon footprint are smaller! I paid a lot for this small house near downtown. A LOT. With that said, I’m glad we decided to buy in AA.
What is it about people and the need for bigger houses. I have 1200sf and if I had another room I wouldn’t know what to do with it. I’ve heard that sometime in the past someone raised 4 kids in my house.
posted by imjustsayin on July 10th, 2007 at 10:01 pmSecond what imjustsayin said. Small houses are good, cohabitation is good; who wants pretty countertops in treeless developments in the middle of nowhere? (If Ann Arbor is a cultural wasteland, what’s 20 min out of the city?) The University gives free rides to m-card holders–why do we need more private parking spaces?
If we care about CO2 footprints, we shouldn’t live in Michigan. It’s that simple. This is not a practical place. It’s a waste of money and hurts the planet (read: others) in the long run. My heating bills make me feel incredibly guilty. The roads amaze me, and more sprawl won’t help. I’m sad I have only one real option for groceries downtown. My memory of this place will be fragments of parks for the cherished cohorts and strip malls. I think this place is great if you dislike cities and wilderness, have never left the Midwest, and have small children.
Ann Arbor may be too expensive for what we’re getting, but that’s our fault. I came for the research without realizing what a smug small town I was getting myself into. This is also far and away the cheapest real estate market I have ever lived in in a developed country. I guess I bump up the price, but I don’t feel like I’m getting a bargain. My bad.
posted by tangledComplaints on July 11th, 2007 at 12:00 amI think the housing market got to be a little much, but it certainly seems to be correcting itself. There’s pretty high inventory and the price has nowhere to go but down.
posted by Emilia on July 11th, 2007 at 8:17 amDon’t worry about being only 59th. The latest Money Magazine rating doesn’t even have Ann Arbor in the top 100 anymore. Plymouth Township is 37th and Farmington is 55th. We’re not overrated anymore. Maybe AAIO should consider archiving this blog and move a bit south. After all, Saline is 57th.
posted by jcp2 on July 16th, 2007 at 9:52 am