Detroit, Michigan Home Affordability

The data below measures home affordability for the Detroit-Livonia-Dearborn, Michigan metropolitan area using price-to-income and price-to-rent metrics.¹ The maximum affordable loan amount for the median household income is also calculated. You can also compare Detroit home affordability to other cities.

Detroit, Michigan Home Price-to-Income Ratios

The current price-to-income ratio for Detroit is 1.09 as determined by March 2012 Realtor median sales prices. The second chart shows a history of the ratio as an index calculated from the Federal Housing Finance Agency's Detroit HPI series. Median household income data for Detroit is from the Census American Community Survey.

Price-to-Income Dollar Ratio: Realtor

Price-to-Income Index Ratio: FHFA

Note: Index set to 100 in Q1 of 2000

Detroit, Michigan Home Price-to-Income Ratio History

Date	Realtor (Dollar Ratio)	FHFA (Index Ratio)
March 2012	1.09	—
December 2011	1.05	80.9
September 2011	1.38	80.4
June 2011	0.97	78.7
March 2011	—	80.2
December 2010	—	82.5
September 2010	—	82.5
June 2010	—	81.5
March 2010	—	82.6

Detroit, Michigan Home Price-to-Rent Ratios

The current adjusted price-to-rent ratio for Detroit is 6.07 as determined by March 2012 Realtor median sales prices. This ratio is calculated using household size adjusted median contract rent for Detroit. The chart below shows an index of the rent ratio calculated from the metro FHFA HPI series and the Detroit median contract rent data from the Census ACS.

Price-to-Rent Dollar Ratio: Realtor, Realtor Adjusted Rent

Price-to-Rent Index Ratio: FHFA

Note: Index set to 100 in Q1 of 2000

Detroit, Michigan Home Price-to-Rent Ratio History

Date	Realtor (Dollar Ratio)	Realtor Adjusted (Dollar Ratio)	FHFA (Index Ratio)
March 2012	6.74	6.07	—
December 2011	6.54	5.90	61.6
September 2011	8.57	7.72	61.3
June 2011	6.00	5.41	60.0
March 2011	—	—	61.1
December 2010	—	—	62.9
September 2010	—	—	62.9
June 2010	—	—	62.1
March 2010	—	—	63.0

Detroit, Michigan Home Rent-to-Mortgage Payment Ratio

The rent-to-mortgage payment ratio uses the adjusted rent for Detroit against a 100% loan-to-value mortgage (30-year fixed) for the median price home using Realtor home sales statistics. It's a lot like a cap rate, but I find it more appealing in ratio form. A ratio of 1.0 means that annual rent is equivalent annual mortgage payments. Values less than 1.0 indicate rents are cheaper and values greater than 1.0 mean mortgage payments are cheaper. Beware, taxes are not considered here. The rent-to-mortgage payment ratio for Detroit was 2.89 in March 2012.

Rent-to-Mortgage Payment Dollar Ratio: Realtor

Detroit, Michigan Home Rent-to-Mortgage Payment Ratio History

Date	Realtor Adjusted Rent (Dollar Ratio)
March 2012	2.89
December 2011	2.97
September 2011	2.23
June 2011	3.04
March 2011	—
December 2010	—
September 2010	—
June 2010	—
March 2010	—

Detroit, Michigan Inferred Affordable Mortgage

The inferred affordable mortgage value is determined by taking the median household income for Detroit, Michigan and calculating the mortgage 30% of that income could afford. Traditionally, 30% of income is the maximum amount a homeowner could use towards a home loan. Inferred affordable loan values are calculated from ACS median household income and average monthly mortgage rates.

Inferred Affordable Mortgage

Detroit, Michigan Inferred Affordable Mortgage History

Date	Inferred Mortgage
January 2012	$254,846
December 2011	$253,613
November 2011	$252,695
October 2011	$250,270
September 2011	$249,070
August 2011	$244,356
July 2011	$236,422
June 2011	$237,531
May 2011	$233,953
April 2011	$228,606
March 2011	$228,606
February 2011	$225,743
January 2011	$230,722