The Visual Capitalist, a digital media company that specializes in analyzing data, recently published a breakdown of housing costs in large, US cities. By comparing the median home price to the median household income in an area, the site was able to determine where in the US people spend the most on housing relative to their incomes. The analysis included only cities that have at least 1M residents. But the formula is relatively simple and yields similar results for less populated areas.
Online real estate marketplace Zillow has a widely available data store that measures the monthly median home price by area. For many locations, Zillow’s historical data reaches back nearly 25 years. Combined with median household income data from the US Census Bureau, it’s relatively easy to develop an index of housing costs for a particular area. Dividing the median home price by the median household income for an area yields the home-price-to-income ratio – an indicator of the cost burden of housing in an area.
Using the Zillow data, I looked at median home prices in various locations in Washtenaw County as well as median household income data from the Census Bureau. In 2022, for example, the average home-price-to-income ratio for residents living in the 48104 ZIP code (Ann Arbor) was 6.6. This is slightly higher than the home-price-to-income ratio for Portland, OR, and the highest home-price-to-income ratio in Washtenaw County.
Residents of the 48103 ZIP code (Ann Arbor) didn’t fare much better. Their home-price-to-income ratio was 5.97, which compares to the home-price-to-income ratio in places like Las Vegas, Nashville, and Washington, DC.
Housing costs are more unaffordable in Ypsilanti
Residents of the 48197 ZIP code (Ypsilanti/Ypsilanti Township) had the third-highest home-price-to-income ratio at 5.3. This compares to the home-price-to-income ratio of cities like Tampa, FL, Charlotte, NC and Bakersfield, CA.
In comparison, in 2000, Ann Arbor’s home-price-to-income ratio was 4.7 and Ypsilanti’s was 3.2. That means in 2000, Washtenaw County residents had an easier time affording housing here. That’s not exactly a headline, but the shift in these numbers over the past two decades show just how hard it has become to afford a house in Washtenaw County.
The data refer only to homeowners. Renters, who comprise more than half the population in both cities, don’t even factor into these calculations. Their struggle to afford housing isn’t captured in this picture.
The cost of housing in Washtenaw County and the struggle to afford a place to live here are two more reasons that Washtenaw Community College should focus on the creation of programs that prepare students for high-wage, high-demand jobs. Over the past two decades, the home-price-to income ratio in Ann Arbor has grown by 30%-40%. In Ypsilanti, the ratio has risen by 65%. It is much harder today for Ypsilanti homeowners to afford living here than it was twenty years ago.
The growing unaffordability of Ypsilanti should be worrisome. Reducing the cost of housing is unlikely without mass home construction, so restoring housing affordability becomes a function of household income. For this to happen, household income in Ypsilanti would have to increase by two-thirds of what it is today.
It’s a problem that requires collective action to solve, and the longer we wait, the harder it will be to address housing affordability in Washtenaw County.
Photo Credit: Zack McCarthy, via Flickr
