From 2018 through 2023, these high-income buyers drove a surge in luxury home purchases across Michigan.
By comparison, Michigans median household income is around $71K.
This indicates that high earners became more active in homebuying after 2018, even as overall sales also grew.
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The typical U.S. homebuyers income jumped to a record $107,000 by 2022-23, a 22% one-year increase.
This reflects how higher-income households have come to dominate home purchases as prices rose.
Many are purchasing their second or third property.
This region is home to affluent communities like Bloomfield Hills, Birmingham, and Grosse Pointe.
This was a dramatic increase even from just a few years earlier.
By 2020, the number had well over doubled from that early-2010s level.
Oaklands million-dollar transactions far outpaced other Detroit-area counties in 2020, underscoring the concentration of high-income buying power there.
Most of these top-tier sales were in Metro Detroits suburban lakefront and estate districts.
Popular Property Types
High earners in Metro Detroit are primarily buying large single-family homes in exclusive neighborhoods.
Gated communities and country club adjacent areas (like those around Bloomfield Hills or Novi) are popular.
However, post-2020, the pendulum swung back toward more space in the suburbs due to pandemic influences.
Another sign of Metro Detroits hot luxury market was shrinking time-on-market.
High-end homes, which historically might sit for many months, began selling faster in 20202021.
Remote work, low interest rates, and lifestyle shifts in 2020-2021 fueled a vacation-home buying frenzy.
In some cases, bidding wars drove second-home prices well beyond asking.
Soaring Lakefront Prices
This demand spike led to soaring prices for lakefront real estate.
This incredible jump reflects wealthy buyers willingness to pay top dollar for Michigans shoreline vistas and retreat properties.
Lifestyle and Safety:During the pandemic, families sought the perceived safety and space of rural areas.
A spacious home on Lake Charlevoix with private waterfront was appealing when urban amenities were shut down.
Moreover, affluent households saved more money while travel and entertainment venues were closed.
Investment/Hedging:Some high earners viewed real estate as a stable investment amidst volatile markets.
A lake home could double as both a vacation spot and an asset likely to appreciate.
Market Moderation
By 2022 and 2023, the vacation-home craze began to moderate.
Higher interest rates and the return of office work cooled demand.
Redfin reported that demand for second-home mortgages plummeted 50% from its 2021 peak by late 2022.
Additionally, the federal government enacted higher loan fees for second-home mortgages in 2022, raising borrowing costs.
Across Michigan, most $500K+ households favored spacious detached houses.
These tend to be empty nesters or young professionals without kids, drawn to walkable amenities and less maintenance.
Downtown Detroit, Ann Arbor, and Grand Rapids all had burgeoning high-end condo markets in the late 2010s.
However, overall condos represent a minority of purchases for $500K+ earners in Michigan, especially after 2020.
The pandemic initially softened demand for city condos as people fled for space.
These include everything from rustic-chic cottages to expansive custom-built lake houses.
New Construction vs. Construction costs did rise with supply chain issues, but those with deep pockets forged ahead.
This led to a powerful desire for more space and comfort at home.
They also spent more on home features since travel and entertainment spending was curtailed.
Remote Work Flexibility
Remote and hybrid work arrangements had a profound influence on high-end buying.
They could choose location more freely.
Financial and Tax Strategies
High-income buyers are always attuned to the financial implications of homeownership.
This affected wealthy homeowners in higher-tax states significantly.
Many high-income buyers leveraged cheap debt to buy more house, while investing their cash elsewhere.
Real estate also serves as an inflation hedge relevant as inflation picked up in 2021-22.
Real estate activity among high earners slowed to a trickle in those years.
That is a more than fourfold increase, showing how dramatically the top end revived.
High earners focused on shoring up primary residences.
20182023:Buyers became more geographically adventurous.
Remote work and the pandemic prompted a return to suburbs and beyond.
The brief flirtation with urban living by the wealthy largely gave way to a suburbia and countryside-oriented preference.
Additionally, the explosion of interest in rural/vacation areas in 2020-21 had no precedent in the prior decade.
New Construction and Development
After the 2008 crash, high-end new construction virtually halted.
There were many unfinished luxury homes and lots that sat idle.
It wasnt until the mid-2010s that building resumed in earnest.
Builders in 2021 described the luxury homebuilding market as the busiest it had been since before 2008.
The prior decade was about working through excess and recovery; the latter was about expansion and new investment.
Buyer Psychology Caution vs. Confidence
The contrast in buyer psychology between the periods is stark.
Post-2008, even wealthy buyers were cautious.
By 20182023, optimism and urgency took over.
Low interest rates from 2015 onward and surging stock portfolios made high-income individuals feel flush.
), this spurred them to act fast on real estate.
Market Outcomes
By 2023, Michigans luxury housing landscape looked very different than in 2013.
