Home Values Lag Ownership Costs
Trend is squeezing homeowners in cities across U.S., including Detroit, Livonia, according to census.
Gordon Trowbridge and Christine MacDonald / The Detroit News
Metro Detroit home values are barely keeping pace with the cost of owning a home, according to Census Bureau data released today.
And of 20 cities across the nation where the survey found ownership costs outpaced the growth in home values, two of them -- Livonia and Detroit -- are in southeast Michigan.
Experts say the trend threatens to squeeze families whose home investment may no longer be growing as fast as the expenses of maintaining it. And it highlights the fact that while much of the nation enjoyed a boom in home values in the first half of the decade, Michigan was left behind.
No city demonstrates the trend better than Livonia: Between 2000 and 2005, real estate values there increased about 29 percent, according to the data released today. Over the same period, the monthly cost of home ownership -- mortgage and tax payments, insurance, condo fees where applicable and utilities -- rose 35 percent. It's as if Livonia homeowners have been investing in a mutual fund with fees so high that they erase all the fund's earnings.
"I am afraid. It's a bummer. I don't even want to know," said Kim Naccashian, 44, of Livonia. She fears the value of the home she and her husband bought in 1992 is fast eroding -- a fear fed by what she sees in her job as a real estate appraiser.
While the rise in costs for Metro Detroit communities was at or about national averages, the growth in home values lagged the rest of the country: Monthly homeowner costs in Metro Detroit were up about 28 percent from 2000 to 2005, more than the national increase of 19 percent. But home values were up only 28 percent in Metro Detroit, compared with 50 percent for the nation.
"Appraising two foreclosures a week does nothing for my financial outlook," Naccashian said.
"You've got people in $500,000, $600,000 homes going into foreclosure."
The numbers are from the 2005 American Community Survey, a random-sample survey that is designed to replace a part of the once-a-decade census. The survey includes data on all geographic areas of more than 65,000 people; data released earlier this year covered population and economic characteristics.
Several factors have pushed ownership costs higher, experts said: For some families, higher interest rates mean bigger mortgage payments, and higher energy costs may be pushing utility bills up.
But economist Christopher Cagan said the real problem for Michigan families is the sluggish growth in home values.
"Costs are rising at a fairly modest rate, but the value growth just has not been there," said Cagan, director of research and analytics for First American Real Estate Solutions, a California mortgage company. The auto industry's struggles have kept Michigan from enjoying the same big jumps in home values that have benefited much of the country.
Elsewhere in the country, some economists worry that exotic mortgages -- interest-only loans or adjustable-rate mortgages -- will hammer homeowners who have bought more home than they can afford.
In other Metro Detroit communities -- Dearborn, Southfield and Canton Township -- home-value increases have barely outpaced monthly costs.
Renters in some communities are being squeezed too, according to the data. The increase in monthly rents in Dearborn and Detroit (both up 39 percent since 2005) are in the top 10 percent of the 500 communities included in the Census Bureau data -- far higher than those cities' rankings in home-value increases.
Among other findings:
Michigan remains among the leaders in homeownership rate. About 75 percent of the state's homes were owner-occupied in 2005, a slight increase from 2000. Only Minnesota and West Virginia had higher homeownership rates.
Livonia ranked second among the nearly 500 communities listed in homeownership rate, at 89 percent. Rochester Hills (79 percent) and Shelby Township (78 percent) also were in the nation's top 20.
Trend is squeezing homeowners in cities across U.S., including Detroit, Livonia, according to census.
Gordon Trowbridge and Christine MacDonald / The Detroit News
Metro Detroit home values are barely keeping pace with the cost of owning a home, according to Census Bureau data released today.
And of 20 cities across the nation where the survey found ownership costs outpaced the growth in home values, two of them -- Livonia and Detroit -- are in southeast Michigan.
Experts say the trend threatens to squeeze families whose home investment may no longer be growing as fast as the expenses of maintaining it. And it highlights the fact that while much of the nation enjoyed a boom in home values in the first half of the decade, Michigan was left behind.
No city demonstrates the trend better than Livonia: Between 2000 and 2005, real estate values there increased about 29 percent, according to the data released today. Over the same period, the monthly cost of home ownership -- mortgage and tax payments, insurance, condo fees where applicable and utilities -- rose 35 percent. It's as if Livonia homeowners have been investing in a mutual fund with fees so high that they erase all the fund's earnings.
"I am afraid. It's a bummer. I don't even want to know," said Kim Naccashian, 44, of Livonia. She fears the value of the home she and her husband bought in 1992 is fast eroding -- a fear fed by what she sees in her job as a real estate appraiser.
While the rise in costs for Metro Detroit communities was at or about national averages, the growth in home values lagged the rest of the country: Monthly homeowner costs in Metro Detroit were up about 28 percent from 2000 to 2005, more than the national increase of 19 percent. But home values were up only 28 percent in Metro Detroit, compared with 50 percent for the nation.
"Appraising two foreclosures a week does nothing for my financial outlook," Naccashian said.
"You've got people in $500,000, $600,000 homes going into foreclosure."
The numbers are from the 2005 American Community Survey, a random-sample survey that is designed to replace a part of the once-a-decade census. The survey includes data on all geographic areas of more than 65,000 people; data released earlier this year covered population and economic characteristics.
Several factors have pushed ownership costs higher, experts said: For some families, higher interest rates mean bigger mortgage payments, and higher energy costs may be pushing utility bills up.
But economist Christopher Cagan said the real problem for Michigan families is the sluggish growth in home values.
"Costs are rising at a fairly modest rate, but the value growth just has not been there," said Cagan, director of research and analytics for First American Real Estate Solutions, a California mortgage company. The auto industry's struggles have kept Michigan from enjoying the same big jumps in home values that have benefited much of the country.
Elsewhere in the country, some economists worry that exotic mortgages -- interest-only loans or adjustable-rate mortgages -- will hammer homeowners who have bought more home than they can afford.
In other Metro Detroit communities -- Dearborn, Southfield and Canton Township -- home-value increases have barely outpaced monthly costs.
Renters in some communities are being squeezed too, according to the data. The increase in monthly rents in Dearborn and Detroit (both up 39 percent since 2005) are in the top 10 percent of the 500 communities included in the Census Bureau data -- far higher than those cities' rankings in home-value increases.
Among other findings:
Michigan remains among the leaders in homeownership rate. About 75 percent of the state's homes were owner-occupied in 2005, a slight increase from 2000. Only Minnesota and West Virginia had higher homeownership rates.
Livonia ranked second among the nearly 500 communities listed in homeownership rate, at 89 percent. Rochester Hills (79 percent) and Shelby Township (78 percent) also were in the nation's top 20.
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