New Developments Will Provide More Jobs as the Detroit HMA Economy Rebounds from the Pandemic
The Detroit-Dearborn-Livonia Housing Market Area (Detroit HMA) is coterminous with the Detroit MSA and includes all of Wayne county, Michigan. Detroit is the most populous city in Michigan with an estimated population of 1.74 million. Once the 4th most populous city in the United States, Detroit is now the nation’s 24th most populous city due to net out-migration from the HMA. Historically, Detroit is known as a center for automobile production and to this day is headquarters to the large automobile producers Ford, Fiat-Chrysler, and GMC. A recent Comprehensive Housing Market Analysis highlights the economic and housing market activity in the Detroit HMA.
2020 Employment Declines Are Recovering, Bolstered by New Developments
As elsewhere in the nation, the COVID-19 pandemic and subsequent public health responses had deleterious effects on the Detroit HMA economy, which during the 12 months ending October 2020 saw an average unemployment rate of 11.6 percent, compared to 5.1 percent the year prior. The unemployment rate was higher than the national average of 7.5 percent during the time.
During this same period, nonfarm payrolls declined by 8.5 percent or 65,300 jobs. Job losses occurred across the board in every sector with the leisure and hospitality sector experiencing the most losses at 20,800 jobs, a decline of 26.2 percent.
The education and health services sector is the largest sector in the local economy, accounting for 17 percent of jobs in the area. During the 12 months ending October 2020, employment declined by 8.6 percent or 11,300 jobs. Other large employment sectors include the professional and business services, manufacturing, and government sectors which account for 16 percent, 12 percent, and 12 percent, respectively. During the 12 months ending October 2020, these sectors experienced respective employment declines of 8.6 percent, 8.8 percent, and 2.9 percent.
The manufacturing sector includes the 3 largest employers in the HMA: Ford, GMC, and Fiat-Chrysler, which employ 48,000, 37,400, and 35,400 people respectively. From 2009 to 2019, the Detroit manufacturing sector grew by an average of 3.7 percent annually, outpacing the national average of 0.8 percent annually during that period.
Over the next 3 years, the economy is expected to recover from the job losses that occurred during the onset of the pandemic. Nonfarm payrolls are expected to increase by an average of 2.9 percent annually in the Detroit HMA. New developments in the HMA include an Amazon facility that is scheduled for completion in 2022. The facility is expected to employ more than 2,000 people. Fiat-Chrysler is also expected to hire 5,000 workers at 3 production plants in the Detroit HMA over the next 3 years.
Tight Home Sales and Apartment Markets
The Detroit HMA home sales market is slightly tight with an estimated vacancy rate of 1.8 percent. New and existing home sales totaled 26,150 with an average sales price of $174,700 during the 12 months ending August 2020. The rental market is balanced with an estimated vacancy rate of 6.2 percent, but the apartment market is tight with a vacancy rate of 3 percent. Despite the tight market conditions, construction activity as measured by building permitting remains subdued. During the 12 months ending October 2020, approximately 970 units were permitted, which is a 7 percent decline from the year prior.
During the next 3 years, demand is estimated for 2,650 new sales homes and 3,025 new rental units. For more detailed information on the Detroit HMA, please see the recent Comprehensive Housing Market Analysis on the area.