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Zip Code 48104: Rising Home Values and Shifting Ownership in Ann Arbor's University Area
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Zip code 48104, located in Ann Arbor, Michigan, has experienced significant changes in its housing market over the past decade. This area, known for its vibrant college town atmosphere and cultural diversity, has seen a notable shift in homeownership rates and housing prices, reflecting broader economic trends and local market dynamics. The homeownership rate in zip code 48104 has steadily declined from 42% in 2013 to 36% in 2022, indicating a shift towards a predominantly renter-occupied market. Concurrently, average home prices have shown a robust upward trend, rising from $261,562 in 2010 to $517,280 in 2022, representing a substantial 97.8% increase over this period. This inverse relationship between homeownership rates and average home prices suggests that rising property values may be pricing out potential buyers, pushing more residents towards renting. Federal interest rates have played a significant role in shaping homeownership trends in the area. The period from 2010 to 2015 saw historically low interest rates, ranging from 0.09% to 0.18%. Despite these favorable borrowing conditions, homeownership rates continued to decline, dropping from 42% in 2013 to 40% in 2015. This trend persisted even as interest rates began to rise, reaching 1.83% by 2018, with homeownership further decreasing to 39%. The continued decline in homeownership despite varying interest rates suggests that other factors, such as rapidly increasing home prices, may have had a more significant impact on homeownership rates in this zip code.
The renter population in zip code 48104 has grown considerably, with the percentage of renter-occupied units increasing from 57% in 2013 to 64% in 2022. This shift coincides with a steady rise in average rent prices, which increased from $1,377 in 2013 to $1,525 in 2022, representing a 10.7% increase. The population of the zip code also grew during this period, from 39,503 in 2013 to 44,243 in 2022, a 12% increase. This population growth, combined with rising home prices, likely contributed to the increased demand for rental properties and the subsequent rise in rent prices.
In 2023 and 2024, the housing market in zip code 48104 continued to show strength. Average home prices reached $535,757 in 2023 and further increased to $548,747 in 2024, representing a 6.1% growth from 2022 to 2024. This growth occurred despite a significant rise in federal interest rates, which jumped to 5.02% in 2023 and 5.33% in 2024, levels not seen since before the 2008 financial crisis.
Looking ahead, predictive models suggest that the upward trend in both average home prices and rent prices is likely to continue over the next five years, albeit at a potentially slower pace due to the higher interest rate environment. Average home prices could potentially reach or exceed $600,000 by 2029, while average rent prices may approach or surpass $1,700 per month.
In summary, zip code 48104 has experienced a significant shift towards a renter-dominated market over the past decade, driven by rapidly appreciating home values and a growing population. Despite fluctuations in interest rates, the trend of declining homeownership has persisted, suggesting that local market factors and affordability issues play a crucial role in shaping housing dynamics in this area. The continued rise in both home prices and rent prices, even in the face of higher interest rates, indicates a robust demand for housing in this desirable Ann Arbor neighborhood.
