11 Must-Read Tips Before Buying A House In Michigan
Molly Grace7-Minute Read
October 14, 2020
“Pure Michigan” is a beautiful and unique state that’s a great place to call home. Whether you’re seeking a big city environment, a rural paradise or something in between, Michigan has something for every hopeful home buyer.
Considering buying a house in Michigan? Here are some things you’ll need to keep in mind as you go through the home buying process.
Why Buy A House In Michigan?
Michigan real estate can be a really solid investment, whether you’re a current resident ready to become a first-time homeowner or are looking to move to the state and put down roots here.
Michigan homes are affordable and see a slightly higher than average amount of appreciation, according to the Freddie Mac House Price Index (FMHPI).
For the United States as a whole, the current FMHPI currently sits just below 206 (measured against an index of 100 in December of 2000); in Michigan, it’s 137. And while homes nationwide see an annual appreciation rate of about 6.7%, according to the FMHPI, Michigan homes experience a rate of 7.1%.
The median home value in Michigan is $146,200, while the U.S. has a median value of $204,900, according to the U.S. Census Bureau.
In addition to its affordable real estate, Michigan is densely-packed with cultural offerings and is a nature-lover’s dream.
What Are The Top Places To Buy A House In Michigan?
Let’s take a look at some of the top places to live in Michigan.
- Median Sold Price: $339,230
Ann Arbor is a picture-perfect college town and cultural hub. With its many theaters, galleries and museums, this city is a haven for artsy souls and intellectual types alike.
Plus, with such a diverse array of delicious restaurants and funky shops, residents never want for things to do on the weekend – especially in Ann Arbor’s charming, historic Kerrytown district.
- Median Sold Price: $256,981
Friendly neighbors, lots of local amenities and an adorable downtown district make this Detroit suburb a great place to live.
For an area with such a small-town vibe, Royal Oak has an impressive theater and music scene that regularly attracts nationally renowned talent. Its walkable downtown area is great for shopping or intimate outdoor dining.
- Median Sold Price: $185,000
For such a lively urban area, the extremely affordable home prices in Grand Rapids are hard to beat.
Grand Rapids is an undeniably fun place to live. Touted by Expedia as one of the country’s “Super Cool Cities,” this locale is home to so many great breweries it’s been nicknamed Beer City USA.
If you aren’t into craft brews, beer isn’t the only thing that makes this city so cool. Grand Rapids is chock full of great museums, art, nightlife and music.
- Median List Price: $308,633
Spend your days drinking in the natural beauty of the Sleeping Bear Dunes National Lakeshore (or any of the other many gorgeous outdoor destinations in the area), and then spend your evenings drinking and tasting all that Traverse City has to offer – from wineries, to microbreweries to the city’s many great restaurants.
Whether you like hiking, biking, fishing, beach-bumming, wine-tasting, beer-sipping, alfresco dining or local produce shopping, there’s something for you in Traverse City. As long as you don’t mind settling down in a touristy area, this city is a great place to live.
- Median Sold Price: $365,483
The town of Novi has made quite a few “best places to live” lists in spite of being somewhat of an unknown entity to those who aren’t from Michigan. But those who live in Novi know that the title is well-earned.
Novi is a bustling suburb with lots of shopping and ample employment opportunities. It’s safe, friendly and has great schools, making it the perfect choice for families. It’s also located in a sweet spot where both Detroit and Ann Arbor are a short drive away, so whether you’re a commuter or just looking for something fun to do on the weekend, you’ll appreciate being in such an ideal location.
Tips For Buying A House In Michigan
Here are our top tips for Michigan home buyers.
1. Know The Real Estate Market
No matter where you buy, it’s important to understand the current conditions of the local real estate market, including whether you’ll be buying in a buyer’s market or a seller’s market.
To learn about the real estate market in the area you’re moving to, utilize Rocket Homes℠ Trend Reports – we’ll tell you about local market conditions, how home prices are trending and how fast homes are selling.
Knowing about the market will give you an idea of how much competition you’re up against and help you move strategically when making an offer.
2. Use A Trusted Michigan Real Estate Agent
Another key to home buying success regardless of where you are is having a great real estate agent by your side. The right agent will be an expert in the local market and help you make a successful offer on a home you love.
If you’re looking for a top-rated real estate professional who knows the ins and outs of the local market, consider working with one of Rocket Homes℠ Verified Partner Agents.
3. Explore Available Financing Options
Unless you plan on paying for the home with cash, you’ll need to obtain a mortgage.
If you’re a first-timer, you might want to look into the different first-time home buyer grants and resources that are available to you that could help make getting into a home a little easier.
4. Understand Michigan Property Taxes
In Michigan, property taxes are generally due twice a year: once on July 1 and again on December 1. Taxes are paid in advance, meaning that home buyers will need to reimburse sellers for a prorated portion of the property taxes the seller has already paid.
The tax rate you’ll pay will depend on exactly where in Michigan you reside, but the average effective property tax rate for Michiganders is around 1.58%, according to a WalletHub analysis.
5. Consider Your Need For Flood Insurance
For those who are buying in a designated high-risk flood zone, buying flood insurance is a no-brainer; if you’re using a mortgage loan to purchase the home, your lender will require you to carry a flood insurance policy, as regular homeowners insurance doesn’t cover flood damage.
However, even those who aren’t required to buy flood insurance could still end up benefitting from it, especially in a state with as many naturally occurring bodies of water as Michigan. Be sure to consider your new home’s level of flood risk and whether buying a policy makes sense for you.
6. Learn The Laws For Lakefront Property
If you’re buying lakefront property in Michigan, be sure to understand how much of that lakefront is included in the property.
Michigan property law refers to something called “riparian rights” when it comes to ownership of lakefront or other water-adjacent property. Basically, it’s a question of who owns the shore, who legally has access to the water and who owns the land beneath the water.
In practice, riparian rights allow lakefront property owners to do things like build a dock on their shore and prevents them from doing things that impede other owners’ or the general public’s ability to use the water.
When you purchase a home on or surrounding a lake, be sure you understand what your rights to the lake are.
7. Ask About HOA Rules
If you’re purchasing in a neighborhood that’s governed by a homeowners association (HOA), be sure you understand all the rules and restrictions that come with that.
Some HOAs require you to get approval before making changes to the exterior of your home or have restrictions on the types of things you can keep on your land (such as a shed or large vehicle). Make sure the community’s rules are compatible with your individual needs and wants.
8. Expect Low Closing Costs
While Michigan doesn’t have the lowest closing costs in the country, they are still on the lower end of the spectrum and below the national average of $5,749 (including taxes), according to ClosingCorp, a real estate data firm.
In Michigan, average closing costs in 2019 were $4,014, with homeowners paying around 2.33% of the sale price in closing costs.
9. Know Where Your Water Comes From
In Michigan, many homes are supplied their water by private household wells rather than a municipal supply. As a homeowner, you’ll need to regularly maintain your well to ensure it stays clean and is working properly.
If you’re considering buying a house that has a well, you’ll want to ensure that it’s been inspected – you may need to hire an inspector who specifically handles wells, in addition to a regular home inspector.
Some Michigan counties require well and septic system inspections prior to a home sale. The responsibility for this typically falls on the seller, who is then required to make any necessary repairs before closing. Your lender may require this type of inspection as well.
Another concern is that Michigan has higher levels of arsenic in its groundwater than many other areas. Be sure to have the home’s water supply tested and, if arsenic levels are beyond what is deemed safe, consider the cost of having filters installed.
10. Consider Your Lifestyle
The great thing about Michigan is that it has something for everyone and every town is different. If you’re moving to Michigan but aren’t quite sure exactly where you want to settle down, be sure to take some time to research the different cities in the area you’re looking to live.
Whether it’s the urban environments of Detroit or Grand Rapids, the beach town vibes of Traverse City or Holland, the natural beauty of the Upper Peninsula or the small town charm of the state’s many dynamic suburbs, everyone can find a spot in Michigan that really feels like home.
11. Make Your Move Before Winter
Winter in Michigan can certainly be beautiful and picturesque, but it can also be long, extremely cold and dangerously icy.
Take heed: you don’t want to be unloading heavy boxes from a moving truck in several inches of snow. If you can, wait for things to thaw out before making your move to Michigan.
The Bottom Line On Buying Michigan Property
All in all, Michigan is a great state to put down roots in – just be sure to keep some of the quirks of Michigan homeownership (such as proper well maintenance) in mind as you go through the home buying process.
Check out more articles on home buying on the Rocket Homes℠ blog.
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