Homes in East Lansing and Lansing are the most affordable in the country, according to the Housing Opportunity Index released this month.
The National Association of Home Builders and Wells Fargo collected information for the index, which is determined by measuring the number of homes that are affordable to those who make the median income of the area. Population size and interest rates also are taken into consideration for the index.
The median price of a home in the East Lansing-Lansing market was affordable to more than 92 percent of households in early 2006, said Steve Melman, director of economic services at the association.
The median price of a home was $108,000, and the median household income was $64,200, Melman said.
Other areas with affordable small housing markets — or having a city population less than 500,000 — were the Davenport-Moline-Rock Island area in Iowa and Illinois; the Lima, Ohio area; Battle Creek and Bay City.
Indianapolis, Ind., topped the list for most affordable major housing market — an area with a population of more than 500,000 — followed by the Youngstown-Warren-Boardman area in Ohio and Pennsylvania, and Detroit-Livonia-Dearborn area. Melman said the poor job market in Michigan is a direct cause of the low housing prices.
"When you're looking at the large losses from the automobile industry, it's really pulled down Michigan and Ohio more than other parts of the country," he said.
Melman said the failing auto industries have prevented housing markets from gaining any momentum and compared it to Las Vegas, a city where the median price of a home increased from $196,000 a year ago to $298,000 in 2006.
Melman said the trend can be seen in many cities that currently have growing economies, whether from international trade in California and Baltimore or the government presence in Washington D.C. In these places, the median house price is affordable to a much smaller percentage of people.
This is good for the few people who do have a high income and want to buy houses, but bad for the economy in general, he said.
MSU economics Professor Charles Ballard said the weak economies in the Midwest — particularly in Michigan — have benefits and drawbacks.
"The downward side is that people are not flocking to Michigan and putting an upward push on house prices," he said. "The upside is that you can get more for your money."
Susan Kaagan, an East Lansing resident who has lived in the city for 24 years, recently sold her house on Northlawn Street in the Glencairn neighborhood, after less than a month on the market.
"The housing market is apparently dead right now, but we've been really lucky," she said.
Kaagan said East Lansing's close location to the MSU campus, the mix of university students and local residents and the unique appearance of her neighborhood makes East Lansing a desirable place to live.
"There are such unusual houses — you go to a new neighborhood in Okemos and they're just identical mansions," she said.
Doug Carr of the Greater Lansing Homebuilders Association said the East Lansing-Lansing housing market has an advantage over other small housing markets in Michigan because of its diverse environment.
Melman said homes will become more expensive when Michigan's economy gets stronger.
"Some of the older industries have lost employment, and hopefully this will open up new opportunities for new businesses to move in," he said.
