Building Costs Per Square Foot in the State of Michigan, USA

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New 3 Bedroom House 340 Dover Road Waterford Michigan $369900 (2)

Completed in 2022 – Newly-built 3 Bedroom House with 3 Bathrooms, 2 x Attached Garages, Gross Floor Area 1,825 sqft – Located on 340 Dover Road, Waterford, MI 48328 – Price $369,900 

Construction Market Analysis in the State of Michigan, USA

Building costs in Michigan are 1% higher than the national average, equivalent to the states of Colorado and Nevada and closer to the states of Ohio, Washington, Wisconsin, Kansas, Maryland, Louisiana and Delaware by 1% . According to TE statistics, the number of building permits issued in Michigan are at their peak during the second and third quarter of the year. The numbers dwindle towards the end and start of the year. The TE Chart shows the number of monthly building permits issued for new private housing in the state over a 5,10 and 25-year period counting back from 2022. The  25-year chart shows the construction boom ended in 2006. Before that, the average monthly peak value of permits was around 5000. This dropped to 3000 in 2006 and reached a record low of 750 in 2009. From 2009 to 2016, the numbers climbed steadily along a smooth slope, reaching an average monthly peak value of 3000. However, although 2017 recorded the highest peak since 2007, the average peak value dropped to 2200, and this was the beginning of an annual decline which persisted until the end of 2020 at around 1800 permits. Recovery was observed in 2021 as the average monthly peak climbed to 2000 permits. The strong monthly performance in 2021 saw values between 1500 and 2000 throughout the year and 2022 might be off to a good start. In February 2022, the state of Michigan approved 1771 building permits for new private housing.

Monthly Building Permits Michigan 2012 to 2022

Monthly Building Permits Michigan 2012 to 2022

Home ownership rates in Michigan rates increased to pre-2015 levels in 2020 after taking a steep decline from 2016 to 2019. About 74.75% of people in the state owned a home in January 2012. This dropped to 73.9% and 73.75% in 2013 and 2014 respectively. Home ownership rates climbed to 74.6% in 2015 and then dropped drastically to 72.75% in 2016. Rates remained steady until  2019 and then shot up to 74.25% in 2020. They declined once again to 73% in 2021. In order to get a broad picture, we have to look at the 25-year chart. Home ownership has decreased from a peak value of 77.5% in 2006 to a peak of 73% in 2021.

The TE Chart also shows the quarterly construction earnings in Michigan over a 5, 10 and 25 year span. From the first quarter of 2019 to last quarter 2021, earnings have increased from $18,250,000 to $22,250,000, with the exception of the second quarter of 2020 which declined to $15,750,000. The 10-year chart shows an almost linear smooth increasing curve of construction earnings from 2012 to 2022, with a notable interruption in the first quarter of 2020 showing a decline in earnings down to $15,750,000. Earnings were around $12,000,000 in 2012 and climbed to $22,500,000 in the first quarter of 2022.

Average hourly earnings in the Michigan construction industry have been increasing since 2012, climbing from $25.5 per hr in 2012 to $31.8 per hr in 2021. Each year exhibited an increase from the previous year over the past decade 2012 to 2021.

The AGC Sage Construction Outlook Survey shows that the majority of contractors in Michigan expected the value of multi-residential building, hospital and public projects to decrease in 2021. However, contractors expressed a positive outlook in water/sewer reticulation, warehouse and federal building projects, with more of them expecting an increase in the value of work and the majority expecting consistency. Expectations were evenly distributed in the bridge/highway, healthcare support, and K-12 educational sector, with the same number of contractors predicting an increase and decrease in the value of work, while the majority expected the value of bridge/highway projects to remain the same.

In power, manufacturing and transportation projects, the majority of contractors expected the value of work to remain the same, and more contractors predicted a decline.

A whopping majority of contractors predicted a decline in the value of work in higher educational facilities, hospitality, office and retail construction. About 59% of contractors postponed projects that were about to start in 2020. 52% of contractors had projects between $50 million and $500million, and 45% had projects less than $50 million.

The average house price in Michigan is $197,676 and the range is $66,704 to $1,333,563. The majority of homes (34.3%) are in the range $133,432 to $266,745. The second most popular homes (19.8%) are in the range $66,705 to $133,431. These are followed by single-family homes in the range $266,746 to $400,057 which are bought by 17% of home buyers. The cheapest homes are $66,704 and below, and these are preferred by 14.1% of buyers. Luxury homes are preferred by 14.9% of buyers and they start from $400,058 and above. There are about 3,970,689 residential dwellings in Michigan and these include single-family homes and apartments.

The home appreciation rate has increased by 68.12% between 2000 and 2021, 84.56% between 2011 and 2021, 44.31% between 2016 and 2021, 21.38% between 2019 and 2021, and 15.62% over the last 12 months between Q3-2020 and Q3-2021. The annual appreciation rate has been 2.45% over 20 years, 6.32% over 10 years, 7.61% over 5 years, 10.17% over 2 years and 15.62% over 12 months.

69.6% of people in Michigan own a house, 30.4% are renting and 14.4% are in possession of vacant land. The majority of homes in Michigan (87.6%) were built before 2000. About 38.5% were built in 1970 to 1999, 34.4% were built in 1940 to 1969 and 14.8% were built in 1939 or earlier. Newer homes, those built in 2000 and after constitute only 12.4% of all homes in the state.

Single-family homes are the most common type of home in the state, constituting 72.2% of all homes. Apartment complexes are the second most popular homes at 13%. 5.3% of homes in the state are mobile homes, 4.9% are small apartment buildings and 4.6% are townhouses.

Three-bedroom houses are the most common size and studio apartments are the least common. 43.8% of all homes in Michigan are 3-bedroom houses, 25.4% are 2-bedroom houses, 16.5% are 4-bedroom houses, 9% are 1-bedroom dwellings and 3.7% are 5+bedroom dwellings.

Historical House Price Index Michigan 1975 to 2021

Historical House Price Index Michigan 1975 to 2021

The FRED Chart shows the historical house price index in Michigan from Q1-1975 to Q4-2021. The index was 60,23 in 1975, climbed to 101.76 in Q4-1980 and remained stable until Q4-1985 at 103.80. It rose gently to 148.97 in Q4-1990, reached 188.44 in Q4-1995, and continued the smooth linear climb to 318.87 in Q4-2005. After reaching this peak, the house price index took a decline, dropping to 225.91 in Q2-2011. Thereafter, the index took an upward trajectory up a linear slope, finishing off at 383.04 in Q1-2021. It then rose steeply to 434.51 in Q4-2021.

The 2021 month-on-month average home sale price in Michigan was $225,000 per house in April, $194,000 in May and $239,000 in June. During these months, the average home sale price was higher than 2019 and 2020. In the Detroit Metropolitan Area, the median home price was $226,500 and the average was $273,763.

Some of the residential building projects in Michigan include the Boston Square Together mixed-use residential complex that will house 270 apartment units in two blocks. The first stage of the project is valued at $60 million and it’s expected to be finished in 2031. Waterford Village is another housing project in the works. It comprises 250 apartment units laid out in horizontal single-storey plan, 68 single-family homes and retail/shopping areas. The project is valued at $80 to $100 million and it was designed by Vocon Partners Architects from Cleveland.

Building Costs Per Square Foot for Single Family Homes in the State of Michigan, USA

Class 1 – Luxury Single Family Homes

The building cost per square foot for luxury private homes in Michigan ranges from $348.34 per sqft to $533.99 per sqft, with the average being $411.09 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 1 Luxury Single Family Homes Building Costs MICHIGAN

Class 1 Luxury Single Family Homes Building Costs MICHIGAN

Class 2 – Semi Luxury Single Family Homes

The building cost per square foot for semi-luxury private homes in Michigan ranges from $211.71 per sqft to $324.51 per sqft, with the average being $249.83 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 2 Semi Luxury Single Family Homes Building Costs MICHIGAN

Class 2 Semi Luxury Single Family Homes Building Costs MICHIGAN

Class 3 – Best Standard Single Family Homes

The building cost per square foot for best-standard private homes in Michigan ranges from $136.86 per sqft to $207.87 per sqft, with the average being $160.23 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 3 Best-Standard Single Family Homes Building Costs MICHIGAN

Class 3 Best-Standard Single Family Homes Building Costs MICHIGAN

Class 4 – Good Standard Single Family Homes

The building cost per square foot for good-standard private homes in Michigan ranges from $99.88 per sqft to $153.17 per sqft, with the average being $117.87 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 4 Good-Standard Single Family Homes Building Costs MICHIGAN

Class 4 Good-Standard Single Family Homes Building Costs MICHIGAN

Class 5 – Average Standard Single Family Homes

The building cost per square foot for average-standard private homes in Michigan ranges from $81.07 per sqft to $124.16 per sqft, with the average being $95.60 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 5 Average-Standard Single Family Homes Building Costs MICHIGAN

Class 5 Average-Standard Single Family Homes Building Costs MICHIGAN

Class 6 – Minimum Standard Single Family Homes

The building cost per square foot for minimum-standard private homes in Michigan ranges from $63.94 per sqft to $98.01 per sqft, with the average being $75.43 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 6 Minimum-Standard Single Family Homes Building Costs MICHIGAN

Class 6 Minimum-Standard Single Family Homes Building Costs MICHIGAN

List of 13 Metropolitan Areas/Cities in Michigan – Percentage Deviation of the City/Town Building Cost from the National Average ($X), in Descending Order:

There are 1773 municipalities grouped into 83 counties in the state of Michigan. The bar chart below indicates that building costs vary in each metro city/town. The construction cost per square foot in each of these metropolitan cities varies from the state and national average by a certain percentage based on the location factor also known as the local modifier.

The percentage deviation of building costs from the National Average for each metropolitan area in Michigan is shown below.

If $X is the Average National Building Cost in the USA, then it will cost the following to build a residential property in each metro city/town in Michigan:

Michigan Average 1% (1% more than X)

  • Grayling 497 -7%
  • Saginaw 486-487 -5%
  • Flint 484-485 -4%
  • Traverse City 496 -2%
  • Battle Creek 490-491 -1%
  • Jackson 492 -1%
  • Lansing 488-489 0%
  • Grand Rapids 493-495 1%
  • Marquette 498-499 3%
  • Detroit 481-482 7%
  • Royal Oak 480 7%
  • Pontiac 483 12%

The Metropolitan Area List above as well as the Bar Graphs below shows that Grayling is the cheapest city to build a private home in the state of Michigan, and Pontiac is the most expensive city to build a home. Building costs are -7% below the national average in Grayling and 12% above the national average in Pontiac.

Deviation of City Building Costs from National Average Michigan - Alphabetical Order

Deviation of City Building Costs from National Average Michigan – Alphabetical Order

Deviation of City Building Costs from National Average Michigan - Ascending Values

Deviation of City Building Costs from National Average Michigan – Ascending Values

Cheapest Places To Build in Michigan:

Grayling is the cheapest to place to build at -7% below the national average, followed by Saginaw City at -5%. The third cheapest place to build is Flint at -4% below the national average. The fourth cheapest city to build a house is Traverse City at -2% below the national average, followed by Battle Creek and Jackson at -1% below the national average. Building costs in the city of Lansing resemble the national average.  The cost of building a home in Grand Rapids and Marquette is 1% and 3% above the national average respectively.

Expensive Places To Build in Michigan:

If anything between 5% and 10% is considered expensive, then there are two such metropolitan areas in the state of Michigan. Building a house in the city of Detroit and Royal Oak is 7% more than the national average.

More Expensive Places To Build in Michigan:

If anything between 10% and 15% is considered more expensive, then there are is one such metropolitan area in the state of Michigan. Building costs in the city of Pontiac are 12% above the national average.

Very Expensive Places To Build in Michigan

The most expensive places to build a house in the USA are those 15% above the national average. There are no such places in Michigan.

Michigan State Average Costs:

Private home building costs in the state of Michigan are 1% above the national average. Building cost rates in the metropolitan areas of Battle Creek, Jackson and Grand Rapids are closer to the Michigan state average by a deviation of 1%. Pontiac is the most expensive city to build a home in Michigan, and the state of Michigan is number 33 on the national ascending costs scale.


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