In Michigan suburbs, once-pricey bedrooms worth less

Some 15 miles southeast of Ann Arbor, the cozy bedroom community of Milan belies stereotypical views of  Michigan's economic decline. Largely white, nestled around a quaint downtown and dotted with upscale, newer homes, it projects the very image of suburban prosperity.

Analysis of property values in 2011 and 2012 tells another story.

In a city of about 6,000 people that straddles Washtenaw and Monroe counties, the Monroe County section lost 15 percent of total property value from 2011 to 2012. In the Washtenaw County side, it dropped 9 percent over the same year. Property values fell by 11 percent in the Washtenaw section, which comprises about three-fourths of city residents.

BILLIONS MORE LOST, BUT PROPERTY VALUE DROP SLOWING

By comparison, Ann Arbor seems downright healthy. It posted a gain in total property value from 2011 to 2012 of just under 1 percent, while residential values grew by just under 2 percent in the same period.

Across the state in Ottawa County, Hudsonville, a community not unlike Milan, had a drop of 6 percent in total property value from 2011 to 2012 and a 10 percent loss in residential value. It has a population of about 7,000, is 94 percent white and serves as a bedroom community for nearby Grand Rapids.

Public attention has long focused on urban centers like Detroit or Flint as poster children for all that has gone wrong in Michigan. But suburbs have by no means been immune to fiscal distress, according to Kurt Metzger, an expert on Michigan demographics and director of Data Driven Detroit, a regional data analysis organization.

WHO’S NO. 1? COUNTY-BY-COUNTY RANKINGS ON PROPERTY VALUES

Bedroom communities have been hit particularly hard by the decline of Michigan’s residential property market, notes Kurt Metzger of Data Driven Detroit.

“The biggest thing that has hit most of the suburban communities is that the majority of their operating funds come from property taxes. It's the residential property that most of the bedrooms depend on,” he said.

In Milan, residential property was assessed at about $96 million in 2012, compared to less than $37 million combined for industrial and commercial property.

WHAT’S PROPERTY WORTH IN YOUR HOMETOWN?

An online real estate site, Homefinder.com, lists numerous foreclosed homes in the ZIP code that encompasses Milan, ranging in price from well under $100,000 to more than $300,000.

But in what has to be encouraging news for the community, data from the Ann Arbor Area Board of Realtors points to recovery in the Milan area housing market in 2012. The average price of homes sold in 2012 climbed to $120,424 on 57 sales, compared to $117,138 on 65 sales in 2011.

A Milan-area Realtor said prices in 2013 are going up.

“Inventory is very low. It's a very good market in Milan right now,” said Dennis O'Hare of Real Estate One. “We're definitely coming back up. We kept going down into this hole and now we are trying to come out the other side.”

But even if residential property rebounds, Metzger warned, “That's not the answer to all issues.”

City and suburb alike face long-term challenges paying for public worker legacy obligations including pensions and health-care costs, Metzger said.

Milan Treasurer Sherry Steinwedel said the city has tried to make do without reducing services. “We have done cuts. It (dropping property value) has hurt us,” she said.

The city functions on a full-time staff of 25, a dozen fewer than before the property plunge. Steinwedel said it accomplished that through retirement incentives and consolidating administrative posts. After the director of Public Works departed, that responsibility was assumed by the Building and Zoning administrator. The position of  Parks and Recreation director was assumed by the city administrator. The city privatized its water and sewer plant.

Steinwedel expects residential values to recover, while adding: “I don't know that it will ever get back to where it was.”

Ted Roelofs worked for the Grand Rapids Press for 30 years, where he covered everything from politics to social services to military affairs. He has earned numerous awards, including for work in Albania during the 1999 Kosovo refugee crisis.