Cost of Living in Detroit, MI

An Overview of Cost of Living in Detroit, MI

Understanding the cost of living in Detroit can help future residents assess whether their current financial situation aligns with the expenses they will encounter. It enables them to plan for potential changes in their budget and lifestyle. The Detroit cost of living index is 84, which is 16% lower than the national average. The cost of living index is calculated by taking into account multiple categories, which encompass both the cost of everyday expenditures and larger expenses as well.

Housing costs often consume a significant share of your take-home income, often surpassing 30%. Fortunately, Detroit distinguishes itself by reporting housing expenses that are 53.2% below the national average. This indicates that both owning a home and renting in this area are notably more budget-friendly compared to the rest of the nation. With such favorable housing affordability, residents of Detroit can allocate more of their income to housing, enhancing their financial flexibility.

What Do Locals Say About the Cost of Living in Detroit?

The most insightful perspective on a city comes from its residents. We recently surveyed 49 locals to gauge their perception of the cost of living in Detroit. The feedback revealed that 69% of respondents found the cost of living to be reasonable, with prices on the decline, while 31% regarded it as notably expensive with prices that continue to rise.

Is Detroit Affordable?

Is Detroit an affordable place to live? It's a good question and one that you might want to ask when considering any new city, as affordability can play a huge role in the decision making process. The cost of living index (which we covered above), as well as housing costs and income levels play a vital role in determining the affordability of an area. The median home price in Detroit is 71.5% lower than the national average, while the average monthly rent prices are 10.4% lower than average. The affordability of any location can also be influenced by median income levels. Detroit has a median household income of $32,498, which is 41.3% lower than the national average.

What Factors can Influence the Cost of Living in Detroit?

Healthcare: Healthcare costs and insurance premiums can fluctuate greatly based on the city or state. Access to healthcare facilities, out-of-pocket expenses for doctor\’s visits, dentist costs, medication costs and specialized care costs can all impact the cost of living. In Detroit, the healthcare costs are 2.2% higher than the national average.

Utilities: Similar to the prices of any other goods or services, utility expenditures can exhibit substantial variability, influenced by factors such as climate, energy sources accessibility, geographical location and state regulations. Costs related to electricity, water, heating, and waste disposal can fluctuate, whether higher or lower, contingent on the city or state. In Detroit, the utilities index is 5.6% lower than the national average.

Taxes: Locations with elevated tax rates, encompassing both sales and income taxes, can be a factor in driving up the cost of living. When you're paying more in taxes for everyday goods and services, it naturally translates into higher expenses. Similarly, a higher income tax rate can also contribute to an overall higher cost of living. In Detroit, the standard sales tax rate starts at 6%, and the income tax rates commence at 4.25%.

Where is the Data From?

The cost of living in Detroit, presented above is derived from the C2ER cost of living index, offering a practical method for assessing living cost disparities in urban areas. Published quarterly, this index compiles data from more than 300 independent researchers, encompassing over 60 goods and services in 6 categories. The weightings assigned to cost variances are informed by government survey data tracking the expenditure patterns of professional and executive households. It should be noted that the C2ER index does not include data on sales or income tax rates, however, AreaVibes incorporates tax rates into the overall cost of living score for each area.