C-
22%
Overall NAT. AVG.
2%
Goods & Services NAT. AVG.
72%
Housing NAT. AVG.
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Date & Last Updated: This data reflects 2023 and was released from C2ER in January, 2024; this is the most current data available.
The cost of living index is based on a national average of 100. For example, if the cost of living is 90, then it is 10% lower than average. If the cost of living is 110, then it is 10% higher than average. The breakdown for each index is as follows: goods & services (33%), groceries (13%), health care (5%), housing (30%), transportation (9%) and utilities (10%). If the cost of living data was unavailable for this city, estimates based upon nearby cities were used.
Index Ann Arbor Michigan National
Cost of living12289100
Goods & Services10293100
Groceries10399100
Health care10293100
Housing17274100
Transportation10097100
Utilities94101100

An Overview of Cost of Living in Ann Arbor, MI

Understanding the cost of living in Ann Arbor 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 Ann Arbor cost of living index is 122, which is 22% higher 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.

If affordability is among your top priorities when searching for a new place to live, this area may not be the ideal fit, as the cost of living in Ann Arbor is among the most expensive in the United States. Just a minority of areas exhibit a cost of living at least 20% higher than the national average, and unfortunately, Ann Arbor falls into this category, which may not align with your goal of finding a budget-friendly living environment.

Housing costs make up a big chunk of the cost of living in Ann Arbor, and they usually eat into a large part of your take-home pay. Unfortunately, in this area, both buying a home and renting one costs 72.5% more than the average city. This includes stuff like home prices, rent, mortgage rates, and insurance.

What Do Locals Say About the Cost of Living in Ann Arbor?

Locals have the inside scoop on their city. So, we polled 23 residents in Ann Arbor to learn how they view the cost of living. We asked how they felt about the cost of living in their area, and if they thought that prices were increasing, decreasing or staying the same. The verdict? 57% find it reasonable with decreasing prices, but 43% think it's quite pricey, with prices that continue to rise.

Is Ann Arbor Affordable?

Is Ann Arbor affordable? This is a pivotal question, especially when mulling over a move, as affordability carries substantial weight in your decision-making process. Factors such as the cost of living index (discussed earlier), housing expenses and income levels all contribute to a location's affordability. For instance, in Ann Arbor, the median home price is 87.8% higher than the national average and monthly rent prices are 36.9% higher than the typical rates. Additionally, the median income levels play a role in affordability, with Ann Arbor boasting a median household income of $69,456, 25.5% higher than the national average.

What Factors can Influence the Cost of Living in Ann Arbor?

Housing: When everyone's vying for homes in popular areas, it drives up property prices and rents, making the overall cost of living surge. On the flip side, in less sought-after locales, where housing demand is low, prices tend to dip, resulting in a more economical cost of living. In Ann Arbor, the housing index comes in at 72.5% higher than the national average.

Transportation: In cities with limited or no public transportation, residents may find it necessary to own and maintain vehicles, thereby elevating the cost of living. Monthly expenditures include fuel, insurance, routine maintenance and potential lease or financing commitments. In Ann Arbor, the transportation index stands at 0.5% lower than the national average.

Taxes: Cities that impose higher taxes, including sales and income taxes, can contribute to an escalated cost of living. The added expense of taxes on everyday goods like clothing and food naturally results in higher overall costs. Similarly, a higher income tax rate can further elevate the cost of living. In Ann Arbor, the general sales tax rate starts at 6%, and income tax rates begin at 4.25%.

Where is the Data From?

The Ann Arbor cost of living data you see above is sourced from the C2ER cost of living index, providing a practical and accurate means of comparing living expenses in urban areas. Updated quarterly, this index gathers data from over 300 independent researchers, covering more than 60 goods and services, in 6 different categories. These selections are made meticulously to represent a wide range of consumer expenditure categories. The weightings applied to cost differences are based on government survey data that tracks spending patterns among professional and executive households. It's important to note that while the C2ER index excludes data on sales or income tax rates, AreaVibes factors tax rates into the overall cost of living score for each region.

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Cost Of Living Quick Facts

  • The cost of living in Ann Arbor is 37% higher than the Michigan average
  • The cost of living in Ann Arbor is 22% higher than the national average
  • Ann Arbor housing is 72% higher than the national average
  • Michigan general sales tax is 18% higher than the national average
  • Michigan state income tax is 64% higher than the national average

Most Affordable Places to Live in and Around Ann Arbor

See all the best places to live around Ann Arbor

Compare Ann Arbor, MI Cost of Living

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      Salary Calculator

      This is how much you would need to earn in
      Price difference in compared to
      Cost of living index
      Goods & Services index
      Groceries index
      Health care index
      Housing index
      Transportation index
      Utilities index

      Median Income & Debt-To-Income Ratio

      Median Income Per Year Per Month Max Budget (28% DTI) Max Budget (36% DTI)
      Owners$119,661$9,972$2,792$3,590
      Renters$42,788$3,566$998$1,284
      To approximate the cost of living and the housing affordability in Ann Arbor, MI, we can look at the percentage of income that is available to be spent on monthly housing, otherwise known as the debt-to-income ratio (DTI). To stay on the safe side, a consumer should not spend more than 28% of his or her gross income on housing-related expenses and costs and not more than 36% of income on all expenses and debts. Homeowners in Ann Arbor have a median income of $119,661. Therefore, the amount that a consumer should spend on housing costs should be no more than $2,792 per month to avoid calamity and poverty. The renters in the city have an income of about $42,788, which would make their monthly maximum allowable rental costs $998.

      Michigan Sales Tax

      State General Sales Tax With Max Surtax
      Michigan 6% 6%

      Michigan Income Tax

      State Income Tax (Low) Income Tax (High)
      Michigan 4.25% 4.25%

      Goods & Services

      Item Ann Arbor National avg. Difference
      Haircut $16.80$24.2630.8%
      Beauty Salon $24.78$45.5645.6%
      Toothpaste $3.66$3.701.1%
      Shampoo $1.13$1.2811.8%
      Movie $12.99$12.137.1%
      Bowling $12.33$18.0031.5%

      Groceries

      Item Ann Arbor National avg. Difference
      Ground Beef $5.75$5.841.5%
      Fried Chicken $1.41$1.5710.4%
      Milk $4.78$4.672.3%
      Potatoes $4.80$4.932.8%
      Pizza $8.99$12.0925.6%
      Beer $9.04$10.4113.2%

      Health Care

      Item Ann Arbor National avg. Difference
      Optometrist $85.00$125.6832.4%
      Doctor $103.33$135.7823.9%
      Dentist $91.00$113.2919.7%
      Ibuprofen $10.22$10.654.1%
      Lipitor $490.11$468.604.6%

      Housing

      Item Ann Arbor National avg. Difference
      Home Price $346,800.00$184,700.0087.8%
      Avg. Mortgage Payment $1,709.07$2,346.6927.2%
      Apartment Rent $1,299.00$949.0036.9%

      Transportation

      Item Ann Arbor National avg. Difference
      Gasoline $3.35$3.463.1%
      Tire Balancing $56.00$59.926.5%

      Utilities

      Item Ann Arbor National avg. Difference
      All Electricity $219.20$193.9913.0%
      Phone $184.44$192.254.1%
      Although the cost of living data is updated regularly, this cost of living information is to be used as estimates only as prices can change on an ongoing basis.

      Nearby cities with low cost of living

      City Population Cost of Living Index National Avg.
      Clinton, MI2,885937.0%
      Belleville, MI3,879955.2%
      Ypsilanti, MI20,792963.7%
      Milan, MI6,057981.7%
      Pinckney, MI2,132990.5%
      Ann Arbor, MI121,09312222.2%

      Cities with similar population

      City Population Cost of Living Index National Avg.
      Allentown, PA121,156981.8%
      Vallejo, CA121,27514545.4%
      East Los Angeles, CA120,50414342.8%
      Arvada, CO120,22913231.8%
      Wilmington, NC122,1621098.7%
      Ann Arbor, MI121,09312222.2%
      Date & Last Updated: This data reflects 2023 and was released from C2ER in January, 2024; this is the most current data available.