Michigan has not fared well in the past decade. The state experienced not a one or two-year economic recession like most states, but ten straight years of economic depression-like conditions. However, several recent data releases are pointing toward a turnaround.
The chart below shows the painful job losses that occurred from 2000 to 2009. Yet jobs stopped bleeding in Michigan in 2010 and actually made a recovery of about 100,000 net new jobs by the end of 2011 from the low point.
Partly due to job gains, home buyers were willing make a bid on a home and as a result home prices squeezed out a 1 percent gain last year, according to Michigan Association of REALTORS® (based on the median price of those sold homes from local multiple listing services). The Case-Shiller price index also listed Detroit as the only major city with a year-over-year price gain (with the other being Washington, D.C.). The government price data from Federal Housing Finance Agency showed Michigan with a 3.3 percent price jump in the latest available quarter, though still down a bit from one year ago.
The seriously delinquent mortgage rate has also made a speedier improvement in Michigan in the past two years compared with the rest of the country. The delinquency in Michigan fell below the national average for the first time in 10 years.
One big reason for the improving situation in Michigan is that auto and light-truck sales have steadily climbed from the very low point of 2009. This is particularly true for domestically produced vehicles, of which Michigan is one big beneficiary (keep in mind that there are foreign brands produced in the U.S. as well such as BMW in South Carolina, Toyota in Kentucky, Nissan in Tennessee, and Hyundai in Alabama).
The rise in vehicle sales, which is typically the second-most expensive purchase item for many consumers, also hints at what may happen to home sales, the single biggest purchase item. The total auto sales in January were 14.2 million at an annualized pace. If this sales pace can be sustained for the rest of the year, which many economists think likely given the steady job gains, then vehicle sales will have risen by 36 percent from the low point in 2009. Meanwhile, existing home sales in 2011 was 4.26 million, which is just 2 percent above the recent cyclical low point. So there is plenty of catch-up recovery potential for home sales.