Slowing Job Growth and Balanced to Slightly Tight Market Conditions in the Warren HMA

Slowing Job Growth and Balanced to Slightly Tight Market Conditions in the Warren HMA

Gabriel Labovitz is a regional economist in the Chicago Regional Office for HUD's Economic and Market Analysis Division

HUD's Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and population and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses. 

The Warren-Troy-Farmington Hills Housing Market Area (Warren HMA) in southeastern Michigan includes Lapeer, Livingston, Macomb, Oakland, and St. Clair counties and is coterminous with the Metropolitan Division of the same name. The Warren HMA, along with the Detroit-Dearborn-Livonia Metropolitan Division, which consists of Wayne County, forms the larger Detroit-Warren-Dearborn, MI Metropolitan Statistical Area (Detroit MSA). The Warren HMA had an estimated population of 2.59 million as of August 1, 2024, or approximately 60 percent of the population of the Detroit MSA. The population in the HMA fell from 2020 to 2022, averaging declines of 3,900, or 0.2 percent annually, because both net migration and net natural change declined. Since 2022, these trends have reversed, and the population is estimated to have increased by 1,950, or 0.1 percent average annual growth. The HMA generally relies on international immigration to offset domestic net out-migration. A recent Comprehensive Housing Market Analysis highlighted the Warren HMA and reflects local conditions as of August 1, 2024.

Job growth in the Warren HMA slowed during the past 12 months, and, as of August 1, 2024, nonfarm payrolls in the HMA had not reached prepandemic levels, reflecting a slower rate of job growth than the nation as a whole.

Economic conditions in the Warren HMA are stable, and job growth slowed during the recent 12 months compared with the previous 12-month period. Nonfarm payrolls in the Warren HMA rose by 5,200 jobs, or 0.4 percent, during the 12 months ending August 1, 2024, to reach 1.27 million jobs — slower growth than the 2.4 percent increase a year earlier. Despite the recent job growth, the number of jobs in the HMA currently remains slightly below the 2019 level; by comparison, in the nation as a whole, the number of jobs during the 12 months ending August 1, 2024, was more than 4 percent higher than the 2019 average. Following a single-year decline of 123,700 jobs, or nearly 10 percent, during 2020, the number of jobs in the HMA rose by an average of 51,500, or 4.4 percent annually, from 2021 through 2022.

The largest employment sector in the Warren HMA is the professional and business services sector, which made up 20 percent of total nonfarm payrolls in the HMA, followed by the education and health services and the wholesale and retail trade sectors, each of which accounted for 15 percent of total nonfarm payrolls. The manufacturing sector is a strong presence in the HMA, accounting for 12 percent of nonfarm payrolls in the HMA compared with 8 percent for the nation as a whole. The two largest employers in the HMA are the automobile manufacturers General Motors Company and Stellantis N.V., providing 31,150 and 28,500 jobs, respectively (Crain's Detroit Business and analyst estimates). During the 12 months ending August 1, 2024, 7 of 11 payroll sectors experienced job growth, led by the education and health services and the mining, logging, and construction sectors, which added 5,700 and 2,700 jobs, or growth of 3.1 and 4.6 percent, respectively. Four sectors declined, led by the professional and business services sector, which fell by 5,800 jobs, or 2.2 percent.

During the next 3 years, nonfarm payrolls are expected to increase 0.7 percent annually, on average, to 1.30 million jobs. Proposed expansions of healthcare facilities in Livingston and Oakland counties will fuel continued growth in the education and health services sector, and expansions and contractions in the transportation and equipment manufacturing industry will impact the manufacturing sector. Stellantis N.V. announced a major layoff in October 2024, but other manufacturers, including suppliers to the automobile industry, have planned expansions.

Relatively high mortgage interest rates and limited for-sale inventory of homes contributed to declining home sales, and limited construction of new apartment units since a 2019 peak have contributed to current balanced rental market conditions.

The home sales market in the HMA is slightly tight, with an estimated vacancy rate of 0.9 percent as of August 1, 2024, down from 1.1 percent in April 2020. Mortgage interest rates, which began rising during 2022 and have increased the cost of homeownership, negatively impacted home sales. In addition, the inventory of homes for sale has been low for more than a decade, and rising mortgage interest rates deter current homeowners from listing their homes if a subsequent home purchase would include a mortgage with higher rates. In July 2024, the HMA had 1.9 months of inventory, unchanged from the level a year earlier, although the number of homes listed for sale fell nearly 6 percent during the same period (CoreLogic, Inc.). The limited inventory of homes for sale spurred home price growth despite declining home sales. During the 12 months ending June 2024, home sales fell 10 percent year over year to 35,850 homes sold, and the average home sales price rose 6 percent, to $318,000. Builders have responded to the slightly tight conditions in the sales housing market conditions by increasing rates of new home construction following 2 years of declines since 2021. During the 12 months ending July 2024, approximately 4,050 new homes were permitted in the HMA, 6 percent higher than the number of new homes permitted during the previous 12 months. Over the next 3 years, demand is estimated for 12,000 new homes.

The overall rental market in the HMA is balanced, with an estimated 6.8 percent vacancy rate, down from 7.0 percent in April 2020. The apartment market is also balanced, and the vacancy rate as of the second quarter of 2024 was 6.0 percent, up from 5.7 percent a year earlier, while the average apartment rent rose nearly 3 percent to $1,365 (CoStar Group). New apartment construction rates reached record-high levels from 2017 through 2019 before falling sharply in 2020. Since 2020, apartment construction rates have risen gradually, helping maintain balanced markets in the HMA. Although the rental and apartment markets remain balanced, developers slowed the construction of new apartment units during the 12 months ending July 2024, when 1,525 new units were permitted, down nearly 19 percent from 1,875 units permitted a year earlier. By comparison, nearly 3,400 new apartments were permitted during 2019, a recent record-high level. During the next 3 years, demand is estimated for 4,275 new rental units.