Detroit was just one of many manufacturing cities that experienced adversity during the 2008 financial recession. A decade later and the city is in recovery mode with startups booming throughout. Detroit is on the receiving end of millions of dollars in venture capital and is now considered a hub of innovation.
The city is definitely rebounding, so how does that impact the cost of living in Detroit? Overall, Detroit prices are 3.5 percent higher than the U.S. average, a 2.9 percent increase over 2020.
Can you afford the cost of living in this city? We’ve broken down the overall cost of living into multiple categories like the average rent in Detroit, healthcare, taxes, etc., to help you determine whether making the move to Detroit is the best choice for you and your family.
- Housing costs in Detroit
- Food costs in Detroit
- Utility costs in Detroit
- Transportation costs in Detroit
- Healthcare costs in Detroit
- Goods and services costs in Detroit
- Taxes in detroit
- How much do you need to earn in Detroit?
Housing costs in Detroit
One of the highest costs in your monthly budget is housing. Depending on what city/neighborhood you live in, the rental fees can make the cost of living in Detroit affordable or totally out of budget.
On average, housing costs in Detroit are 2.3 percent higher than median housing costs in the U.S. The average rent in Detroit is $2,660, a whopping 73 percent higher than last year.
Of course, this is just the average. Some neighborhoods cost less, others cost more. The neighborhood with the highest rental rates is the Capitol Park Historic District, where renters pay an average of $2,864 each month. However, if you decide to move to the neighborhood of Brooks, you can pay as low as $750 per month in rent.
Average rent prices in cities near Detroit
If you’re not a fan of living in a big city and prefer the idea of living in a smaller town or suburb, there are several areas around Detroit to consider. Not only will you be close enough to the city to enjoy its amenities, but you’ll usually pay less in rent than the Detroit average. Here are some cities to check out:
- West Bloomfield: $2,254
- Rochester Hills: $1,708
- Ann Arbor: $3,399
- Canton: $1,385
- Southfield: $1,282
Home prices in Detroit
If you’re not sure renting in Detroit is right for you, consider buying a home. Housing costs in this city are some of the lowest in the country, with the average sale price coming in at $75,000. If you make a 5 percent down payment, your monthly mortgage rate will cost around $714. If you put the often-recommended 20 percent down, your monthly payment drops to $601.
It’s possible that owning a home will drop the cost of living in Detroit, especially since it can save you around $2,000 a month considering the average rent in Detroit. However, you’ll also have maintenance, insurance and property tax fees that factor into the cost of owning a home.
Food costs in Detroit
You’ll be happy to know that your monthly grocery/dining out bill is on par with the national average. Overall, food prices in Detroit are only 0.6 percent higher than in other cities in the country.
For instance, if you buy chicken, tuna, cereal and peaches, you’ll pay a total of $8.02 in Detroit, compared to the national average of $8.13.
If you’re like most people, you eat out from time to time, both out of necessity (we all lead busy lives!) and for the pure enjoyment of it.
According to Eater.com, some of the restaurants in Detroit are absolutely essential. You’ll find delectable international cuisine serving Lebanese, Polish, Mexican and Thai cuisine. Residents also have their pick of delis, steakhouses and breweries, as well as restaurants serving New American cuisine. On average, a single meal will cost around $15 per person. Of course, at a fine dining or specialty restaurant, the prices will be higher.
Utility costs in Detroit
Something that can radically drive up the cost of living in Detroit is utility fees. As a northern Midwest state, Michigan residents often deal with extreme weather — from below freezing temperatures and snow in the winter to unbearably hot, humid conditions in the summer.
Thankfully, most apartments for rent in Detroit have the means to keep you comfortable, namely heaters and air conditioners. Running these devices, though, can increase the average rent in Detroit, whether you or your landlord are covering those costs.
On average, utility fees in Detroit are on par with the national average — only 0.7 percent higher. Your energy bill in Detroit will cost approximately $177.06. The national average is $161.20.
Other utilities to factor into the cost of living in Detroit include:
- Internet
- Cell phone service
- Water and sewage
- Garbage/recycling pick-up
- Cable
Transportation costs in Detroit
Transportation costs in Detroit are higher than the U.S. average by 2.3 percent. Figuring out what you’ll end up spending in order to travel to and from work, to get groceries and to run other errands may determine where you choose to live in the city.
You might be able to save costs by living Downtown and walking or riding your bike to work. You might find this hard to do in the winter months, though. But still, it can help save some money, which will be helpful if you’re paying the average rent in Detroit.
The walkability and biking scores (59 and 60) in the city are higher than average.
Another option is to take public transit (the Detroit transit score is 43). The Detroit Department of Transportation has recently simplified its fare structure. Now, whenever you buy bus fare, it includes:
- Unlimited rides
- Zero transfer fees
- Rolling passes
A 4-hour Dart pass is $2, or you can pay $5 for 24 hours. A 7-day pass is $22, while a 31-day pass is $70.
Owning a vehicle in Detroit
If you’re like many Americans, you like the independence of owning your own vehicle. You don’t have to rely on bus schedules or carpool with co-workers you aren’t really crazy about.
While there are some definite perks to owning a car, don’t forget the expenses that come along with it. These include:
- Maintenance fees like tire balancing ($61.16)
- Fuel ($2.67 per gallon)
- Insurance
- Registration fees
- Parking fees (off-street parking averages $5 per hour; a monthly parking pass is around $100, though you can find cheaper rates)
Healthcare costs in Detroit
Other bills that can quickly raise the cost of living in Detroit are healthcare costs. It’s hard to determine an exact figure in this category because healthcare is such a personal thing. Each person has different needs and will pay a different amount per month/year.
Overall, healthcare costs in Detroit are 5.2 percent lower than the national average. Here’s what that might look like for you:
- Doctor visit: $109 in this city ($112.81 – national average)
- Dental check-up: $96.75 in Detroit (national average: $99.44
- Eye exam: $85 in Detroit ($105 elsewhere)
- OTC medications: $8.99 for ibuprofen in this city ($9.80 – U.S. average)
What about prescription medications? They’re typically 3.2 percent higher than the national average.
Goods and services costs in Detroit
In addition to your grocery bill, other expenses include non-essential yet important purchases. These include things like:
- Dry cleaning
- Gym fees
- Shampoo
- Deodorant
- Kleenex
- Toilet paper
- Toothpaste
Goods and services can also include a night out to the movies with your friends and/or significant other, followed by a burger and beer at your favorite casual restaurant.
Overall, these costs are 7.7 percent higher than the U.S. average.
Let’s use date night as an example. You buy a movie ticket for you and your partner, plus dinner for both — two burgers, two beers. The total cost is $48.76 in Detroit vs. the national average of $51. At first, that might not seem like a huge discrepancy. But if you think of all the items you purchase monthly, the price quickly adds up and can determine whether you find the cost of living in Detroit affordable or not.
Taxes in Detroit
One thing that holds people back from investing in their own homes is the residential property tax rate. The average county tax rate in Detroit (Wayne County) is 2.35 percent. If you purchase a home for $75,000, you’ll pay around $1,763 in taxes each year. This will increase the cost of living in Detroit and may make it harder to afford depending on your income.
Other taxes include sales and income tax. The sales tax in Detroit is 6 percent. Michigan sales tax is 6 percent and there are no additional city/county taxes on top of that if you live in Detroit. If you find a product to purchase with a price tag of $1,000, you’ll end up paying $1,060 with tax.
Michigan also has a flat income tax rate of 4.25 percent. No matter what you earn, you’ll pay 4.25 percent in taxes.
How much do you need to earn to live in Detroit?
The cost of living in Detroit can be expensive or affordable depending on how much you earn. The average income in Detroit is $30,843. If you follow the guideline of many financial gurus and don’t spend more than 30 percent on rent, you’ll end up paying $9,252.90 in rent each year, or $772 per month.
The average rent in Detroit is $2,660, a cost that’s way over most people’s budgets. Based on your budget, you may decide that it’s too expensive to live in Downtown Detroit. Remember, though, that there are nearby suburbs that are within budget!
Use our free rent calculator to find out if you can afford the cost of living in Detroit.
Understanding the cost of living in Detroit
Detroit is a booming city again, and while 2020 census data shows that more people are moving out of the city than those that are moving into it, the rate is continuing to slow as the decade progresses.
If you think the cost of living in Detroit is reasonable and want to make the move to Motor City, be sure to check out our Detroit apartment listings. You’ll find apartments for rent in Detroit that fall into the average rent rate in Detroit, as well as suburbs that are even more affordable.
