Analysis of the Upper Peninsula of Michigan Housing Market (1966)
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728.r. :308 I"22 Upper Penlnsula, m;"1 ,t966 ' I jI Wtltfrp UPPER PENINSUTA OF MICHIGAN HOUSING MARKET as of Decembcr 1, 1966 A Report by the DEPARTMENT OF HOUSING AND URBAN DEVETOPMENT FEDERAT HOUSING ADMINISTRATION WASHINGTON, D. C. 204t I Scptcmbcr 1967 a ANALYSIS OF TI{E UPPER PENINST]LA OF MICHIGAN HOUSING I',IARKET AS OF DECE},IBER 1. 1966 Field Market Analysis Service Federal Housing Administration Department of Housing and Urban Development a Foresord Ae a publ.lc eervlce to a6si6t local houslng rctivities through clearer understanding of local housing market condlEions, FHA lniEiat.ed publtcatton of tt.s comprehenslve housing markeE analyses early ln 1965. Whlle each reporE 1s deslgned specifically for FtlA use 1n admlnlBterlng itB mortgage lnsurance operations, 1t ls expected that the factual lnformatlon and the flndings and concluslons of t,hese reports wlll be generally useful also Eo bullders, mort,gagees, and othere concerned with Iocal housing probleme and Eo oEhers having an lnterest ln local economic con- dttlonc and trends. Stnce aerket enalysls is not an exacE sclence, the judgmental factor ls lmportant ln the developnenE of flndlngs and conclusions There wtll be dlfferences of opinton, of course, in Ehe lnter- preEetlon of avatlable factuaI lnformation in deEermining the absorptlve capaclEy of Ehe market and Ehe requiremenEs for main- tenance of a reaeonable balence in demand-supply relat.lonships. The factual'framework for each analysis is developed as Ehoroughly as posslble on the basle of lnformaElon avallable from both local and natlonal rources. Unlees apeclflcal[y iCenrifled by source reference, all est.lmateo and judgmenEs ln Ehe analysls are Ehose of the authorlng analyst and the FllA Market Analysls and Research Sec E ton . a Table of Contents Page Summary and Conclusions i a Houstng Market Area 1 Map of Area 2 Economy of the Area Character and History 3 Employnent 4 Unemployment 10 Future EmpLoyment Prospects 11 Income 11 Demographic Factors Population 13 Household s 15 Demographic Trends by Area L6 Housing tlarket Factors Housing Supply 19 Residential Building Activiry 2l Tenure of Occupancy 22 Vacancy 22 Sales Market 24 Rental Market 25 Mortgage Market 25 Urban Renewal 26 Military Housing 26 PubLic Housing 27 Demand for Housing Quantitative Demand 28 Qualltative Demand 30 ANALYSIS OF TTIE UPPER PENINSULA OF MICHIGAN HOUSING MARKET AS OF DECEMBER 1 L966 Summary and Conc Lusions 1 The economy of much of the Upper (U.p. a Peninsula ) of Michigan is based on extractive industries (copper and iron mining) as well as lumbering and wood producE manufacture. Each of these industries has a history of erratic ups and doums, both nationally and in the U.P. Other important sources of employment are government, trade, and services. Ttre latEer two receive support from tourist traffic in the summer months. 2 Employment. in the u.P. dectined for several decades, but the decline appears to have been arrested in recent years. Nonagricultural wage and salary employment has increased each year since 196r, averaging 68,1oo in 1965. During the first nine months of 1966, wage and salary employment averaged 70,7oo, up from 67,8oo during the corresponding perlod in 1955. Based on expansions at copper and iron mining facil- ities, on expected growth in manufacturing employment in the U.p., and on anticipated trends in nonmanufacturing employment, an increment of between 1,2OO and 1,8OO wage and salary jobs appears to be a reasonable expecEation for each of the next thro years. 3. Durlng the first nine monEhs of L966, unemployment averaged 7.3 percent of the civilian work force of the Upper Peninsula. Unemploy- menE has been a long-standing problem in the u.p. The present rate, while hlgh, represents a reduction from the recent peak of 13.g percent in 1961. Because of the effect of seasonal factors on much of the U.P. employment, presenE over-all average annual unemployment may be near Ehe structural minimum. 4 The Upper Peninsula is a low-income area. Ihe current median income of all families in the u.P. is about $5,625, after the deducEion of federal lncome tax, and the median after-tax income of two-or-more Person renter households is $4,775. within Ewo years, median annual after-tax income of all families is expected to be $5,925, and renter households of Ewo or more persons will have a median after-tax income of $5,O25 annually. 5 The population of the U.p. was 31g,500 persons in Decemb reflecting er !966, an increase of about L2,550 April Lg6o, or an ,r..rg" of 1,875 annua1Ly. The military population"in"" (rrniforrned personnel military and their farnilies) of the U.p. was about 17,500 persons, up about 81950 since April 1960. During the next population tvro years, the total of the U.P. is expected to increase by about 2,g5c annuarly. 1I 6 Households (occupied housing units) in the U.P. number about 91,550, up around 2,675 (4OO annually) since April 1960. AbouE 3,925 of the househoLds are headed by uniformed military personnel, reflecting an increase of 2,525 since April 1960. During the next two years, Ehe total number of households is expected to increase by about 750 t annua 1 ly . 7 There were L22r100 housing units in the U.P. in December l966,reflect- ing a net gain of about 7rlOO since the 196O Census, an average of almost 1,075 a year. Much of Ehe housing built since April 1960 has been under military eontrol (a total of almosL 2,325 units) or is public or student-family housing. Many of the units built were for seasonal use onIy. PrivaEely-financed nonseasonal housing consErucEion has averaged about 42O yearly since April 1960. Judging from the number of building permits issued, the pace of private housing construcEion appears to be accelerating. The number of housing units authorized has increased each year since 1964. Ihe number of units auEhorized during the first eleven months of L966 (38O) is greater than the total for any previous year during the 196O's. Building permits reflect about 8O percent of the total private nonseasonal housing buiLt in the U.p. 8 As of December 1, L966, there were about 2,9OO available vacant nondilapidated nonseasonal housing units in the U.P. About 1r1OO of the available vacancies were for sale only, a homeowner vacancy rate of 1.6 percent, and 1,8OO were available for rent, a renter vacancy rate of 7.1 percent. Both the sales and rental vacancy rates were up somewhat from the 1.4 percent and 6.9 percent, respec- tively, reported in the 1950 Census. The incidence of vacancy varies somewhat in different geographic regions of the U.P., however, and houslng shortages exist in some areas. 9 A total of abouE 78O uniEs of new privately-financed nonseasonal housing units might be absorbed annuatty in certain areas of the U.p. during the next two years. I'tre toEal annual demand includes 630 slngle-family units and 15O units of multifamily housing, exiluding public low-rent housing and rent-supplement accommodations. An additlonal 40 units of housing at Ehe Lower rents achievable with below-market-rate lnterest financing or asslstance in land acquisi- tlon or cost mlght be marketed in Marquette annually. It is unlikely that the building industry of the area can supply this quantity of new housing, however, and part of the demand may be satisfted by the rehabllitation of exlstlng units. Demand for slng[e-family and multifamlLy housing ts distributed by geographic area in the table on page 29. The forecast demand for single-family housing is expected to approximate the price range distribution shown on page 30. ANALYSIS OF TI{E UPPER PE NINSTJLA OF MICHIGAN HOU SING MARIGT AS OF DECEMBER 1. 1966 Hous ins rket Area I The upper Peninsula (u.P.) of llichigan is a projection of land which extends northeastward from northern Wisconsin and is bounded by Wisconsin on the west and Lakes Superior, Huron, and Michigan (see map cn following page). The area of the peninsula is 16,500 square miles, about one-third of all of Michigan; it is divided into fifteen counties. For the purposes of this report, the u.P. is divided into four geographic areas, each consisting of two to six counties. These areas are: The Copper Country area of the western peninsula, defined as Houghton, Keweena\,u, and Ontonogon Counties; the Southr^restern area, defined as Iron and Gogebic counties; the central area, consisting of A1ger, Baraga, De1ta, Dickinson, Marquette, and Menominee counties; and the Eastern area, defined as Chippewa, Luce, Mackinac, and Schoolcraft Counties. rhe u.P. is sparseLy populated; acgording to the census, the total popula- tion of the peninsula was 306,000J/persons in April !960, equal to juit four percenE of the Michigan toEal. The largesE incorporated area is Marquette, in the central area, which had a 1960 population of 19,goo persons. This report will include population estimates for the 13 communities whose current population is 5,ooo persons or more. Ihe topography of the Upper Peninsula is quite fIaE and heavily-forested, for Ehe most part. Much of the interior consists of marshland. Ihere are several areas, however, in which the terrain is hilly enough to make skiing an important winter sport. The most imporEant tourist season is the summerr_when many Persons take advantage of the recreational oppor- tunities of the U.P., including 17 state parks. Ttre primary access route to the U.P.