Michigan's population declines pummel economy, housing market

MSU Land Policy Institute Director Soji Adelaja said the decline was largely attributable to people who moved to other states seeking job opportunities and better quality of life.

Washtenaw County's gain is a reflection of its vibrancy and the economic power of the University of Michigan, Adelaja said. The report found that 63 of 83 Michigan counties lost population from 2005 to 2008.Washtenaw also gained about 19,000 residents from 2000 to 2005.

“It’s no accident that Washtenaw County was one of the few places in Michigan that gained population,” Adelaja said in an interview.

Still, the state’s economic collapse is leading thousands of residents to leave in search of more fertile economic ground. Michigan's unemployment rate in October was 15.1 percent. The national rate was 10.2 percent.

Michigan and Rhode Island were the only states whose populations declined from 2006 to 2008, according to the report.

The U.S. Census Bureau estimates that Michigan's population in 2008 was about 10 million, up 0.7 percent from 2000. However, the U.S. population has increased 8.0 percent since 2000.

Michigan's recent population decline is particularly concerning because the increasingly service-oriented economy needs talent and spending to succeed, Adelaja suggested.

“When people move, they take economic activity with them,” he said. “More and more of the things we spend our money on - those services - tend to move with people."

The impact of Michigan’s population exodus on the housing market is significant. The 63 counties that lost population between 2005 and 2008 collectively lost about $2.49 billion in home equity, according to the report. Wayne County alone lost $1.8 billion.

Michigan’s 83 counties collectively lost $2.42 billion in home equity from 2005 to 2008.

“These property-value losses associated with population loss alone are quite substantial,” the report said. “These losses add another layer of constraint on the financial health of property owners and on future prospects for economic growth.”

Some distressed homeowners are leaving the state for greener pastures, while others who want to move are staying because they can’t afford to leave. Michigan’s average home value is nearly $100,000 below the national average.

But Adelaja said that the housing market is playing only a small role in the shifting complexion of Michigan’s population. Workers are leaving for other economic reasons and quality of life, he said.

“Michigan just really needs to be able to address the issue of how welcoming it is to innovation, how well it attracts young people and knowledge workers and what infrastructure you have in place to attract population,” he said.

Adelaja said he was most concerned about what would happen to Michigan’s population after the national economy gains steam. A University of Michigan forecast released Nov. 20 predicted that the state’s unemployment rate would stay above 15 percent through 2011.

“Michigan is going to be in this slump for a while longer,” he said. “As economic opportunity starts to emerge in other places, what is that going to do to our population?”

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter.