Households earning $500,000 or more per year – roughly the top 1% of earners in Michigan – have become an influential force in the state’s real estate market. From 2018 through 2023, these high-income buyers drove a surge in luxury home purchases across Michigan. This period saw record-breaking sales of million-dollar homes, rapid price appreciation in vacation markets, and shifting preferences influenced by tax laws, remote work, and lifestyle priorities.
Despite comprising a small share of all households, Michigan’s $500K+ earners had an outsized impact on home sales volume and prices in the luxury segment. Their choices reveal how top earners responded to economic cycles: weathering the post-2008 downturn and then accelerating the market’s upswing after 2018.
High-Income Homebuyers: Profile and Market Influence
Michigan households earning over $500,000 are relatively rare – an annual income of about $505K puts a family in the top 1% statewide. By comparison, Michigan’s median household income is around $71K. These elite earners are typically mid-career or late-career professionals, executives, or business owners, often with dual high incomes per household.
Gen X (ages ~43–58 in 2023) comprises a large share of these buyers, as this age group has the highest median income among home purchasers nationally. Many high-end Michigan buyers are married couples in their 40s, 50s or early 60s, at peak earning years and frequently dual-income. For second-home purchases, a recent analysis showed vacation-home buyers skewed heavily Gen X: nearly 60% were ages 45–64.
Market Share and Impact
Though few in number, these wealthy buyers account for a growing slice of Michigan home sales by dollar volume. In 2020, homes priced above $500K made up about 7% of all sales in Southeast Michigan, up from 5.6% the year prior. This indicates that high earners became more active in homebuying after 2018, even as overall sales also grew.
The typical U.S. homebuyer’s income jumped to a record $107,000 by 2022-23, a 22% one-year increase. This reflects how higher-income households have come to dominate home purchases as prices rose. In Michigan, high earners often can afford large down payments or all-cash offers, helping them win bidding wars.
Demographically, high-income buyers in Michigan are predominantly in older age brackets and often longstanding residents of the state’s affluent suburbs. Many are purchasing their second or third property. According to realty firm analyses, a significant portion have children at home (fueling demand for more space) or are empty-nesters looking to upgrade or relocate for lifestyle reasons.
Metro Detroit’s Luxury Market Boom
When it comes to high-end homebuying in Michigan, Metro Detroit (Southeast Michigan) is the epicenter. The Detroit metro area – especially Oakland County and parts of Washtenaw and Wayne counties – contains the state’s wealthiest enclaves and saw a robust luxury housing boom from 2018 to 2023. This region is home to affluent communities like Bloomfield Hills, Birmingham, and Grosse Pointe.
Record Million-Dollar Sales
Data show that luxury sales in Metro Detroit hit unprecedented levels in the late 2010s and early 2020s. Oakland County, historically Michigan’s most affluent county, saw 382 home sales priced at $1 million or more in 2020 – an all-time high. This was a dramatic increase even from just a few years earlier.
For perspective, in 2012 (as the market was recovering from the Great Recession) Oakland County had 148 million-plus sales, which at the time was a 66% jump from 2011. By 2020, the number had well over doubled from that early-2010s level. Oakland’s million-dollar transactions far outpaced other Detroit-area counties in 2020, underscoring the concentration of high-income buying power there.
Ultra-Luxury Segment Growth
Even at the ultra-luxury end (homes $4M and up), Metro Detroit set records. In 2021, at least 18 homes sold for $4 million+ in Michigan, up from 16 in 2020 and just 9 in 2019. Most of these top-tier sales were in Metro Detroit’s suburban lakefront and estate districts.
Oakland County alone accounted for 7 of the top 10 most expensive home sales in Michigan in 2022, according to one analysis. This dominance reflects both the concentration of high-income residents and the availability of luxury inventory (large custom homes) in that area.
Popular Property Types
High earners in Metro Detroit are primarily buying large single-family homes in exclusive neighborhoods. These high earners often seek properties with 4,000+ square feet, high-end finishes, and substantial land or lake frontage. Gated communities and country club adjacent areas (like those around Bloomfield Hills or Novi) are popular.
Downtown Detroit did see a few notable condo sales in 2018–2019 as the city’s resurgence attracted young professionals with high incomes. However, post-2020, the pendulum swung back toward more space in the suburbs due to pandemic influences. Ann Arbor (Washtenaw County), home to the University of Michigan and a burgeoning tech scene, also recorded growth in luxury buying.
Market Dynamics
High-income Metro Detroit buyers in this period were often purchasing “forever homes” – trading up from a starter luxury home to a truly premium property, or relocating into Michigan from higher-cost states. In 2020 and 2021 especially, buyers flocked to properties with more land, home offices, and amenities like pools and home gyms, a trend amplified by remote work.
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Another sign of Metro Detroit’s hot luxury market was shrinking time-on-market. High-end homes, which historically might sit for many months, began selling faster in 2020–2021. Even with 35% fewer high-end listings available, showings of luxury homes were 50% higher in late 2020 than a year before. Metro Detroit’s well-heeled buyers were in fierce competition for the limited supply of top-tier homes, especially during the 2020-2022 boom.
The “Up North” Vacation Home Explosion
One of the most striking trends from 2018 to 2023 was the explosive demand for vacation homes in Michigan, especially during the pandemic years. Michigan is renowned for its “Up North” lakefront destinations – from Lake Michigan resort towns to cottages on inland lakes – and high-income households flocked to these areas to purchase second homes. Remote work, low interest rates, and lifestyle shifts in 2020-2021 fueled a vacation-home buying frenzy.
Sales Surge in Northern Michigan
In the northwestern Lower Peninsula (Traverse City area and surrounding counties), home sales hit record levels in 2020 and 2021. According to a regional market report, year-to-date home sales through October 31 peaked around 3,200 in 2020 and again in 2021 in Northwest Michigan, before cooling off later.
High earners were a big part of that surge: many were buying luxury vacation properties (waterfront homes, ski lodge-style cabins, etc.). A huge influx of out-of-area buyers descended on vacation counties like Grand Traverse, Leelanau, Emmet, and Charlevoix, often making cash offers. In some cases, bidding wars drove second-home prices well beyond asking.
Soaring Lakefront Prices
This demand spike led to soaring prices for lakefront real estate. In Northwest Michigan, the average sale price jumped from $321K in 2020 to $509K by 2023 – a 59% increase. Much of this appreciation was on the high end: the average waterfront home price in that region rose 84% since 2020, from about $561K to over $1.03 million.
In other words, within just a few years, a typical lakefront property that might have sold for around $550K pre-pandemic could fetch over $1 million. This incredible jump reflects wealthy buyers’ willingness to pay top dollar for Michigan’s shoreline vistas and retreat properties.
Vacation-Home Demand Drivers
Several factors converged to drive the rush to buy lake houses:
Remote Work: Suddenly, many wealthy professionals could work from anywhere, at least part-time. Instead of being tied to an office in Detroit or Chicago, they could spend months at a time in Harbor Springs or Saugatuck and still do their jobs.
Lifestyle and Safety: During the pandemic, families sought the perceived safety and space of rural areas. A spacious home on Lake Charlevoix with private waterfront was appealing when urban amenities were shut down.
Low Interest Rates and Savings: Mortgage rates hit historic lows in 2020 (under 3% for a time), making it cheap to finance a vacation property. Moreover, affluent households saved more money while travel and entertainment venues were closed.
Investment/Hedging: Some high earners viewed real estate as a stable investment amidst volatile markets. A lake home could double as both a vacation spot and an asset likely to appreciate.
Out-of-State Buyers
A lot of Michigan’s vacation home purchases were by out-of-state residents (especially from Illinois, Ohio, and Indiana) who have long favored Michigan’s lakeshore. During 2020–21, realtors in southwest Michigan reported waves of Chicago-area buyers snapping up homes along Lake Michigan (e.g., in New Buffalo, St. Joseph, Saugatuck).
Market Moderation
By 2022 and 2023, the vacation-home craze began to moderate. Higher interest rates and the return of office work cooled demand. Redfin reported that demand for second-home mortgages plummeted 50% from its 2021 peak by late 2022.
Additionally, the federal government enacted higher loan fees for second-home mortgages in 2022, raising borrowing costs. In Michigan’s vacation markets, inventory had been largely depleted by the frenzy, so by 2023 some prospective buyers backed off due to lack of options or sticker shock from prices that had jumped 30–60% in two years.
Property Types and Preferences
Luxury Single-Family Homes
The cornerstone of high-income homebuying is the traditional single-family luxury home. Across Michigan, most $500K+ households favored spacious detached houses. These properties often feature 4+ bedrooms, extensive square footage (e.g., 3,500–8,000 sq ft), high-end finishes, and amenities like pools, home theaters, and home offices.
Privacy and land were key selling points from 2018–2023, especially after COVID hit – affluent buyers sought gated communities or multi-acre parcels to ensure personal space. We saw families leaving denser neighborhoods for more open areas: for instance, a trend of moves from Birmingham (walkable but smaller lots) to Bloomfield Township (more spread-out estates).
Urban Luxury Condos
A smaller but notable segment of high-income buyers opted for condos or penthouses in city centers. These tend to be empty nesters or young professionals without kids, drawn to walkable amenities and less maintenance. Downtown Detroit, Ann Arbor, and Grand Rapids all had burgeoning high-end condo markets in the late 2010s.
However, overall condos represent a minority of purchases for $500K+ earners in Michigan, especially after 2020. The pandemic initially softened demand for city condos as people fled for space. By 2023, the urban condo market was recovering, but most wealthy buyers who wanted a second property chose resort-area homes over a downtown high-rise.
Lakefront and Vacation Properties
Second homes on waterfronts (Great Lakes or inland lakes) became a huge priority for many affluent buyers. These include everything from rustic-chic cottages to expansive custom-built lake houses. Many $500K+ households in Metro Detroit acquired a cottage “up north” if they didn’t already have one, or upgraded their existing vacation home.
Lake Michigan frontage commanded the highest prices (often $1–3 million for a nice house, even more for premium locations). Inland lake properties in Oakland County, such as those on Orchard Lake or Pine Lake, also traded frequently among the wealthy, often as primary homes.
New Construction vs. Existing Homes
Many high-end buyers in 2018–2023 bought existing luxury homes, but there was also a boom in custom-home building, especially in 2021-2022. Custom builders in Michigan reported being extremely busy as wealthy clients commissioned dream homes – either tearing down older homes on prime lots or building on vacant land.
For instance, in Oakland County, numerous older lakefront houses were demolished to make way for larger modern estates. In fast-growing areas like suburban Grand Rapids, high earners bought lots in exclusive subdivisions to build 5,000 sq ft modern farmhouses. Construction costs did rise with supply chain issues, but those with deep pockets forged ahead.
Motivations of High-Income Buyers
Pandemic-Era Lifestyle Upgrades
The COVID-19 pandemic prompted many affluent families to reassess their housing. Suddenly, home was not just where you live – it was the office, the school, the gym, and the vacation spot. This led to a powerful desire for more space and comfort at home.
Throughout 2020 and 2021, high earners raced to purchase larger properties or ones with specific amenities (an extra bedroom to use as a Zoom office, a large yard for outdoor recreation, a pool since public pools were closed, etc.). They also spent more on home features since travel and entertainment spending was curtailed.
Remote Work Flexibility
Remote and hybrid work arrangements had a profound influence on high-end buying. For Michigan’s $500K earners – executives, professionals, tech workers – remote work meant they were no longer tethered to the office five days a week. They could choose location more freely.
Some took this as an opportunity to relocate to Michigan from higher-cost states (for example, a Michigan-born tech executive working for a Chicago firm moving back to Metro Detroit or Ann Arbor while keeping their job). Remote work also enabled “co-primary” living – e.g., a family splitting time between a Detroit-area home and a Northern Michigan home, since they could work from either.
Financial and Tax Strategies
High-income buyers are always attuned to the financial implications of homeownership. The 2017 Tax Cuts and Jobs Act introduced a $10,000 cap on state and local tax (SALT) deductions and lowered the mortgage interest deduction limit. This affected wealthy homeowners in higher-tax states significantly.
Michigan’s state income tax and property taxes meant many $500K+ earners hit the SALT cap easily, reducing the tax benefits of owning expensive homes. However, Michigan’s taxes are moderate compared to places like New York or Illinois, so for some out-of-state buyers, moving to Michigan was actually a tax relief strategy.
Through 2021, low interest rates made taking on a large mortgage attractive even for the rich (who might otherwise pay cash). Many high-income buyers leveraged cheap debt to buy more house, while investing their cash elsewhere. In 2022–2023, rates jumped, and we saw wealthy buyers respond by increasing cash purchases or down payments to avoid big loans.
Real Estate as Investment
Beyond lifestyle, high-net-worth individuals often view real estate as part of their investment portfolio. From 2018 to 2023, housing prices were generally on the rise, making real estate a potentially lucrative investment. Michigan, in particular, was seen as offering “value” for luxury – a $1 million home in Michigan might cost $3+ million on the coasts.
Real estate also serves as an inflation hedge – relevant as inflation picked up in 2021-22. Some $500K+ households bought property (either a second home or rental units) to park their money in a tangible asset during times of currency inflation.
Historical Comparison: 2008–2017 vs. 2018–2023
Recovery from Bust to New Boom
The 2008–2012 period was marked by the housing crash and Great Recession, which hit Michigan particularly hard. Real estate activity among high earners slowed to a trickle in those years. Home values plummeted – the city of Detroit saw average home prices drop to around $7,500 in 2009, an extreme example of the broader collapse.
By contrast, 2018–2023 was an expansion era (aside from the brief pandemic recession), with rising prices and confident buyers. In 2009, a wealthy buyer could scoop up a mansion at a relative bargain but might have been too unsure about the economy to do so. In 2021, wealthy buyers were aggressively bidding over asking prices for luxury homes, trusting that the market had long-term strength.
The number of high-end transactions illustrates this swing: Oakland County had fewer than 90 sales over $1M in 2011 (post-crisis low), but 382 such sales in 2020. That is a more than fourfold increase, showing how dramatically the top end revived.
Shifting Location Preferences
2008–2017: The early part of this era saw virtually no second-home buying – many second homes were actually sold off or lost to foreclosure in 2008-2010. High earners focused on shoring up primary residences. As recovery set in (2013–2017), there was a trend of some younger affluent professionals moving to downtown Detroit and other urban centers, attracted by revitalization efforts.
2018–2023: Buyers became more geographically adventurous. Remote work and the pandemic prompted a return to suburbs and beyond. The brief flirtation with urban living by the wealthy largely gave way to a suburbia and countryside-oriented preference. Additionally, the explosion of interest in rural/vacation areas in 2020-21 had no precedent in the prior decade.
New Construction and Development
After the 2008 crash, high-end new construction virtually halted. There were many unfinished luxury homes and lots that sat idle. It wasn’t until the mid-2010s that building resumed in earnest.
In 2018–2023, new construction of luxury homes accelerated significantly, especially in the suburbs of Detroit and Grand Rapids. Builders in 2021 described the luxury homebuilding market as the busiest it had been since before 2008. The prior decade was about working through excess and recovery; the latter was about expansion and new investment.
Buyer Psychology – Caution vs. Confidence
The contrast in buyer psychology between the periods is stark. Post-2008, even wealthy buyers were cautious. Jumbo mortgages were harder to get, and many high earners were digesting losses from stock market declines and business setbacks.
By 2018–2023, optimism and urgency took over. Low interest rates from 2015 onward and surging stock portfolios made high-income individuals feel flush. In 2020–21, despite a global crisis, wealthy Americans saw their assets rebound quickly and even increase; coupled with the unique circumstances (lockdowns, etc.), this spurred them to act fast on real estate.
Market Outcomes
By 2023, Michigan’s luxury housing landscape looked very different than in 2013. Home prices at the top end were significantly higher; inventory was tighter (in part because institutional investors and wealthy individuals had bought up many properties); and high-income buyers had become accustomed to competing for homes.
The balance of power shifted towards sellers by the 2020s for luxury real estate, whereas buyers had the upper hand around 2009–2012 when there was a glut of high-end homes (often foreclosures or distressed sales) and few takers.
Conclusion
Looking ahead, the question is whether the trends of 2018–2023 are a new normal or an anomaly. As of today, rising interest rates and economic uncertainties are tapping the brakes on some luxury purchases, but the preference shifts (toward more space, multiple homes, etc.) may endure.
Michigan’s attractiveness to high earners – with its relatively low cost of living, natural beauty, and improving urban centers – could continue to draw wealthy buyers, even as the market cycles. If one lesson stands out from this analysis, it is that Michigan’s housing market is increasingly bifurcated: high-income households are actively buying expensive properties and often owning two or more homes, while middle and lower-income buyers face affordability challenges. The 2018–2023 boom among $500K+ earners underscores the growing role of top 1% wealth in shaping real estate trends, for better or worse.
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