A Tale of Two Rental Markets: Metro Detroit vs. Jacksonville, FL

Source: Detroit Metro Times and Home Builder Digest.

There are over 400 major housing markets in the United States.

That's a lot of areas to cover if you want to know which markets are worth investing in—let alone understand the critical investing information to navigate the market and reap the promised returns. So we’re making it easier for you with this ongoing series that compares two real estate markets at a time.

The two hotspots we’ll discuss in this comparative report are Metro Detroit, MI, and Jacksonville, FL. The former is our home market, where we've lived and operated as a property management company for over two decades (and counting!). The latter is Florida's hottest real estate market.

Between the two, which one is better for investing in rental properties? That's what we'll answer below.

Read on to know the strengths and weaknesses of the Metro Detroit and Jacksonville markets. We’ve highlighted the property values, appreciation, average rent, tenant demographics, property conditions, and overall quality of life for you to make wise investment decisions.

We did our best to be unbiased, but whenever there's a close call, know that we'll unashamedly favor Metro Detroit—it's our home base, and we've seen its investment potential!

Overview of Metro Detroit

Metro Detroit saw most of its wealth move from the city to the suburbs in the 1960s to 1970s. This event resulted in a unique price spread, where real estate prices get more affordable closer to the metropolitan's central city. You can see this in the map below, where property values are below $30,000 in the City of Detroit and above $80,000 outside its limits:

Source: Proximity One.

Since the Great Recession in 2008, the city's job growth and population have revived, where property values and rent prices have surged compared to surrounding suburbs. Thankfully, residents left only because of the casual appreciation in nearby areas. So, to include today's investors in the area's original market, we've covered all the opportunities you'll find across Metro Detroit—not just its central city.

Further reading: We go into the details of each city and neighborhood in Metro Detroit in our Deep Dive series, should you want to examine the real estate potential of each area. Check it out!

To stay up to speed, here’s a quick summary:

• - Metropolitan Statistical Area (MSA) of Detroit-Warren-Dearborn includes the 6 counties of Lapeer, Livingston, Macomb, Oakland, St. Clair, and Wayne.
• - Metro Detroit is the Detroit tri-county area that only includes Macomb, Oakland, and Wayne counties. They cover 3,888.4 sq mi (10,071 km2) and a population of over 4 million—the most populous metro area in Michigan.
• - The City of Detroit is the biggest city in the Metro Detroit metropolitan area and in Michigan. It’s 142.89 square miles (370.1 km²).

Metro Detroit is still the highest populated Michigan metropolitan area. There are a total of 72 cities within this real estate hotspot, all spread out like so:

Source: Georgetown Public Policy Review.

To help investors like you get a grasp of Metro Detroit, we’ve coined the term “Ring Cities” for the suburban cities surrounding the City of Detroit in a semicircle. These cities offer an excellent balance of cash flow and buy-and-hold potential, plus the housing markets are affordable and don’t have the risks commonly associated with Detroit investing.

Below, you’ll find a list of all the cities in Metro Detroit, where we’ve highlighted Ring Cities in green. If you’re new to the area, focus on those. Any hyperlinks you see will take you to our Deep Dive series so you to learn more about its real estate market:

We hear you: What about investing in the City of Detroit? Okay, here’s a snapshot. The City of Detroit is split into 11 regions, all with their own qualities and features:

Source: Wikipedia.com

The City of Detroit’s 11 regions are further divided into 105 neighborhoods, as you can see in the following map. The hyperlinks in the list will bring you to corresponding Deep Dives for more information on each neighborhood’s investment potential:

Source: Loveland’s Detroit Neighborhoods Map

Back in 1950, the City of Detroit had a population of roughly two million people. Less than half of them still live in the city, which means there are literally thousands of homes sitting vacant. Of course, some Detroit neighborhoods retained their population better (these are in high demand today).

Property and rent values in the city have been consistent for several years now, where the local government has been demolishing and rehabilitating structures to minimize oversupply. As you can expect, this leads to increasing property and rent values, which is excellent news for you.

Back to the bigger picture—here’s a quick summary of the Metro Detroit real estate market:

Source: Home Area.

While the City of Detroit is part of Metro Detroit, these two areas differ significantly in terms of real estate. So if you’re new to the area or are an out-of-state (OOS) investor, seek professional help to set your expectations correctly beforehand.

For instance, property classes can vary widely from one block to another. We’ve seen too many investors purchase what they thought was a gorgeous, Class A property, only to find out that it’s nothing but a Class C property in need of overhaul renovations when they visit the area.

Don’t invest in the City of Detroit based on a zip code someone recommended. Instead, partner with trustworthy and experienced experts to conduct a boots-on-the-ground evaluation of the property or area that you have your eyes on.

That said, due to Metro Detroit’s peculiar situation, we’re comparing the entire metropolitan area versus a city (Jacksonville, FL) in this comparative report. We’ll remind you of this seemingly unfair evaluation as we go through the details later on.

And if there’s one thing to remember about Metro Detroit, it’s this: Always consider Ring Cities!

Overview of Jacksonville, FL

The City of Jacksonville is the most populous city proper in Florida and the second largest city by area, having a total population of 949,611. The city’s larger area, Jacksonville Metropolitan, also counts as Florida’s fourth-largest metropolitan region.

Jacksonville straddles the St. Johns River on the Atlantic coast of northeastern Florida, straddling the St. Johns River, around 12 miles south of the Georgia state line and 350 miles north of Miami. The well-known Jacksonville Beaches communities can be seen along the adjacent Atlantic coast.

Since the late 19th century, Jacksonville improved its harbors and made itself a major military and civilian deep-water port. Its riverine location includes the Naval Station Mayport, Naval Air Station Jacksonville, the U.S. Marine Corps Blount Island Command, and the Port of Jacksonville—the state’s third largest seaport. The city’s military bases and nearby Naval Submarine Base Kings Bay also form the third largest military presence in the nation.

Here’s a map that shows the entire Jacksonville MSA, where can see the city within Duval County:

Source: Proximity One.

Similar to what we saw in Metro Detroit, Jacksonville properties seem to also be more affordable the closer they are to the city’s center. Assuming income relates to property prices, observe the price spread in the following map:

Source: Proximity One.

Most Jacksonville locals aren’t as wealthy as you might expect, so the property values are lower the closer you are to the city. However, prices increase as you fan out to the rest of the county and metropolitan area, in accordance with data that show increases in income for those areas. We’ll see the details later on.

Here’s a snapshot of the real estate market and demographics in the City of Jacksonville:

Source: Home Area.

Comparing Real Estate in Metro Detroit vs. Jacksonville, FL

The key contributing factors to the financial viability of rental properties are rent amounts, property value, property appreciation, quality of tenants, quality of life, and general property conditions. Before we get into the details of each factor, we’ll overview the rental properties listed on Zillow for both Metro Detroit and Jacksonville:

Source: Zillow.

Home Value

According to Zillow, the median property price in Metro Detroit is $224,028. This figure is from a 5.5% growth over the past 12 months and is predicted to continue rising:

Source: Zillow.

In Jacksonville, FL, properties are valued at $291,597, an increase of 11.5% over the past 12 months. The growth also implies a future increase, just like Metro Detroit properties:

Source: Zillow.

Most available properties for sale are either in the City of Detroit or one of the Ring Cities surrounding it. In these places, you’ll easily find famous less-than-$100k properties the Detroit market is known for. You’ll also realize that the housing density in these areas is much higher compared to other US real estate markets, which is a result of smaller lots:

Source: Zillow.

In contrast, current Zillow listings in Jacksonville show that the expensive properties (ranging from $1,000,000 all the way to $7,000,000) are largely in the lower right area, versus the more affordable properties that are generally lumped up in the city’s center.

Source: Zillow.

Appreciation

These are the appreciation rates of Metro Detroit and Jacksonville, according to Sperling’s Best Places:

• - Metro Detroit home appreciation in the past decade is 109.8%, and is up 9%.
• - Jacksonville’s home appreciation in the past decade is 153.9% and is up 16.2%.

You’ll generally find affordable homes in Metro Detroit and more expensive ones in Jacksonville, but both come with excellent appreciation rates, especially when you compare them to the national rate—an 11% increase from November 2021 to November 2022.

2023’s rates are lower compared to the 16% annual growth in July 2022, indicating a possible slowdown in the real estate market. But 2023 will likely be a growth year, since millennials (the largest segment of the population today) are purchasing properties, bringing competitive pressure on prices.

Looking closer, the heat map below shows the affordability of Metro Detroit properties, with lower prices in and around its main city. Still, remember, the diversity and variation of the area mean there are scattered sweet spots everywhere—you’ll easily find affordable houses in up-and-coming neighborhoods:

Source: NeighborhoodScout.

The majority of Jacksonville’s subareas show appreciation rates on the higher end of the spectrum. There are exceptions—mostly in the upper area—but most are priced relatively high. Here’s the heat map for you to check out:

Source: NeighborhoodScout.

Average Rent

Regarding average rent, Metro Detroit’s prices are higher than average for Michigan, while Jacksonville's prices are only higher than its metropolitan area—not higher than that of Florida. In terms of absolute numbers, Jacksonville rents are a tad higher than Metro Detroit’s, as you can see below:

Source: Best Places.

Comparing these figures to Zillow listings, we see that the chart is relatively accurate and even a tad understated for a few properties. You can likely charge higher than the average rent as an investor, which means strong and greater cash flow:

The tenant pool sizes for both areas are as follows:

Source: NeighborhoodScout.

There are more renters than owners in Metro Detroit, and the opposite is true for Jacksonville. You’ll have a larger tenant pool to choose from in Metro Detroit, although Jacksonville might have properties in better condition simply because homeowners tend to take care of their houses better than renters.

Later on, we’ll dive into more details regarding the demographics of these two tenant pools.

Rent-to-Price Ratio

You’ll have a long list of properties to sort through once you start researching. So use the rent-to-price ratio as a quick indicator to see which properties can generate solid, positive cash flow to shortlist your options to a handful that you can conduct more research on. The industry standard is to meet the 1% Rule, where the minimum rent price should be 1% of the total purchase cost, including rehabilitation.

Here’s the formula:

Monthly Rent / (Purchase Price + Rehab ) ≧ 1%

We’ll use this formula to evaluate the properties you’ll find in Metro Detroit and Jacksonville. The rent-to-price ratio is the easiest and fastest way to estimate your return on investment (ROI) in seconds.

Side-by-Side Chart

We’ll use actual Zillow listings to see the data in action. This is what you’ll do once you get serious about investing in either Metro Detroit or Jacksonville, so we’re giving you actual examples to visualize.

Here are two three-bedroom properties in Metro Detroit and Jacksonville. See how they stack up against each other in terms of property values and estimated rent amount:

Source: Zillow.

The listing in Metro Detroit (the City of Detroit, to be specific) shows a ratio that meets the industry standard, while the one in Jacksonville falls short. This means that if you want to prioritize steady cash flow, the Metro Detroit listing is your best bet—add appreciation rates to that and you’re looking at an excellent balance of cash flow and equity gains for short- and long-term.

Quality of Tenants, Properties, and Living

Tenant, property, and neighborhood quality determines your success as a rental investor—especially the first one. After all, tenants are the bloodline of your business. They influence:

• The stability of your rental income.
• Property maintenance needs to protect your assets.
• The necessary and possible home renovations and rehabilitations.
• The kind of property management required to handle the tenants.

The information you’ll find below comes from our local knowledge of Metro Detroit and multiple research points for Jacksonville, FL. You can use them as definite metrics to guide your decisions.

Before going into the details, here are heat maps from Roofstock that plot the quality of life in the City of Detroit (and its surrounding areas) and Jacksonville, FL. These ratings are based on property values, employment rates, school quality, income levels, and other investment criteria:

Source: Roofstock Jacksonville and Detroit surrounding areas.

Most Detroit properties are Class C, so they come with additional challenges regarding tenant management and property maintenance. They’re not ideal properties for beginner investors. In contrast, Jacksonville shows a relatively even and average quality of life across its city, regardless of subareas.

Tenant Quality

Tenant quality greatly depends on the local income average, unemployment rates, and educational attainment. Let’s take a closer look at the tenants in Metro Detroit and Jacksonville.

Average Income

Jacksonville falls short compared to Metro Detroit in terms of income per capita, household income, and unemployment rate. Still, it has a stronger potential for future job growth. If you want to base your evaluation on current figures, however, Metro Detroit definitely takes the win.

Source: Best Places.

You want to charge the highest rent possible—we understand. But what’s more important is to secure tenants that are financially capable to keep up with payments. That’s what stable income and employment can provide.

Moreover, a growing job market will increase the population and strengthen the local economy, expanding your tenant pool with quality renters. The growth will also affect property values and rent prices in a positive way, which both areas have the potential for.

Educational Attainment

In terms of education attainment, residents in Metro Detroit and Jacksonville are nearly identical. Most of them have graduated high school and some of them have received their degree from a university. Whichever area you choose, you’ll find tenants that have the educational attainment to secure well-paying jobs that’ll enable them to rent good properties.

Source: Best places.

Property Condition

Property condition determines how much renovations or updating you’ll need to do after purchasing the property. The fewer things you have to do, the more you can save up on costs—generally, at least.

Property Age

The median home age in Metro Detroit is 51 years, while in Jacksonville, it’s 34. There is a significant difference, although old properties don't automatically mean bad news. It only means that you’ll have to conduct more renovations and maintenance throughout your ownership—which is worth it if the property is a classic or has a rustic feel to it. It all depends on what the tenants are looking for!

Source: Best Places.

Home Ownership and Rental

According to Best Places, there are more properties owned in Metro Detroit and more properties rented in Jacksonville. This data isn’t consistent with the data from NeighborhoodScout quoted earlier, but Best Places’ data is still worth considering because it’s based on historical data.

Looking at data from Best Places and NeighborhoodScout, we see pros and cons to both owning and renting in Metro Detroit and Realeigh:

• More homes owned means properties are better maintained.
• More homes rented means you’ll have a larger tenant base.

And, whether you choose to invest in properties in either Metro Detroit or Jacksonville, you’ll find relatively maintained properties and a large-enough tenant base to choose quality renters from.

Source: Best Places.

Quality of Life

The quality of life in both Metro Detroit and Jacksonville is shaped by the local economy, safety and crime rates, demographic diversity, and neighborhood livability factors. Let’s take a look.

Local Economy

Similar to the rest of the world, Metro Detroit’s economy was affected by the pandemic. Its largest automotive and manufacturing sectors remained strong, but smaller businesses and the leisure and hospitality industry didn’t hold on as well. Still, things are turning around in 2023.

The number of new business applications in Michigan increased by 42.2% in 2020 (versus 2019), and new construction permits are now reflecting pre-pandemic levels, which is great news for you.

Here are a few statistics and news on the job growth in Metro Detroit this 2023:

• - Ford Motor Co. has a multi-year plan for a 30-acre “mobility innovation district” in Downtown Detroit, creating 5,000 new job opportunities for locals. Google also joined as a founding member and commits to training locals to work in the up-and-coming district.
• - Michigan’s economy is ranked #1 by Bloomberg among 37 other states with populations of more than 2 million, thanks to the state’s impressive recovery from the pandemic. The announcement made headlines worldwide and certainly shone a positive light on the state.
• - General Motors announced its plan to create an all-electric future with 5,000 manufacturing job openings in Michigan. The state also said it’ll align a minimum of $126 million in resources to support the district and expand local job growth in the sector it’s known for—automobiles.

Jacksonville wasn’t spared from the pandemic either. Still, the city is showing growth in the post-COVID landscape, where the following statistics and news show promise:

• - Population growth is increasing ahead of the state, where the market has a disproportionately strong share of such population increase. People from the likes of - New Jersey, New York, Chicago, Pennsylvania, and California are moving to Florida due to its weather, business-friendly environment, lack of state income taxes, and attainable cost of living.
• - Florida’s main industries (tourism, agriculture, trade, aerospace, financial services, and life sciences) had the fastest collapse during COVID-19 but also had the most significant recovery. Florida thrives on tourism, but Jacksonville remained resilient, especially when compared to other cities in Central and North Florida.
• - Jacksonville residents are demanding to be paid a lot more, and they’re getting it. This is excellent news for you, as it directly relates to quality, financially capable tenants. You can expect the growth to continue in 2023, especially as the price of housing skyrockets.

In a nutshell, here is a snapshot of the post-COVID economy in Metro Detroit and Jacksonville. Keep in mind that the figures for Jacksonville refer to the city, not the entire metropolitan area:

Source: Brookings.edu.

We have to admit—Jacksonville is looking much healthier than Metro Detroit. Still, let’s not forget that most areas are still recovering from the devastating changes that COVID-19 brought worldwide. As a real estate investor, prioritize which areas show resilience and growth to attract new residents, allow them to have well-paying jobs, and provide a good neighborhood to live in.

Safety and Crime

In terms of safety, both Metro Detroit and Jacksonville have higher crime rates than their respective larger areas (Michigan and Jacksonville Metro). Jacksonville does have better rates compared to the rest of its metropolitan area, which makes it more attractive to prospective residents moving into the city.

Source: Best Places.

The areas we’re exploring—especially Metro Detroit—have varied cities and neighborhoods, so it’s difficult to generalize their level of safety. The best course of action is to visit the area you’re looking to invest in and ask local real estate experts if it’s a safe block for investment. You might find a house that’s in a safe neighborhood just a street away from an area that’s deemed unsafe.

Here are two maps that show how much safety can vary within the areas:

Source: NeighborhoodScout.

Diversity

Regardless of race, your goal is to invest in properties that attract reliable, responsible, communicative tenants that’ll help protect your hard-earned assets. Renters should have minimal to zero problems keeping up with payments, maintaining the property, and following your lease agreement.

Here is the diversity breakdown for Metro Detroit and Jacksonville:

Source: Best Places.

The racial diversity in Metro Detroit and Jacksonville differs, although ultimately, it’s up to your investment goals to determine which market is more suitable for your strategy.

Liveability

In a nutshell, here is the life one can expect from either Metro Detroit or Raleigh:

Source: Best Places.

*Density isn’t always a con! Density also means more potential tenants.

Both Metro Detroit and Jacksonville show resilient economic growth for people seeking to better their careers, grow a family with excellent schools nearby, and more. Still, be careful when choosing your real estate market. Your goal is to prioritize the market that is in high demand by high-quality tenants, so your pool will be filled with responsible renters who’ll contribute to your success.

Moreover, if you’re a beginner or out-of-state investor, work with an experienced local agent or property management company to accurately analyze the key investment factors before pushing through with purchasing a property.

Conclusion

Whether you’ve decided to invest in Metro Detroit or Jacksonville, conduct a thorough evaluation of the areas before purchasing any property. Both markets have enormous and varied subareas with unique strengths and weaknesses—all dependent on your investment goals.

Here’s a quick recap of all the information we’ve provided in this comparative report:

Regardless of what we’ve presented, both Metro Detroit and Jacksonville are still evolving, so you’ll have to keep an eye on how the real estate markets shift. Based on our two decades worth of experience and understanding, our bias is certainly towards Metro Detroit, where you’ll find the most lucrative opportunities with an excellent balance of cash flow and equity gains.

That said, money is still the root of all investments, so we advise that you focus on finding investment opportunities that align with your goals and priorities. Find that sweet spot of short- and long-term returns so you’re covered for the present and future.

And, since you’re already reading this article, you’re one click away from getting in touch with experts in Metro Detroit (yes, we mean us!). Give us a call today and we’ll answer any concerns you have. And if you’re a bit shy, leave a comment below or shoot me a message. I’m excited to lead you into one of the famous real estate hotspots in the United States—Metro Detroit!

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Do you want to learn more? We have an ongoing that unpacks the investment details of all Metro Detroit cities and Detroit neighborhoods. You can also request a specific area for us to cover if you have one in mind. We’ll prioritize that for you!