Deep Dive into Metro Detroit Cities: Highland Park

Source: Zillow listing

The metropolitan area of Metro Detroit is enormous. Encompassing nearly a hundred neighborhoods and cities, the area has multiple personalities and real estate market factors—tenant demographics, property conditions, property management requirements, and returns on investment.

You’ll have to get insider knowledge and local experience to reap the famed returns of the Detroit market, where there is a booming demand for single-family homes within the affordable housing market.

Not to worry, we have your back. You can invest in Metro Detroit rental properties with complete confidence, leveraging our two-decade worth of experience to focus on the areas worth your time.

This installment is part of our ongoing series that unpacks each Metro Detroit city's rental market scene. With these ultimate guides, you can sift through your options and identify the best investment opportunities that work for you.

For this article, our featured area is Highland Park, Michigan—an enclave city in Wayne County surrounded by the City of Detroit. Read on to see if this is your ideal investment city!

Source: Google Maps

Highland Park

Highland Park in Wayne County, Michigan, has a population of 10,818 in its land area of 2.97 square miles (7.69 km2), resulting in a population density of 3,642 people per square mile. This density is slightly lower than the City of Detroit's 4,606 people per square mile.

Although Highland Park is surrounded by the City of Detroit on all sides (except for a small portion that touches Hamtramck), it’s not considered a Ring City in our books. We give the term to Metro Detroit cities that border the City of Detroit in a semicircle, where you’ll find a balance of property affordability and reduced risks. But Highland Park is a city that’s within the City of Detroit in practical terms.

Here’s where Highland Park is compared to all other cities in Metro Detroit:

Source: Georgetown Public Policy Review

If you want to take a closer look, here is a list of all the cities in Metro Detroit. All the names highlighted in green are Ring Cities just like Highland Park, while all those with hyperlinks will bring you to previously published Deep Dives for further research:

Highland Park Hummingbird

Highland Park got the nickname "Highland Park Hummingbird" after Chrysler's gear-reduction starter in the early days, having a distinctive cranking sound like a hummingbird's.

The history of Highland Park is intimately linked with the history of the City of Detroit. French colonists first settled the area in 1701 before it was ceded to the United States in the Treaty of Saginaw following the war of 1812. Early European Americans subsequently opened the location to settlement in 1836.

Highland Park began to develop as a residential suburb of the City of Detroit in the late 19th century. The Detroit Street Railway Company built a streetcar line connecting Highland Park with downtown Detroit in 1886, which is still operational as part of the Detroit Department of Transportation's (DDOT) bus system.

By 1907, Highland Park was incorporated as a city, having William H. McNeil as its first mayor. Its population reached 4,867 during this time. Its primary employer was the Ford Motor Company, which established an automobile assembly plant in Highland Park in 1908.

Unfortunately, the Ford Motor Company plant closed in 1910 following a strike by its workforce. The Great Depression hit Highland Park hard, and the city's population declined to 3,479 by 1930. The city's economy began to recover in the 1940s following World War II and the establishment of the U.S. Army's Fort Wayne Military Reservation, now known as Selfridge Air National Guard Base, in neighboring Harrison Township, Macomb County.

Highland Park's population peaked at 13,582 in 1970 before beginning a long-term decline fueled by white flight and suburbanization. As of 2010, the population of Highland Park had fallen to 10,818. Despite its decline, Highland Park remains an important commercial and cultural center for southeastern Michigan African Americans.

In terms of real estate, Highland Park offers a variety of affordable housing options, including single-family homes, apartments, and condominiums. The city also has several parks and recreation facilities, making it an ideal place to live an active lifestyle. It's a community with a strong sense of history and culture, but is Highland Park ideal for investing in rental properties?

Let's take a closer look at the city.

Rent & Rent-to-Price Ratio (The 1% Rule)

According to Niche, the average rent in Highland Park is $585 per month. If we break this figure down to specific bedroom sizes, we see that its rent amounts are significantly lower than the rest of Metro Detroit, Michigan, and the nation:

Source: Bestplaces

If we look at current listings on Zillow, we see that the rent averages from Niche and Bestplaces are significantly underestimated. In fact, the Zillow rent estimates range from $942 to $2,250 per month, depending on the property condition and size:

Source: Listing on Zillow as of September 2022

From the Zillow listings, we also see that the most popular property sizes in Highland Park are three-bedroom ones with varying numbers of bathrooms. There are a few four-bedroom homes and studio units, but the majority have three bedrooms.

Let’s use the rent-to-price ratio calculation to see if these homes will potentially generate strong cash flow. Remember that the industry standard is for the rent amount to be a minimum of 1% of the total property price (including purchase price, closing costs, renovations, etc.) to generate substantial returns.

We’ve chosen this listing (see below) for our calculation, It is a beautiful home with new wood flooring, a large deck in the backyard, a full basement, and new vinyl windows. With an estimated rent of $1,470 a month and a sold property price of $125,000, the ratio results in 1.17%. This figure goes beyond the industry’s minimum and fits the average ratio of Ring Cities in Metro Detroit.

Source: Sold listing on Zillow as of September 2022

In other words, you can have full confidence investing in Highland Park properties that generate strong cash flow month on month. That’s good news for any rental property investor!

House Value and Appreciation

Niche reports that the average house value in Highland Park is $50,200. Zillow’s estimate is a tad higher, clocking in at $76,963 average home value in the city, where the value has gone up 9.1% over the past 12 months and might continue growing in the years to come.

Source: Zillow

We can also see further proof of the uptrend of Highland Park property values from Redfin, where its data shows that the median sales price is a whopping $219,000 and has been increasing by 35.2% year-over-year—an impressive achievement for the small city:

Source: Redfin

While the number of homes sold has declined, it doesn’t discount the fact that Highland Park is a “Somewhat Competitive” market based on Redfin’s Compete Score, where homes get multiple offers and can sell 3% above list price.

According to NeighborhoodScout, the most popular home type in Highland Park is single-family homes, accounting for more than half (52.2%) of all homes in the city. Next are apartment complexes (31.4%), small apartment buildings (12.9%), townhomes (3.1%), and mobile homes (0.4%). Most of these homes have either three bedrooms (30.6%), two bedrooms (21.8%), or one bedroom (20.2%), with the rest having four (17.3%) or more (6.4%).

Going back to Zillow listings, we see a good selection of three-bedroom and four-bedroom homes in Highland Park. Prices range from $9,000 to $188,000, depending on the property condition, location, and size of property. We can clearly see affordable options everywhere as well:

Source: Listing on Zillow as of September 2022

These affordable property prices are reflective of the Detroit housing market—one that literally surrounds Highland Park from all four sides. Although Highland Park isn’t a Ring City by our terms, you’ll find the famous “cheap properties” here similar to the rest of the City of Detroit.

Regarding property appreciation, NeighborhoodScout reports that Highland Park real estate appreciated at a 14.48% rate in the past 12 months, which is slightly above the national average. Unfortunately, in the latest quarter, the rate has been 0.79%, which annualizes to 3.21%—not the best rate we’ve seen.

Highland Park properties saw an increase in appreciation by 172.47% in the past decade (an average annual appreciation rate of 10.54%), putting itself in the top 10% for real estate appreciation in the nation. But it still doesn’t have the best reputation—unless you compare it to Brightmoor.

Look at the map below and you’ll see two good areas here. But everywhere else is filled with burnt and run-down buildings to avoid. Just be careful when you invest, and you should be right in Highland Park.

Here’s a heatmap that shows where you can take advantage of Highland Park’s appreciation rates, where our pro tip is to find properties that are as near to Woodward as possible:

Source: NeighborhoodScout

Quality of Tenants, Properties, and Living

With the financial viability of investing in Highland Park out of the way, let’s analyze the quality of tenants, properties, and lifestyle in the city. These factors are as important as the numbers we’ve discussed above, as they determine the type of tenants, the property conditions, and the level of attraction you’ll have to work with in Highland Park.

All the information below comes from in-depth research and our personal experience as a property management company and local residents in Metro Detroit.

Average Property Class and Condition: C+

Average property age: 72 years

Based on Bestplaces, a whopping 39.1% of all properties in Highland Park were built in 1939 or earlier, resulting in an average property age of 72 years. In the real estate industry, any homes that are above the age of 50 are considered “old”, which means you’ll come across many old homes in Highland Park.

Source: Bestplaces

Still, old homes don’t automatically mean bad investment. It only means that you’ll have to learn how to deal with higher maintenance demands and possible major renovations to bring the home up to rental standards. You’ll also find well-maintained and newly-furnished homes in Highland Park, anyway, if you would rather deal with maintenance moving forward.

Conduct ample research of the housing market and have keen attention to detail when inspecting older homes to succeed. Be careful with budgeting and analysis before purchasing—possibly even work with a professional inspector if necessary—so you can reap the expected gains in Highland Park.

And if you’re worried about blight in Highland Park, don’t worry, many locals are taking the steps to transform the neighborhood into a beautiful place to live.

“The block was terribly blighted and it needed love and a bunch of years ago we decided to come over here and I said I'm going to bring my ministry over here and we're going to work on this block and create something beautiful for the children and the community," said , also affectionately known as Mama Shu.

Quality of Life in the Neighborhood: B

Moving on, let’s look at the quality of life in Highland Park. Only good locations attract high-quality, responsible renters who’ll pay rent, take care of your home, and maximize the impact of your investment return, so you’ll want to know how good it is to live in Highland Park.

In other words, prioritize desirable neighborhoods and you’ll avoid getting tenants who are a pain to manage, having to chase them up for rent, and spending a fortune repairing what they’ve damaged.

Let’s check the quality of life in Highland Park.

Local Economy

The local economy determines the local income, employment stability, and overall development and growth of the city. So it’s one of the key contributing factors to a neighborhood’s livability.

Fortunately, Highland Park passes with flying colors for this defining factor.

The city’s motto is, “Return to Excellence,” which is a commitment to revive and drive the new mission and vision for the local Community and Economic Development Department. It says that they want to, “bring excellence to Highland Park by showcasing the community for prospective developers in efforts of revitalizing the local economy and providing a better quality of life for our residents.”

Moreover, to achieve that goal, Highland Park is “strongly committed to soliciting, supporting and strengthening businesses in their efforts to grow, expand and locate within our borders. This is accomplished by the City working to partner with the business community to achieve the right incentives, programs, and support needed to aid in the growth of businesses, both large and small.”

Looking closer, the local economy in Highland Park is largely based on the automotive industry. The city is home to the Ford Motor Company plant, which was once the largest automobile assembly plant in the world. The plant closed in 1910 following a strike by its workforce, but it was reopened in 1917 and operated until 1980. Today, the plant is known as The Henry Ford and it is a major tourist destination.

Highland Park is also home to the Charles H. Wright Museum of African American History, one of the largest museums dedicated to African American history and culture in the nation. The museum features permanent and temporary exhibits on topics such as the Underground Railroad, the civil rights movement, and African American art, music, and literature.

Walking through Highland Park today, you'll see evidence of the city's rich history and cultural diversity. The city is home to a number of important historical sites, museums, and cultural institutions. The main commercial corridor is along Woodward Avenue, where many of the buildings along Woodward Avenue date back to the early 20th century and are listed on the National Register of Historic Places.

School Rankings

According to GreatSchools, the top-rated schools in Highland Park based on a variety of measures include George Washington Carver Middle School (Charter, 5-8) and Barber Elementary School (Charter, PK-8). Moreover, NeighborhoodScout gives us the following heatmap so you know where to focus if you want to attract family tenants with younger kids:

Source: NeighborhoodScout

Crime and Safety

Unfortunately, Highland Park isn’t the safest place to live in. However, it’s also not the most dangerous city in Metro Detroit and Michigan. You’ll still attract tenants seeking a relatively good neighborhood to live in—keeping your assets safe from crimes.

Here’s another heatmap from NeighborhoodScout that shows where the safest areas are in Highland Park. You’ll do yourself a favor by focusing on these areas when purchasing a property:

Source: NeighborhoodScout

Still, we should mention that safety in Metro Detroit varies greatly from one block to another. So it’s best that you visit the area yourself, ask the neighbors, and get an accurate evaluation of the crime rate on the exact street you’re interested in. Pay close attention to details and ensure that you’re investing in a place that’s safe for both you and your future tenants.

Livability

Areavibes say that Highland Park has excellent amenities and cost of living, attracting people seeking a nice and affordable neighborhood to live in. However, Areavibes did give the city a poor score for its low employment rate, lack of good schools, and higher crime rates. Still, user ratings actually gave it a relatively good score, which means locals are generally enjoying their stay in Highland Park.

Moreover, here is a breakdown of the cost of living in Highland Park from Bestplaces, where you can see how the majority of the costs are lower than the national average:

Source: Bestplaces

Tenant Class and Demographics: C+

Lastly, let’s evaluate the potential tenant pool you’ll have in Highland Park. If you’re a wise property investor, you’ll ensure that the demographics support your goal of having a successful rental business—one that has responsible, financially-able tenants.

So, here are the main factors that contribute to your investment in Highland Park:

• Income: The average income of Highland Park locals is significantly lower than in Metro Detroit, Michigan, and the United States. This isn’t good news for investors, as it means you won’t be able to charge rent that’s too high.

• Unemployment: The unemployment rate in Highland Park is higher than Metro Detroit, being closer to Michigan’s rate than anything. But note that this rate might still be reflecting the negative effects of the global pandemic on local economies, as we see potential job growth in the city’s near future. Your tenant pool will increasingly get better-paying jobs to rent better homes.

• Education: While only a small percentage of the residents in Highland Park have higher education, a good portion of them have attended and graduated high school. Your tenant pool shouldn’t have any problems securing jobs in Highland Park, allowing them to afford rent.

Source: Bestplaces

• Diversity: Niche provides a racial breakdown of the locals in Highland Park:

Source: Niche

Based on the average income, unemployment rate, and educational attainment of Highland Park residents, you’ll need to conduct thorough tenant screening to ensure that you only accept quality tenants who’ll earn higher incomes and have stable jobs.

You might run into renters that’ll require higher levels of property management, which means you might have to hire third-party help like property management companies to receive payments, maintain your assets, and ensure that your tenants comply with their lease agreements.

Source: Google Maps

Overall Score: C+

We’re giving Highland Park a rental investment score of B+. While the tenant pool and older housing stock require more attention to detail and hands-on management, the following reasons are strong enough to make Highland Park an option for you to invest in Metro Detroit:

• - Highland Park’s rent-to-price ratio comes in at 1.17%, where you can generate positive cash flow from its housing stock, given that you conduct thorough research before purchasing.
• - Highland Park’s house value and appreciation rate are increasing, and the city has a track record for impressive property appreciation to garner equity gains for long-term returns.

Still, we recommend that you check out our other Deep Dives to see better Ring Cities for you to invest in Metro Detroit. Highland Park may have good qualities, but there many others like St. Clair Shores and Hazel Park that have even more excellent investment options you can consider.

Once you’ve found the perfect area for you, get in touch with our team for quality property management services to handle your growing rental property portfolio. Our expansive experience and knowledge in Metro Detroit can help you manage investments without having to deal with the daily headaches—just sit back, relax, and watch your investments grow to unbelievable heights.

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Do you want us to dive into another Metro Detroit area? Comment below!

Our series isn’t stopping until we’ve covered every city and neighborhood in Metro Detroit. And if you want to get more help with your investment journey, don’t hesitate to get in touch with our experts today.