What Is The Cost Of Living In Florida Vs. Michigan?

With nearly 1,500 miles of space between them and two unique cultures, Florida and Michigan might as well be two different worlds. Though, both states have much to offer potential residents. On the one hand, Michigan provides access to both small-town and urban living, has a strong economy, all four seasons, and is, generally, one of the most beautiful states in the country.

While, on the other hand, Florida boasts world-class beaches, a warm year-round climate, numerous employment opportunities, and tourist attractions for the whole family to enjoy. But, how do these two states compare when it comes to cost of living?

The cost of living index in Florida is 102.8, meaning it is nearly 3% more expensive to live in Florida than the national average (100). Michigan, on the other hand, has a cost of living index of 89.6, so it is significantly more affordable than both Florida and the national average. The median price of a home in Florida is $294,900, which is relatively on par with the national average of 291,700. Meanwhile, the median home price in Michigan is $207,800 – about 30% less than Florida.

Aside from median housing prices, let’s examine how the cost of living compares in Florida vs. Michigan.

When you consider the fact that Florida’s median home price is close to $295,000, it is more expensive to purchase a home here than in the state of Michigan. With Michigan’s median home price of nearly $208,000, you’ll end up spending about 42% more for a house in Florida.

During 2020 and as a result of the COVID-19 pandemic, there was a huge migration of people to the state of Florida. This occurred because people realized that, by settling in Florida, they could have a higher quality of life but still make the same amount of money. With such an influx of new residents and mortgage rates being as low as they’ve ever been, this caused a limited inventory of homes and high demand, resulting in increased home prices.

Although home prices are higher now than anyone could have predicted, studies suggest that the ratio of sellers to buyers should begin to ease over time. This same situation is occurring around much of the U.S., including Michigan. The housing market in Michigan is probably the most competitive that it has ever been and homes are seeing double-digit sale price surges. Even with limited homes on the market, the low interest rates are still attracting buyers in Michigan.

In both Florida and Michigan, the current market situation is causing home buyers to have to switch up their strategy, including making offers at the top of their price range or expanding their search area for the perfect home. It is an excellent time to sell a home but home buyers are facing more competition and higher prices than normal. Regardless, even with the rise in home prices, it is still cheaper to purchase a home in Michigan than Florida.

As buyers continue to compete, the homes in Michigan and Florida are going to steadily increase in price. Though, more affordable housing can be seen as a significant financial advantage of living in Michigan over Florida. In either state, prices do vary depending on the city you live. For example, most cities in Michigan have median home prices that are well below the national average, with the exception of Ann Arbor. Whereas, you’ll find that most Florida cities are above the national average.

While there may be some cities in Michigan that have higher home prices than other U.S. states, housing costs are still between 30 and 40 percent cheaper than Florida.

Like home prices, monthly rental prices vary in Florida based on the city you live in. With a statewide average of $1,175 per month, Florida has the eleventh most expensive rent in the U.S. Reports suggest that rental prices are going to continue to rise throughout the state, with South Florida having the third fastest-growing rental market in the nation. In this area, the average rent is $2,432 (as of August 2021), which is about 27% higher than last year.

With that said, the following table delivers a more comprehensive look at the average monthly rental prices in some of Florida’s most popular cities:

In the U.S, there are twenty-one states with average rents under $1,000 a month. With a statewide average rent of $871 per month, Michigan is considered an affordable place for renters. In general, states with the lowest rental prices also tend to have some of the lowest overall costs of living, which is certainly the case for Michigan. Though, like Florida, rent varies based on where you live in Michigan. For example, Allendale has the most expensive rent in the state, at $1,611, but Flint apartments are the cheapest – just $629 per month.

The table below outlines the average monthly rent you can expect in some of major cities across Michigan:

One of the advantages to living in Florida instead of Michigan is the fact that there is no state income tax. In fact, the state is among a select few that do not levy any sort of personal income tax at the state level. This means that regardless of your income level, you do not have to file a state income tax return or pay any taxes on your income in Texas. You do, however, still have to file a federal income tax return and pay your federal income taxes.

Michigan, on the other hand, has a flat income tax system. This means that, no matter how much you make, all income earners pay 4.25% of their taxable income. For states that have a flat tax, Michigan’s is one of the lowest rates. Though, some Michigan cities also collect their own income taxes – with rates that range from 1% to as much as 2.40% for residents. For non-residents that work on those areas, you have to pay half the residential rate.

Florida’s statewide base sales tax rate is 6%. Some Florida counties also collect their own sales taxes, ranging from as low as 0.5% to a high as 2.5%. Although there are no sales taxes charged at the city level, the total sales tax rate you could end up paying in Florida is as much as 8.5% – depending on the county you’re in.

Unlike Florida, and most other states in the U.S. that have sales taxes, there are no city or county sales taxes in Michigan. Like their state income tax, Michigan has a flat sales tax rate. This means that no matter where you’re at in Michigan, you will pay have to pay the same 6% in sales tax. The rate is lower than most of the neighboring states and there are a number of goods that are not taxed at all, including medications, groceries, and newspapers.

Whether you’re thinking about buying a home in Florida or Michigan, you must consider property taxes. Florida’s average effective property tax is below the national average, at just 0.83%. Though, as property taxes are collected by the individual county, they vary based on where your home is located. For example, the effective rate in Miami-Dade County is slightly higher, at 0.97%.

Michigan, however, has some of the highest property taxes in the country. Residents of the Great Lakes State pay an average effective rate of 1.45% of their home’s market value in property taxes annually. Since properties are evaluated and taxes are collected at the local level, the amount of property taxes paid varies considerably from one area to another. For instance, Leelanau County’s effective property tax rate is only 0.87%, but Wayne County’s is a staggering 2.35%.