Petoskey, Michigan, a city of 5,800 residents, has transformed into a "pure luxury" community, with over half of its home listings exceeding $1 million. Realtor.Com ranked Petoskey 11th nationally on its list of such communities, making it the only Michigan city included. Since $2020, the median home cost has more than tripled, rising from $310,000 to $1.1 million, while the statewide median only increased from $250,000 to $270,000 in $2025. This surge has made homeownership nearly impossible for local teachers and nurses.
The city's popularity has led to an occupancy rate of over 99% and about half of its homes being purchased by out-of-towners, primarily as summer residences near Lake Michigan. This influx has created a dire housing shortage for permanent residents, with one study indicating Emmet County needs an additional $3,300 housing units, and the broader 10-county region requiring $30,000 more units by $2027. Developers face challenges such as the high cost of building custom homes, averaging $500 per square foot, making a 2,000-square-foot home cost $1 million.
Efforts to address the crisis include new rental developments like The Lofts at Lumber Square and Victories Square apartments, which will provide about $300 new units, marking the first new apartments in Petoskey in two decades. Some units are reserved at below-market prices for middle-income tenants. However, employers in the region, such as those surveyed by Northern Lakes Economic Alliance, cite attainable housing as the top barrier, affecting job recruitment, with some professionals declining job offers due to lack of housing options. This situation has led to preliminary discussions between the mayor and school superintendent about using school district property for housing.
