Wallet Watch: Changing climate shifts Michigan’s wine, ski and snowmobile industries

It’s a cold, wet Monday in Michigan.

Tens of thousands of households are still without power in Southeast Michigan after last week’s ice storm knocked out power for 700,000 homes and businesses. This Monday brought a second dose of ice to the north and rain to the south.

Wherever you’re slushing through this wintery mix we’ve got business news for you. This week’s Wallet Watch recap looks at climate change’s affect on business, a cooling housing market and major developments in the automotive world.

Let’s dive in.

What does climate change mean for Michigan business?

This weird, whiplash winter has kept Michigan businesses on their toes as they adapt to a changing climate.

Environmental reporter Sheri McWhirter talked with Michigan vineyards up north about what warmer temperatures mean for their crops.

While Michigan has become a standout in the white wine industry climate change has actually paved the way for a burgeoning red wine industry.

Wine farmers in the Leelanau Peninsula say Lake Michigan retaining more heat has protected them from spring frosts and extended summer growing seasons.

In addition to changing weather patterns, there’s also been a change in taste buds. Farmers say the trend towards reds is also locked in on consumer demand for them.

Related: Turning red: Michigan’s wine industry adapts to warming temps, changing tastes

Meanwhile, northern businesses that rely on snow are struggling to keep business afloat this winter.

Ski resorts throughout Michigan have doubled down on their snowmaking investments foreseeing warmer, unpredictable winters ahead.

Jim MacInnes, CEO and co-owner of Crystal Mountain, said they plan to stay in the snow business for as long as possible and that means planning for climate change now.

Crystal Mountain started with seven snow guns in 1985 and have since ramped up to 175 snow guns pumping out 5,000 gallons of water per minute.

Unfortunately for snowmobile businesses that offer rentals, tours or rely on snowmobilers staying or eating at their establishment there aren’t snow guns on snowmobile trails. That leaves many of them expanding into summer activities or simply praying for snow.

Cadillac snowmobile tour guide Randy Cornell said it best: “The IRS doesn’t give you a tax deduction for failure to have snow.”

Home prices, sales cool down

Much like the temperatures, the housing market typically cools down in the winter but the last few years have been the exception. The momentum of climbing prices and competitive offers carried through in the winter months, shocking most real estate experts.

But the new year has brought a housing hangover.

January data shows home sales in Michigan are declining, matching the same trend nationwide. Realcomp, a Michigan real estate data company, reports home sales are down almost 30{dd3cf16dc48cbccde1cb5083e00e749fe70e501950bc2e0dea1feff25a82382f} year-over-year.

With sales slowing, days on the market are up to 43. That’s an increase compared to January 2022 when homes sold within 35 days on average.

Without the same fiery competition heating up prices the median sale has leveled off. Realcomp data shows no change from January 2022′s median price of $210,000.

This is still a major increase, though, compared to pre-pandemic prices. In January 2019 the median price was $159,900.

Related: Houses are staying on the market longer as home sales cool

Homeowners who held onto their home during the frenzy happily watched their investment gain value, but renters are paying more for the same space.

Compared to last January, rent prices are nearly 10{dd3cf16dc48cbccde1cb5083e00e749fe70e501950bc2e0dea1feff25a82382f} higher in Michigan bringing the median price to $1,367, according to rent.com data.

Zooming in on major cities like Detroit, rent has only increased 1.17{dd3cf16dc48cbccde1cb5083e00e749fe70e501950bc2e0dea1feff25a82382f} year-over-year and actually showed a slight drop month-over-month.

ATTOM, a national real estate data company, reported that the tides have shifted making renting more affordable than homeownership.

Despite rising rent prices, a January report from ATTOM found renting versus owning a three-bedroom home would require a significantly smaller portion of wages. The report analyzed 222 U.S. counties and found this to be true for 95{dd3cf16dc48cbccde1cb5083e00e749fe70e501950bc2e0dea1feff25a82382f} of them.

Related: These 31 Michigan cities have more renters than homeowners

MLive’s Data reporter Taylor DesOrmeau analyzed Michigan’s rental data and found that while homeownership still outstrips renting in all 83 counties there is a major gap in homeownership and renting in Michigan cities.

Looking at median household income, Taylor’s analysis didn’t find a clear correlation between income and homeownership rates. Most of the larger counties have higher incomes and lower homeownership rates, while many of the smaller counties have lower incomes and higher homeownership rates.

(Can’t see the chart? Click here.)

The renting trend instead seems to be driven by location, in particular metros.

Taylor found 31 Michigan cities where renting was more popular than homeownership.

Ypsilanti had the highest concentration of renters with East Lansing, Mount Pleasant, Kalamazoo and Ann Arbor all close behind, showing a clear trend of college populations swaying the rental saturation.

(Can’t see the chart? Click here.)

Ford’s megasite gets chilly reception from Michigan Republicans

This month’s announcement that Ford plans to build a $3.5 billion battery plant in Marshall was met with mixed reactions.

If you’re just catching up, I would recommend reading Rose White’s explainer on megasites first. The short version is the state has been clearing swaths of rural land for development to attract business.

Ford’s battery project drew praise from Gov. Gretchen Whitmer for creating an estimated 2,500 jobs in southwest Michigan. It was also seen as a major win for the Michigan Economic Development Council after sealing the deal with $246 million in state incentives for Ford.

Rose reported that Marshall residents weren’t too keen on the 2.5 million-square-foot facility proposed for their backyards. Residents had environmental concerns as well as fear that this new development would cost them their small-town charm.

The latest pushback comes from Michigan House Republicans over technology from Chinese battery maker Contemporary Amperex Technology Co. Ltd., or CATL.

Tensions between the U.S. and China are coloring the scrutiny put on Ford after the automaker said they plan to use CATL’s technology at the new battery plant.

On a national level, Sen. Marco Rubio, R-Florida, asked the Biden administration to investigate the licensing agreement between Ford and CATL and Bloomberg reports the Chinese government also plans to scrutinize the deal.

Back here in Michigan, Rep. Ken Borton, R-Gaylord, grilled Chris Smith, Ford’s chief government affairs officer, during a Michigan House Appropriations Committee hearing on Feb. 22.

Smith maintains the Chinese government has no role in the battery plant.

Borton asked about day-to-day operations, financial investments and if the contract between Ford and CATL is available for review.

Smith answered CATL is not Ford’s partner but acting as a “technical service provider” on the project. He said the contract, still under negotiation, cannot be shared yet.

“There will be no foreign investment in the plant. This is not a joint venture. Ford is simply licensing technology to make these batteries. The government of China has no role in the project, and no tax dollars will go to the company licensing us the technology,” Smith said.

More on MLive:

Michigan could spend another $750M on Ford battery plant in Marshall

Ford says Chinese government ‘has no role’ in $3.5B Michigan plant

Unpredictable winters are here to stay. How will Michigan ski resorts adapt?

Snowmobile businesses are praying for another snow amid weird whiplash of a winter