It also depends on which school you apply to and UM. Each school has different criteria, e.g. CoE has a lower admit rate than LSA, some schools require performance or porfolios. Washtenaw and Oakland counties tend to have the most educated parents (Ann Arbor has one of the highest % of adults w degrees in the US) who’s offspring tend to attend the state flagship. In addition, many kids go where their friends go - Western MI kids attend WMU, CMI, Ferris GVSU, or MSU.
The in-state admission rate is also high because there just are not that many qualified (and they self-select) in-state applicants due to Michigan’s lack of population growth and the Regents’ commitment to keep UM 50% in-state.
Finally the in-state yield is higher because UM is a huge bargain compared to OOS and private schools, especially if you don’t get FA. For example, do you attend the #6 engineering school (UM @ $25K , CMU @$60K, GT @40K OOS) vs #4 Caltech @64K or #3 Berkeley @44K. That’s a $60-150K degree cost difference for a not too dissimilar experience.
Michigan is still affordable for most middle-class parents, especially those that starting saving early or bought METs. I can’t say that for many other highly rated schools.