Harbor Springs is in a sheltered bay on the north shore of the Little Traverse Bay on Lake Michigan. The Little Traverse Lighthouse is a historic lighthouse on the Harbor Point peninsula that forms the natural harbor there. M-119 connects with US 31 seven mile east and south at Bay View, with Petoskey just five miles away on the south side of the harbor.
Founded by the Jesuits, Harbor Springs was once called L'Arbre Croche, which means Crooked Tree. In 1847, L'Arbre Croche had the largest concentration of Indians in the states. French traders renamed the area Petit Traverse, or Little Traverse, when they arrived in the area. The village was eventually incorporated as Harbor Springs in 1880.
One of the city's more prominent members was the late Ephraim Shay, most famous for the invention of the Shay locomotive. The hexagonal shaped house he built in downtown Harbor Springs still stands today. The local elementary school is named after him (Shay Elementary)
The town is also just a few miles from neighboring Petoskey, Michigan, which is on the other side of the bay and offers a wider variety of activities including a multiplex movie theater, a thriving downtown area of its own, and several big-box stores.
As of the census of 2000, there were 1,567 people, 683 households, and 383 families residing in the city. The population density was 1,208.9 per square mile (465.4/km²). There were 1,086 housing units at an average density of 837.8/sq mi (322.5/km²). The racial makeup of the city was 91.70% White, 0.19% African American, 5.87% Native American, 0.19% Asian, and 2.04% from two or more races. Hispanic or Latino of any race were 0.57% of the population.
There were 683 households out of which 23.0% had children under the age of 18 living with them, 46.0% were married couples living together, 7.8% had a female householder with no husband present, and 43.8% were non-families. 39.4% of all households were made up of individuals and 18.0% had someone living alone who was 65 years of age or older. The average household size was 2.14 and the average family size was 2.88.
In the city the population was spread out with 20.4% under the age of 18, 4.6% from 18 to 24, 22.8% from 25 to 44, 28.3% from 45 to 64, and 23.8% who were 65 years of age or older. The median age was 47 years. For every 100 females there were 81.6 males. For every 100 females age 18 and over, there were 74.4 males.
The median income for a household in the city was $35,341, and the median income for a family was $46,750. Males had a median income of $29,236 versus $27,167 for females. The per capita income for the city was $21,876. About 5.3% of families and 6.8% of the population were below the poverty line, including 6.5% of those under age 18 and 9.8% of those age 65 or over.