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The Detroit, MI housing market is one of the most popular and affordable in the country. Situated in Wayne County on the US/Canadian border, the city has a population of around 650,000- but is actually quite small in terms of land area.
What is not small is the housing market. There is a solid supply of homes for sale and a hot buyer's market for first-time buyers and real estate investors- not to mention one of the most competitive renters markets in the country.
The Motor City is home to many major automotive manufacturing companies- and has been at the center of the industry for over a decade. This means job opportunities and reasonable economic security- things that make the city appealing to many potential buyers.
Buying property in the Detroit Metro Area and beyond splits opinions among the experts- with some seeing the potential for massive returns through rental- and others doubting the possibility to be able to resell for more money.
If you are considering investing in Detroit real estate, here are the facts, figures, and forecasts you need this year.
A Few Key Facts and Statistics
- Detroit currently has a buyer's market- with more demand than supply.
- The median price for a home in Detroit is $75,000- compared to $436,800 in the US as a whole.
- In April 2023, it took an average of 43 days to come off the market.
- Homes in Detroit sell (on average) for 95.3% of the listing price.
- 24.8% of properties sold in Detroit in April 2023 sold for above the list price.
- 22.4% of properties sold in Detroit in April 2023 sold with a price deduction.
- Detroit's rental market is one of the fastest growing in the country.
- The number of homes sold each month is generally lower than the previous year, with some exceptions.
- House prices have been increasing consecutively month-to-month in 2023.
- Detroit is considered an affordable city to live and work in and is generally recommended to property investors and first-time buyers.
What Are the Driving Factors in the Detroit Real Estate Market Today?
The Detroit real estate market is in a strong position- but what factors have the greatest influence on how it trends? Here is a summary of the three things having the most significant impacts on the market in Detroit so far in 2023.
Revitalize Detroit Efforts
Detroit is a historic city with many old buildings and run-down areas, but recent efforts to revitalize struggling neighborhoods have seen a major improvement. The city's appeal is growing thanks to massive investments in its appearance and property quality- which is helping price appreciation and popularity.
Growth in New Businesses
The city also has a major neighborhood enterprise zone, and is the home of the automotive industry. With huge manufacturing companies and a booming start-up community, Detroit attracts many young people and families looking for affordable housing near and employment opportunities.
More People Looking to Rent
One of the key demographics driving the Detroit housing market is renters. Detroit has a huge tenant population, and property investors with money to put into turning single-family homes and apartments into attractive rental properties have plenty of chances to see impressive returns.
Because of this, more people are buying- and contributing to the overall improvement of the city and its housing options.
2023 Detroit Housing Market Trends
Here are the standout real estate market trends in Detroit for the first part of 2023.
Median Sale Price
Housing prices in Detroit are significantly lower than the average for the US- sitting at just $73,000 as of April 2023. This is 6.5% lower year-over-year but has been steadily appreciating over the last few months.
It has climbed slightly from $71,000 in February 2023- and is expected to continue on a similar trend going forward.
Median Listing Home Price
The median listing home price is also relatively low- at around $69 per square foot. This figure varies greatly depending on the neighborhood.
Sale-to-List Ratio
Detroit has a sale-to-list price ratio of 95.3%- quite a bit lower than the national average. It is still a reasonably strong figure- especially considering that there are more homes available than buyers on the market.
It means that the average home sells for 4.7% less than the original list price- which is not a significant sum of money when we consider how low the home values are overall. That said, almost a quarter of the homes sold in Detroit in April 2023 sold for higher than the list price. It shows that demand is still high- and supports beliefs that house prices in the city could continue to climb.
There has, however, been a slight year-over-year increase in the number of sellers who reduced their list price before selling. It is up from 19.9% in April 2022 to 22.4% in April 2023- a minor increase of 2.5%. It could be down to the fact that people need to stay competitive in the current market, and some areas have more seller competition than others. Experts don't seem to believe this increase is cause for concern.
Number of Homes Sold
The recent trends for the total volume of home sales in Detroit have been fairly erratic of late, with no real pattern to follow.
2023 began almost on par with 2022- only 1.6% of a difference (378 homes sold in January 2022, 372 homes sold in January 2022). From there, the deficit grew slightly, and February numbers showed a 6% decrease year-over-year.
It looked like a downward trend was forming, but March turned things around with the best sales month of the last few years. Figures jumped 10.7% year-over-year- only to dive again in April.
On the most recent reports, the downward trend is on again- showing a 14.1% YOY drop between April 2022 and April 2023. That said, the excellent performance in the month of March throws a question mark in the mix as to whether things are cooling- or it is just taking time for things to resettle into a steady flow following the disruption of the pandemic.
Number of Homes for Sale
There are still more homes for sale than people looking to buy- which puts Detroit in a strong position for a buyer's market with healthy competition between sellers. The buyer-biased trend has held fast in the city for a while- and doesn't show signs of changing any time soon.
Average Number of Days Spent On the Market
One of the key indicators of how hot the market is is the average length of time it takes for a house to sell. In Detroit, homes currently spend an average of 43 days on the market- a relatively short time that suggests the market is fairly hot.
Numbers have increased year-over-year. Sales took an additional 10 days in April this year compared to last, but it still represents an improvement- with the smallest YOY deficit of 2023 so far.
What Is the Forecast for the Detroit Housing Market?
If we are to take the most recent trends are the basis of the forecast, then it looks like home prices are likely to rise. The city has high demand- but it also has high supply, so it is unlikely to appreciate all that quickly- but minor increases are possible.
Detroit is expected to remain a buyer's market, but sellers are still in a good position and should still be able to sell their homes reasonably quickly for close to the list price. Metro Detroit is a booming business and enterprise area, and the influx of buyers and renters moving to the city for jobs brings the potential for a positive outlook- and excellent opportunities for property investors.
Real Estate Market Forecast for the US
Now that we have looked at the forecast for Detroit, let's see how it compares to the US real estate market in general.
Detroit is trending a little differently from the US as a whole, but national economic forecasts are likely to have similar impacts.
Overall, the US is in short supply of available housing- partly due to the pandemic putting a halt to a lot of construction efforts- and partly because people cannot afford to sell their homes because of the cost of getting a mortgage on the new one.
The forecast for the American housing market in the coming months is for mortgage rates to remain high and supply to remain low- although parts of the country are beginning to see improvements in inventory.
House prices are a point of contention among experts- with some predicting a steady climb and demand continuing to outweigh supply- and others expecting them to drop to avoid sellers pricing out a significant portion of potential buyers.
Summary
In short, the Detroit real estate market is in a pretty good spot, having slowly recovered over the last decade and a half after the 2008 crash. It remains one of the country's most affordable places to buy real estate- and has a growing economy that looks promising for the future.
Detroit is especially appealing for investors looking to buy houses to create rental properties- since many of the people moving to the city want to rent instead of buy. Considering the low median home price, it has great potential to be a money-maker for investors if they pick the right neighborhoods.
As far as the immediate future is concerned, there is debate about what way prices will go. Restoration efforts in the city could add further value and allow people to price up. It is still a buyer's market, and there is not enough competition to really drive sales up much further.
Frequently Asked Questions
Does Detroit offer affordable housing?
Detroit is widely considered one of the most affordable cities in the country when it comes to real estate. Some neighborhoods have unbelievably low home prices- although there do not tend to be many properties for sale in these parts.
As a property investor, there are ample opportunities to turn profits on housing bought to let- and money goes further in this city than most.
Is Detroit a good city for real estate investors?
Yes- very much so. Metro Detroit is a booming market for investors because of low property costs. Many real estate agents work with these types of buyers in neighborhoods where rental properties are popular- selling cheap single-family homes to be turned around for renting.
How do home prices differ between popular Detroit neighborhoods?
There is a vast range of home values in Detroit to suit every budget. Overall, properties cost less in the Detroit region than in similar areas of most other major cities.
Regent Park is one example of the ultra-affordable housing Detroit is known for. Homes here sell for an average of $59,500. There are many other small neighborhoods with even cheaper housing- including Grixdale and Chandler Park- where properties can sell for less than $30,000.
Boston Edison West is one of the more high-end neighborhoods- with median housing prices sitting around $355,000 at the time of writing. Although this figure is below the national average, it is much higher than to cities overall median value. Downtown Detroit is even more expensive on average at $375,000.
What is the rental market like in Detroit?
Detroit's rental market is strong- and growing- making it an interesting area for real estate investors looking to make a profit. More people are renting in Detroit because of the influx of new businesses and job opportunities, and there is also a significant student population.
The city is the fastest-growing market for rental property in the entire metro area, with real estate investors making the most of incredibly low house prices over the past few years to generate high returns through renters.
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