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May 17th, 2018 by Marco Santarelli
Detroit Real Estate Market
This year, the Detroit real estate market can be seen to be flourishing since people from all across the US are considering to invest in Detroit. In addition to this, many older residents of the city are also considering a move back to their hometown because of the prospects here. With a population of around 4.3 million and average household income of around $53,000, Detroit is moving rapidly upwards when it comes to both population growth and development. Also, of notable mention is the fact that the in the Detroit housing market, the median house value has increased to 40% since 2017. Detroit stands with Orlando, Kansas as well as Columbus and Atlanta, when it comes to real estate market comparison.
Detroit Real Estate Market Forecast 2018
According to Zillow.com, the median home value in Detroit is $26,003. Detroit home values have gone up 12.0% over the past year and Zillow predicts they will rise 5.4% within the next year. The median rent price in Detroit is $800, which is lower than the Detroit Metro median of $1,100.
Below is the graph showing Zillow Home Value Index from 2009 to 2019 for the Detroit Housing Market. The Zillow Home Value Index is the median Zestimate valuation for a given geographic area on a given day. The Zestimate home value is Zillow’s estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home’s value and is not an official appraisal.
It shows the median home value for single family homes to increase by 5.4% to $27,395 in Mar 2019.
Mortgage delinquency is the first step in the foreclosure process. This is when a homeowner fails to make a mortgage payment. The percent of delinquent mortgages in Detroit is 3.0%, which is higher than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Detroit homeowners underwater on their mortgage is 36.2%, which is higher than Detroit Metro at 11.4%.
Detroit Real Estate Market Trend 2018
According to Trulia.com, the Detroit housing market trends indicate an increase of $4,000 (8%) in median home sales over the past year. The average price per square foot for this same period rose to $45, up from $42. Trends in Detroit housing market also show a 8% year-over-year rise in median sales price and a 0% rise in median rent per month.
Top Reasons To Invest In Detroit Real Estate Market In 2018
The following are top reasons to invest in Detroit real estate market in 2018:
Increasing Home Values
Since residential properties in Detroit still have price tags that vary significantly from other real estate markets, it is not impossible for investors to find properties at lesser of a price than other markets.
However, within the city these prices are increasing at a rapid pace and investors are encouraged to consider this market since the growth is expected to stay for a long time.
Detroit is #1 Affordable Housing Market
While the general rates of the Detroit real estate market are increasing, buying a property here is still more affordable than other competitive markets. Even though housing prices in Detroit are rising, among large cities, Detroit is still pretty affordable. A new report from “SmartAsset.com” compared home values in the largest cities in America to see how much you can get for $100,000, and Detroit is #1 on the list. The data was taken from Zillow from 2015 and the findings determined that $100,000 can get you about 2,850 square feet in the city. Investing in the Detroit real estate market today will get potential owners a range of properties at cheaper rates and they can either rent them out for improved cash flow or sell them whenever the market is soaring high.
Increased Rentals In Metro Detroit
Those looking for investing in rental properties to improve their cash flows can confidently consider Detroit real estate market for both housing and commercial properties. Although Detroit rent is affordable compared to other big cities, rent has gone up within the city over the past few years. Affordability ranked as the top factor in renters deciding to move, with job opportunities coming in second. This is one of the main reasons that many residents who had previously moved away from the city for better prospects are coming back and restoring their properties to get the advantage of increased rental rates.
Construction has been booming in Detroit these past couple years. A majority of that construction has been in the Detroit housing market, and even more so rentals. A new report from RentCafe.com shows the metro areas around the country building the most apartments, and while metro Detroit is pretty far down the list, we’re showing a steep increase from last year. 175% increase, to be exact, adding 1,615 new rentals to the market in 2017. Of the new rentals available, 785 are in the city. The new developments along the Riverfront and Lafayette Park open this year, specifically Orleans Landing and DuCharme Place.
Detroit is the most populous city in the U.S. state of Michigan, the largest city on the United States – Canada border, and the seat of Wayne County. The municipality of Detroit had a 2016 estimated population of 672,795, making it the 23rd-most populous city in the United States. The metropolitan area, known as Metro Detroit, is home to 4.3 million people, making it the second-largest in the Midwest after Chicago.
Since many older residents are moving back in and new businesses are bringing increased job opportunities for the city, there is an upward population growth trend in the city. Many small families and single-person households are also part of the growing Detroit real estate market which is both a cause and an effect for population growth.
Compared to many other real estate markets across the country, Detroit is an affordable market to both invest in or rent real estate in the current year. The city is also has the headquarters many Fortune 500 companies which is directly proportional to the city’s economic and employment development.
The most heavily represented sectors are manufacturing (particularly automotive), finance, technology, and health care. The most significant companies based in Detroit include: General Motors, Quicken Loans, Ally Financial, Compuware, Shinola, American Axle, Little Caesars, DTE Energy, Lowe Campbell Ewald, Blue Cross Blue Shield of Michigan, and Rossetti Architects.
On May 21, 2014, JPMorgan Chase announced that it was injecting $100 million over five years into Detroit’s economy, providing development funding for a variety of projects that would increase employment. It is the largest commitment made to any one city by the nation’s biggest bank.
Owing to rapid growth in the demographics of Detroit in recent years, its downtown is also seeing significant development and has improved the quality of life for the residents of this city in Michigan. In the central portions of Detroit, the population of young professionals, artists, and other transplants is growing and retail is expanding. This dynamic is luring additional new residents, and former residents returning from other cities, to the city’s Downtown along with the revitalized Midtown and New Center areas.
There are popular eateries, sports teams with significant fan bases, regular concerts and a generally happening nightlife. The same could not be said for this city a few years ago and now it attracts a number of businesses and consequently, families that choose to live here.
Rapid Job Growth
A number of large corporations already have their presence in Detroit and many more businesses are being attracted to city owing to its fast growth. This growth directly translates to increased jobs in the city, which also means more demand of residential properties. Keeping its current growth in view, Detroit real estate market is also a budding prospect for entrepreneurs who are looking for affordable rents and properties in growing markets.
Tourism In Detroit
Because of its unique culture, distinctive architecture, and revitalization and urban renewal efforts in the 21st century, Detroit has enjoyed increased prominence as a tourist destination in recent years. The New York Times listed Detroit as the 9th-best destination in its list of 52 Places to Go in 2017, while travel guide publisher Lonely Planet named Detroit the second-best city in the world to visit in 2018.
Metropolitan Detroit is a hub for entertainment options where a number of festivals are organized on a regular basis, including musical shows and cruises, and has a wide range of hotels to choose from. Other tourist attractions include parks and museums which tourists frequent all year round. Owing to its many tourist attractions, the city constantly needs short term and affordable residential options.
Detroit Government Initiatives
The government of Detroit has also been playing an important role when it comes to development of the real estate market in the city. Developing parks and green zones around the city and improving the urban quality of life in the suburbs and all over the city. This is another reason for the rapid development of the Detroit real estate market.
Healthy Growth of Detroit City
Generally, Detroit is a city home to people from various walks of life coming from a range of financial and economic categories. This is a healthy environment for families and businesses to flourish in as it offers a balance of both modernity and tradition. Detroit real estate market holds a high value since it offers a well-rounded lifestyle for people who choose to reside in or move back here.
Excellent Detroit Education System
Detroit is home to several institutions of higher learning including Wayne State University, a national research university with medical and law schools in the Midtown area offering hundreds of academic degrees and programs. The University of Detroit Mercy, located in Northwest Detroit in the University District offers more than a hundred academic degrees and programs of study including business, dentistry, law, engineering, architecture, nursing and allied health professions. The University of Detroit Mercy School of Law is located Downtown across from the Renaissance Center.
With about 66,000 public school students (2011–12), the Detroit Public Schools (DPS) district is the largest school district in Michigan. Detroit has an additional 56,000 charter school students for a combined enrollment of about 122,000 students.
Excellent Health System For Residents
Within the city of Detroit, there are over a dozen major hospitals which include the Detroit Medical Center (DMC), Henry Ford Health System, St. John Health System, and the John D. Dingell VA Medical Center. DMC is the largest private employer in the City of Detroit. The center is staffed by physicians from the Wayne State University School of Medicine, the largest single-campus medical school in the United States, and the United States’ fourth largest medical school overall. In 2011, Detroit Medical Center and Henry Ford Health System substantially increased investments in medical research facilities and hospitals in the city’s Midtown and New Center.
Transportation In Detroit
With its proximity to Canada and its facilities, ports, major highways, rail connections and international airports, Detroit is an important transportation hub. The Ambassador Bridge in Detroit is the single busiest border crossing in North America, carrying 27% of the total trade between the U.S. and Canada.
Mass transit in the region is provided by bus services. The Detroit Department of Transportation (DDOT) provides service to the outer edges of the city. From there, the Suburban Mobility Authority for Regional Transportation (SMART) provides service to the suburbs and the city with SMART’s FAST service. FAST is a new service powered by SMART, which offers limited stops and connects the suburbs to downtown quickly and easily
Should You Invest In Detroit Real Estate Market: The Verdict
Realtor.com released their list of the “hottest” markets in the country for January 2018, according to how long houses stay on the market and by listing views in mid to large markets. Detroit real estate market landed in top 20 of the hottest real estate markets in the U.S. This is the second month in a row for Detroit-Warren-Dearborn at the #19 spot. The median age of inventory – or how long the homes last on the market – came in at 68 days for Detroit.
Considering all the aspects that drive Detroit’s housing market, experts are expecting that this market is going to stay upwards for a long time now. Investors are being encouraged to consider this market for investing in both commercial and residential properties. However, it is also important that investors quickly make up their minds since properties in Detroit are being sold or taken for rent in short spans of time.
We recommend 7 other real estate markets for turnkey rental property investing:
https://www.pioneerhomesus.com/why-detroit/ https://en.wikipedia.org/wiki/Detroit https://www.trulia.com/real_estate/Detroit-Michigan/market-trends/
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