The Detroit Housing Market Trends for 2023
Investing in the Detroit housing market has been a source of contention for investors for a long time. When considering whether or not to add properties in the Motor City to your portfolio, keep these three current trends in mind. The city of Detroit is one of the most populous in the Midwest. It also serves as the county seat for Wayne County.
When it comes to residential in Detroit, home prices are exceptionally low. Detroit is the most affordable city. The rentals can generate extremely high returns on investment. Since the purchase price of a Detroit single-family home is significantly less, it presents a fantastic opportunity with significant returns and cash flow. It is also the fastest-growing city in the metro for rent.
The Detroit housing market has seen a lot of fluctuations in the past few years. The city has been slowly but steadily recovering from the Great Recession, which hit the area particularly hard. In this blog post, we will take a look at the current state of the Detroit housing market, based on the most recent data available. We will analyze key metrics such as home prices, days on the market, and buyer/seller competition to provide insights into what to expect in 2023.
Median Sale Price
Data by Redfin show that the median sale price for all home types in Detroit in January 2023 was $76K, up 1.1% compared to the previous year. This modest increase is a positive sign for the city's housing market, indicating that demand for homes is stable. However, it is worth noting that this increase is still not enough to recover the 3.8% drop in the average sale price seen last year. Overall, Detroit's housing market seems to be recovering slowly, but it is still far from pre-recession levels.
Days on the Market
Homes in Detroit sell after 54 days on the market on average, compared to 41 days last year. This increase in days on the market suggests that the market is slightly cooling off, giving buyers more time to make decisions. However, it is worth noting that homes in Detroit still sell relatively quickly, taking just over a month to go from listing to closing.
Buyer/Seller Competition
The Redfin Compete Score rates how competitive an area is on a scale of 0 to 100, where 100 is the most competitive. Based on this metric, Detroit's housing market is somewhat competitive, with a score of 63. This means that while homes in Detroit receive 3 offers on average, some homes still get multiple offers, making the market somewhat competitive.
Detroit, MI Housing Market
The following housing market trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. Detroit, Michigan has had its fair share of ups and downs, but when it comes to the housing market, things are definitely looking up. According to the latest report, the median listing home price in Detroit was $79.5K in February 2023, up 6% year-over-year. In addition, the median listing home price per square foot was $69.
While the median home price may seem low compared to other major cities in the United States, it's important to remember that Detroit is still in the midst of a renaissance. With companies like Amazon and Google setting up shop in the city, and a growing tech industry, it's no surprise that housing prices are on the rise.
Despite the increase in prices, Detroit has still considered a buyer's market as the supply of homes is greater than the demand for homes. With 180 neighborhoods in Detroit, there's a wide range of options available for buyers. Those looking for a luxurious home in a high-end neighborhood might consider Boston Edison West, which has a median listing home price of $295K. On the other hand, those on a tight budget might find Regent Park to be the most affordable option, with a median listing home price of $54.9K.
But what does this mean for buyers and sellers in the Detroit housing market? Here are a few key takeaways:
Buyers may be able to find a great deal. As previously mentioned, Detroit is currently a buyer's market. This means that there are more homes for sale than there are buyers, which could result in lower prices and bargaining power for those looking to purchase a home.
Sellers may still be able to get a good price. While Detroit may be a buyer's market, that doesn't mean that sellers won't be able to sell their homes for a fair price. With housing prices on the rise, sellers may be able to get more for their home than they would have a few years ago.
Location matters. As with any housing market, location matters in Detroit. Those looking for a high-end home in a prestigious neighborhood should expect to pay more, while those looking for an affordable option may need to look in less expensive neighborhoods.
The rental market is also on the rise. With the influx of new businesses and industries in Detroit, the rental market is also experiencing growth. This could be a great opportunity for investors looking to purchase rental properties.
Keep an eye on the forecast. While the current forecast is positive, it's important to keep an eye on future predictions for the Detroit housing market. Changes in the economy or housing market trends could impact prices in the coming months and years.
Overall, the Detroit housing market is showing promising signs of growth. Whether you're a buyer, seller, or investor, there are opportunities to be found in this city. With the right research and guidance, anyone can navigate the Detroit housing market successfully.
ALSO READ: Michigan Housing Market Forecast
Detroit Housing Market Forecast 2023
Since the last twelve months, the typical home value in Detroit-Warren-Dearborn Metro has appreciated by nearly 5.5% (Zillow Home Value Index). Currently, the typical value of homes in Detroit-Warren-Dearborn Metro is $224,028. The latest forecast is that home values will rise by 1.3% between January 2023 to January 2024.
Based on the current data, the Detroit-Warren-Dearborn housing market appears to be steadily appreciating in value. For sellers, this means that the market is likely to remain strong and that they may continue to see appreciation in the value of their homes. It could be a good time to list their properties if they are considering selling, as demand remains high and home values are expected to rise.
For buyers, a 1.3% increase in home values may not seem like a significant amount, but it could still impact their budget and the affordability of homes in the area. Buyers should also take into account other factors, such as interest rates and inventory levels when deciding whether or not to purchase a home in the Detroit-Warren-Dearborn market.
Overall, the forecast for the Detroit-Warren-Dearborn housing market is positive, with steady appreciation in home values expected to continue in the near future. Both buyers and sellers can use this information to make informed decisions about their real estate investments in the area.
Here is the graphical representation of the historical Detroit metro house price growth by Zillow.
According to Neigborhoodscout, over the last decade, Detroit real estate has appreciated 89.70 percent, which equates to an average annual appreciation rate of 6.61 percent, placing Detroit in the top 30% of all cities for real estate appreciation. In the last twelve months, Detroit's appreciation rates have remained among the highest in the country, at 20.95 percent. Short-term real estate investors have found success in Detroit over the last twelve months. Detroit's appreciation rates were 0.87 percent in the most recent quarter, equating to a 3.53 percent annual appreciation rate.
Here are the best neighborhoods to invest in Detroit rentals because they have the highest appreciation rates since 2000 (List by Neigborhoodscout.com).
- Rosa Parks Southeast
- University West
- West Village
- Mcdougall Hunt South
- Condon East
- Corktown
- Jeffries
- Brush Park
- Mcdougall Hunt West
- University
Detroit Real Estate Investment Overview
Detroit, Michigan is a city with a rich history, known for its role in the automobile industry and its contributions to music, art, and culture. In recent years, Detroit's real estate market has been on the upswing, making it an attractive destination for real estate investors looking for long-term returns. In this overview, we will explore the current state of the Detroit real estate market and provide five compelling reasons to invest in this market for the long term.
The typical home value in Detroit is $60,030, according to Zillow. This is significantly lower than the national median home value. However, Detroit's real estate market has been steadily improving over the past few years, with home values increasing by over 6.8% in the past year alone. This is due in part to the city's revitalization efforts, which have attracted new businesses, residents, and investment to the area. In addition, Detroit's low cost of living and diverse cultural scene make it an attractive place to live and work.
Top Reasons to Invest in Detroit Real Estate for the Long Term:
- Affordable Prices: Detroit's real estate market offers some of the lowest prices in the country, making it an ideal destination for investors looking to buy low and sell high. With a median home value of $54,500, there is plenty of room for appreciation in the long term.
- Strong Rental Market: Detroit's rental market is thriving, with a high demand for affordable housing. This makes it an ideal market for buy-and-hold investors who are looking for passive income streams.
- Revitalization Efforts: Detroit has undergone a significant transformation in recent years, with major revitalization efforts taking place throughout the city. These efforts have attracted new residents, businesses, and investment to the area, driving up property values and creating new opportunities for investors.
- Job Growth: Detroit's economy is on the upswing, with job growth in a number of key sectors, including technology, healthcare, and manufacturing. This is driving demand for housing and creating new opportunities for investors.
- Pro-Investor Policies: Detroit has a number of pro-investor policies in place, including tax incentives and other programs designed to encourage investment in the city's real estate market. This makes it an attractive destination for investors who are looking for long-term returns.
- Thriving Detroit Downtown: Over the past decade, the downtown area of Detroit has undergone a major transformation and has become a hub of economic and cultural activity. The downtown area is home to several major corporations, including General Motors, Quicken Loans, and Ally Financial, as well as numerous startups and small businesses. The thriving downtown area has also led to an increase in demand for housing in the city. As more and more people move to Detroit to take advantage of job opportunities and the city's vibrant culture, the demand for housing in the downtown area has increased. This has led to an increase in property values and rental rates in the area. Investing in real estate in the downtown area of Detroit can provide a great opportunity for long-term growth and rental income. Properties in the area are likely to appreciate in value over time as the area continues to grow and attract more businesses and residents. Additionally, rental rates in the area are likely to remain high due to the high demand for housing in the downtown area.
- Detroit Government Initiatives: In recent years, the city's government has taken several initiatives to revitalize Detroit and attract more businesses and residents to the city. These initiatives have included tax incentives, redevelopment projects, and community outreach programs. One of the most significant government initiatives in Detroit is the Strategic Neighborhood Fund (SNF), which was launched in 2016. The SNF is a public-private partnership that provides funding for neighborhood revitalization projects, such as park improvements, streetscape enhancements, and commercial corridor redevelopment. The program has invested over $40 million in Detroit neighborhoods and has helped to attract new businesses and residents to the city. Another government initiative that has had a positive impact on Detroit's real estate market is the Neighborhood Enterprise Zone (NEZ) program. The NEZ program provides tax incentives to homeowners and businesses in designated areas of the city. The incentives include a freeze on property taxes for up to 15 years and a reduction in the taxable value of the property. This has made it more affordable for residents and business owners to own property in Detroit, which has led to increased demand for real estate in the city. The Detroit Land Bank Authority (DLBA) is also a government agency that has played a key role in revitalizing the city's real estate market. The DLBA is responsible for acquiring and disposing of tax-foreclosed properties in the city. The agency has made it easier for residents and investors to acquire property in Detroit, which has helped to stimulate the real estate market and drive up property values.
Detroit Rental Market Trends
Detroit's rental market has seen significant growth in recent years, with both short-term and long-term rental options becoming increasingly popular. This growth can be attributed to several factors, including the city's revitalization efforts, an increase in job opportunities, and a growing population. As a result, Detroit's rental market has become an attractive investment opportunity for real estate investors.
One of the main reasons for the growth of the rental market in Detroit is the city's revitalization efforts. In recent years, Detroit has undergone a significant transformation, with abandoned buildings and neighborhoods being restored and renovated. As a result, the city's population has grown, and job opportunities have increased. These changes have created a demand for housing, including rental properties, leading to an increase in rental rates.
Another reason for the growth of the rental market in Detroit is the city's growing population. According to the U.S. Census Bureau, the population of Detroit increased by over 4% between 2010 and 2020. This growth has led to an increased demand for housing, and rental properties have become a popular choice for many residents.
The short-term rental market has also seen significant growth in Detroit in recent years. With the rise of platforms like Airbnb, short-term rentals have become an increasingly popular choice for travelers. In Detroit, short-term rentals have become an attractive option for tourists and business travelers, with many properties located in desirable neighborhoods close to popular attractions.
Investing in the Detroit rental market offers several advantages for long-term investors. One advantage is the potential for long-term appreciation in property values. As the city continues to grow and improve, property values are expected to increase, leading to a significant return on investment for those who invest in rental properties now.
Another advantage of investing in the Detroit rental market is the relatively low cost of entry compared to other markets. With lower prices for rental properties, investors can purchase properties at a lower cost, increasing their potential return on investment.
Additionally, the high demand for rental properties in Detroit offers the potential for a consistent stream of rental income. As more people move to the city and job opportunities continue to grow, the demand for rental properties is likely to increase, providing a steady source of income for investors.
The Zumper Detroit Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Michigan one bedroom median rent was $1,017 last month. Birmingham was the most expensive city with one bedrooms priced at $1,430 whereas Warren was the most affordable city with one bedrooms priced at $910.
The Fastest Growing Cities in Detroit Metro Area For Rents (Y/Y%)
- Southfield had the fastest growing rent, up 11% since this time last year.
- Ypsilanti saw rent climb 10.4%, making it second.
- Ann Arbor was third with rent increasing 8.2%.
The Fastest Growing Cities in Detroit Metro Area For Rents (M/M%)
- Detroit had the largest monthly rental growth rate, up 6.1%.
- Southfield was second with rent increasing 5.7%.
- Birmingham saw rent climb 4.4%, ranking as third.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
Another good market to choose for investment is Savannah, GA. The Savannah area is evolving from a small town to a regional services hub with a diversified economy. It is never going to be a booming metropolis like Atlanta, but that won’t prevent it from being a great real estate investment. Many people are moving here for the ideal balance between the small-town feel and great amenities like a world-class hospital and international airport. The Savannah housing market is seeing significant appreciation due to strong demand and slower-growing inventory.
Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
- https://www.zillow.com/detroit-warren-dearborn-mi/home-values/
- https://www.zumper.com/blog/detroit-metro-report/
- https://www.redfin.com/state/Michigan/housing-market/
- https://www.realtor.com/realestateandhomes-search/Wayne-County_MI/overview
- https://www.neighborhoodscout.com/mi/detroit/real-estate
- https://gmaronline.com/resource-library
- https://www.mirealtors.com/housing-statistics
- https://detroitmi.gov/search?search=strategic+neighborhood+fund
- https://detroitmi.gov/search?search=neighborhood+enterprise+zone+%28nez%29+program
