If you’re keen to invest in the Detroit real estate in 2020 and buy before prices become out of reach, you must read till the end. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment. 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. Is Detroit going to be one of the hottest real estate markets for investors in 2020? Let’s take a deep look at the latest Detroit housing market trends to come to a conclusion.
Detroit Real Estate Market Forecast 2020
According to Zillow.com, the median rent price in Detroit is $850, which is lower than the Detroit-Warren-Dearborn Metro median of $1,200. The Detroit housing market forecast for the 3 years ending with the 3rd Quarter of 2021 is also positive. The Accuracy of the Trend Prediction for Detroit is 76%.
Accordingly, LittleBigHomes.com estimates that the probability for rising house prices in Detroit, MI is 76% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Detroit, Michigan Real Estate Market Forecast.
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. It shows the median home value for single family homes to increase by 5.4% to $27,395 in Mar 2019.
Detroit Real Estate Market Trends
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.
- The median sales price for homes in Detroit for Feb 10 to May 9 was $54,000 based on 239 home sales.
- Average price per square foot for Detroit was $45, an increase of 7% compared to the same period last year.
- The median rent per month for apartments in Detroit for Apr 9 to May 9 was $800.
- According to Neighborhoodx.com, Detroit Downtown and Midtown’s prices are disproportionately higher, with Downtown’s average price per square foot at $415, and Midtown’s average coming in at $328 per square foot.
- Midtown is one of the most successful areas within Detroit to have a residential occupancy rate of 96%.
- We then see Lafayette Park, directly east of Downtown, with prices averaging $165 per square foot.
- Boston-Edison, which saw huge sales last year and a very wide range of homes available, is currently coming in at $116 per square foot. Bagley currently has the more affordable properties out of these neighborhoods, at $41 per square foot.
As per the real estate company named Redfin, the Detroit housing market is somewhat competitive. Homes in Detroit receive 1 offers on average and sell in around 35 days. The average sale price of a home in Detroit was $50K last month, up 25.0% since last year.
The average sale price per square foot in Detroit is $45, up 32.4% since last year. Homes typically receive 1 offer. Homes in the Detroit housing market sell for about 7% below list price and go pending in around 35 days. Hot homes for sale in Detroit, MI can sell for around list price and go pending in around 12 days.
There are currently 2968 homes for sale in Detroit on Redfin.com at a median listing price of $49.9K. The asking price of homes for sale in Detroit has increased 13.4% since August 2018. Most homes for sale in Detroit stay on the market for 68 days and receive 1 offer. In the past month, 2568 homes have been sold in Detroit. The median price per square foot in Detroit has increased by 32.4% over the past year.
There are 2,851 homes for sale in Detroit, MI on Realtor.com. 203 of which were newly listed within the last week. Additionally, there are 626 Detroit rentals for sale up to $9K per month. As per Realtor.com's real estate data, in July 2019, the Detroit housing market was a seller’s market, which means there were roughly more buyers than there were active homes for sale.
In July 2019, the median list price of homes in Detroit, MI was $71.3K, trending up 18.8% year-over-year. The median listing price per square foot was $58. The median sale price was $95,000. On average, homes in Detroit, MI sell after 60 days on the market. The trend for median days on market in Detroit, MI has gone up since last month, and slightly up since last year.
The median list price in Detroit, MI is $47,000 on Movoto.com. The median list price in Detroit was less than 1% change from August to September. Detroit's home resale inventories is 2,223, which increased 1 percent since August 2019. The median list price per square foot in Detroit is $43. August 2019 was $43. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in September.
Detroit, MI Single Family And Multi-Family Homes
Following the real estate market decline in 2007 in the U.S., single family rental homes became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.
Single family rental properties have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.
As per the real estate company called Neigborhoodscout.com, the median house price in Detroit, MI is $46,198, which indicates that home prices in Detroit are well below the national average for all cities and towns in the United States. Single-family detached homes are the single most common housing type in Detroit, accounting for 66.04% of the city's housing units.
Three and four bedroom single-family detached homes are the most common housing units found in Detroit. Detroit city has a mixture of owners and renters, with 47.23% owning and 52.77% renting.
Currently, there are 3,047 single family homes for sale in Detroit, MI on Zillow. Additionally, there are 630 single family homes for rent in Detroit, MI. Under potential listings, there are about 195 Foreclosed and 116 Pre-Foreclosure homes. These are the properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
Detroit, MI Foreclosures And Bank Owned Homes
As per the Detroit foreclosure data by Zillow, the percent of delinquent mortgages in Detroit is 1.7%, which is higher than the national value of 1.1%.
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 34.4%, which is higher than Detroit-Warren-Dearborn Metro at 9.1%.
| Foreclosures in Detroit | 1,022 |
| Homes for Sale in Detroit | 1,124 (RealtyTrac) |
| Recently Sold | 6,962 |
| Median List Price | $46,000 (0% ⇑ vs Jul 2018) |
There are currently 1,022 properties in Detroit, MI that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,124. In August 2019, the number of properties that received a foreclosure filing in Detroit, MI was 76% higher than the previous month and 8% lower than the same time last year.
Best Neighborhoods to Invest in Detroit Rentals
If you are looking to invest in the Detroit rentals, you should know the best places to invest in. The three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. Demand would raise the price of your Detroit rental real estate and you should be able flip it for a lump sum profit.
When looking to invest in Detroit real estate, you need to find places where the expected property appreciation forecast is positive. The running costs for owning and managing an Detroit investment property should be low. The neighborhoods in Detroit must be safe to live in and should have a low crime rate.
The neighborhoods should be close to basic amenities, public services and shopping malls. There should be a natural and upcoming high demand for rental properties and a low supply of income properties. There are 196 elementary schools, 180 middle schools, 135 high schools and 114 private & charter schools. There are 181 neighborhoods in Detroit.
Some of the best neighborhoods in or around Detroit, Michigan are Grosse Pointe Woods, Grosse Pointe Park, Grosse Pointe Farms, New Center, Boston Edison West, Virginia Park, North End, University, Eastern Market, Boston Edison East, Corktown, Midtown, Mexicantown, LaSalle Gardens, Oakman Boulevard Community, Downtown Detroit, Southwest Detroit, and Rivertown-Warehouse District.
Grosse Pointe Shores has a median listing price of $694.9K, making it the most expensive neighborhood. Outer Drive – Hayes is the most affordable neighborhood in Detroit, with a median listing price of $29.9K.
Here are the best neighborhoods to invest in Detroit rentals because they have the highest appreciation rates (List by Neigborhoodscout.com).
1 | 3rd St / W Forest Ave |
2 | Trumbull St / Lincoln St |
3 | Gratiot Ave / Canton St |
4 | Muse St / Wayside Pl |
5 | City Center |
6 | W Jefferson Ave / Lafferty Vermont St |
7 | Grand River Ave / Woodward Ave |
8 | Woodward Ave / E Hancock St |
9 | John C Lodge Fwy / Selden St |
10 | Saint Aubin St / Holbrook St |
Is Detroit a Good Place to Invest in Real Estate?
Now that you know where Detroit is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Should you invest in Detroit rental real estate?
Many real estate investors have asked themselves if buying a rental property in Detroit is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
We have already discussed the Detroit housing market 2020 forecast for answers on why to put resources into this market. Although, this article alone is not a comprehensive source to make a final investment decision for Detroit but we have collected ten evidence based positive things for those who are keen to invest in the Detroit rentals in 2020.
Investing in Detroit rentals will fetch you good returns in the long term as the home prices in Detroit have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Detroit real estate market which can help investors who are keen to buy an investment property in this city.
1. Increasing Detroit 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.
2. 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.
3. 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.
4. Population Growth
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.
5. Booming Economy
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.
6. Thriving Detroit Downtown
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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
Detroit Real Estate Investment
Maybe you have done a bit of real estate investing in Detroit, MI but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold.
A good cash flow means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt.
Therefore, finding a good Detroit real estate investment opportunity would be a key to your success. If you invest wisely in Detroit rental real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.
The less expensive the Detroit rentals are, the lower your ongoing expenses will be. Roughly a $150,000 property is what some experts recommend starting with.
Most investors naturally gravitate to residential property investment. When looking for the best real estate investments in Detroit, you should focus on neighborhoods with relatively high population density and employment growth.
Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Detroit, MI. 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.
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 area, 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.
The aim of this article was to educate investors who are keen to invest in Detroit real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Best Places To Invest in Real Estate in 2020
The other best place to invest in real estate is Chico, CA. The Chico real estate market provides strong rental returns, a favorable legal and tax climate, and near certain and significant property appreciation.
These are among a few of the reasons to consider Chico real estate investment over “hotter” real estate markets due for a correction. The Chico real estate market is affordable when you compare it to the rest of California.
The average property in the Chico housing market is selling for around 350,000 dollars. That is a hundred thousand dollars higher than the national average.
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.
In fact, 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. Property prices increased more than five percent in 2019. Prices are projected to increase nearly two percent in 2020.
*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, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
Market Prices, Trends & Forecasts
https://detroit.curbed.com
https://www.zillow.com/Detroit-mi/home-values
https://www.redfin.com/city/5665/MI/Detroit/housing-market
https://www.realtor.com/realestateandhomes-search/Detroit_MI/overview
https://www.movoto.com/detroit-mi/market-trends
https://www.neighborhoodscout.com/mi/detroit/real-estate
https://www.realtytrac.com/statsandtrends/mi/wayne-county/detroit
https://www.pioneerhomesus.com/why-detroit
https://en.wikipedia.org/wiki/Detroit
https://www.trulia.com/real_estate/Detroit-Michigan/market-trends
https://www.biggerpockets.com/renewsblog/detroit-real-estate-market
https://www.verticalrent.com/entry/7-reasons-why-the-detroit-real-estate-market-is-heating-back-up
