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.
Detroit Housing Market Trends
According to Redfin, the Detroit housing market is somewhat competitive. Homes in Detroit receive 2 offers on average and sell in around 33 days. This level of competitiveness has led to a 6.3% increase in median sale prices over the past year, with the median sale price of a home in Detroit reaching $85,000 last month.
Recent Trends in Detroit Housing
So, what is the housing market like in Detroit today? In September 2023, Detroit home prices were up 6.3% compared to last year, selling for a median price of $85,000. On average, homes in Detroit sell after 33 days on the market, compared to 43 days last year. The number of homes sold in September this year increased to 536 from 457 last year.
Median Sale Price
The median sale price of all home types in Detroit has been steadily increasing:
- 2021: $40,000
- 2022: $60,000
- 2023: $85,000
Are Home Prices Dropping Detroit in 2023?
In 2023, home prices in Detroit are not dropping. In fact, the median sale price of homes in Detroit has experienced a 6.3% increase compared to the previous year. This upward trend in home prices indicates that the Detroit housing market remains competitive and has seen appreciation rather than a decline in property values.
Is the Housing Market Slowing Down?
The housing market in Detroit is not slowing down significantly in 2023. While the average time a home spends on the market has decreased from 43 days to 33 days compared to the previous year, this is not indicative of a significant slowdown. The market continues to be somewhat competitive with homes receiving multiple offers, and the number of homes sold has increased, pointing to ongoing activity in the Detroit housing market.
Across the nation, 0.81% of homebuyers searched to move into Detroit from outside metros. The top metros from which people are moving to Detroit include:
- San Francisco, CA
- Los Angeles, CA
- Washington, DC
- New York, NY
- Evansville, IN
However, some residents are leaving Detroit for other cities, with Grand Rapids, MI being the most popular destination among those leaving.
ALSO READ: Michigan Housing Market Forecast
Detroit Housing Market Forecast 2023-2024
The Detroit housing market has seen some notable trends over the past year. According to Zillow, the average home value in Detroit stands at $65,875, which represents an 8.1% decrease from the previous year. Homes in Detroit also tend to move quickly, with an average of 21 days from listing to pending sale, reflecting the city’s dynamic real estate landscape. The data provided is accurate as of September 30, 2023.
Key Statistics
- Median Sale to List Ratio (August 31, 2023): 0.979
- Percent of Sales Over List Price (August 31, 2023): 26.7%
- Percent of Sales Under List Price (August 31, 2023): 55.5%
- Median Days to Pending (September 30, 2023): 21
Detroit MSA Housing Market Forecast
The Detroit Metropolitan Statistical Area (MSA) housing market is a significant part of the real estate landscape in Michigan. Zillow’s data provides insights into the market’s trajectory for the upcoming months. Here’s a forecast for the Detroit MSA housing market, including key metrics:
As of the Base Date, September 30, 2023, the RegionName “Detroit, MI” in the MSA of Michigan (MI) had a value of 0.4%. The forecast indicates that this value is expected to increase to 0.5% by December 31, 2023, and further rise to 0.8% by September 30, 2024. This suggests a positive trend in the housing market in the Detroit MSA.
These values represent a positive outlook for the Detroit MSA housing market, with a gradual increase in the market performance over the specified time frame. It indicates growing confidence in the real estate sector in the Detroit metropolitan area.
In summary, while Detroit city’s average home value has seen a decrease over the past year, the real estate market remains dynamic, with homes selling relatively quickly. Additionally, the Detroit MSA is forecasted to experience growth, suggesting a positive outlook for the broader metropolitan area. These insights provide valuable information for those interested in the Detroit housing market and its future prospects.
According to Neigborhoodscout, over the last decade, Detroit real estate has appreciated 81.18 percent, which equates to an average annual appreciation rate of 6.12 percent, placing Detroit in the top 40% of all cities for real estate appreciation.
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
- Corktown
- Butzel
- West Village
- Rosa Parks East
- Mcdougall Hunt West
- Mcdougall Hunt South
- Jeffries
- University
- Condon East
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.
Detroit, known for its historical significance and urban revitalization efforts, presents a complex yet potentially lucrative landscape for real estate investors. As of the latest available data, the average home value in Detroit stands at $67,745, reflecting a recent decrease of 1.2% over the past year. This market trend may offer opportunities for value-oriented investors seeking properties with growth potential.
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 $85,000, 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 $1,039 last month. Birmingham was the most expensive city with one bedrooms priced at $1,920 whereas Romulus was the most affordable city with one bedrooms priced at $820.
The Fastest Growing Cities in Detroit Metro Area For Rents (Y/Y%)
- Ann Arbor had the fastest growing rent, up 12.7% since this time last year.
- Southfield saw rent climb 8.8%, making it second.
- Warren was third with rent increasing 8%.
The Fastest Growing Cities in Detroit Metro Area For Rents (M/M%)
- Birmingham had the largest monthly growth rate, up 6.1%.
- Ann Arbor was second with rent increasing 6%.
- Southfield saw rent climb 6%, 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