Detroit Housing Market: Prices & Forecast 2022-2023 (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, with a median sales price of $100,250, which is a growth of 38% from last year. 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 rents, up 32% since last year.

Although the city’s population is shrinking the number of millennials who are relocating to Detroit is steadily increasing. According to a recent study conducted by the Detroit Chamber of Commerce, metro Detroit experienced the second-highest growth among peer cities for people between the ages of 24 and 35 over the previous decade, ranking second among peer cities overall.

Even though prices in the Greater Metropolitan Area of Detroit have increased by more than 8.5 percent year over year, the median home price of $275,000 is significantly lower than the national median price, providing investors with significant room to maneuver in terms of their profit margin. Is Detroit going to be one of the hottest real estate markets for investors in 2022 & 2023? Let’s take a look at the latest Detroit housing market trends.

<<Michigan Housing Market Forecast>>>

Detroit Real Estate Market – Greater Detroit Area Trends

Compared to the previous year, homes in the Greater Metropolitan Area of Detroit area stayed on the market for an average of 16 days in June 2022. The median sales price went from $231,000 to $260,000, up + 12.6%. The Months Supply of Inventory is 1.8. Several regions saw home price gains in double-digits. In the City of Detroit, the median home price increased by 38.3%, from $72,500 to $100,250, according to the report published by the Greater Metropolitan Association of REALTORS® (GMAR).

Key Housing Stats by Region or County

Metro Detroit Area: The Median Sale Price for the Metro Detroit area (Livingston, Macomb, Oakland, & Wayne combined) reached an all-time high at $275,000, up by 8.5% over last June, based on 5,221 sales. Listings spent an average of 16 days on the market, down 3 days compared to last June.

City of Detroit: The Median Sale Price for the City of Detroit surpassed the $100K threshold for the first time at $100,250, up by 38.3% over last June, based on 381 sales. Listings spent an average of 36 days on the market, down 8 days compared to last June.

Lapeer County: The Median Sale Price for Lapeer County surpassed the $280K threshold for the first time at $282,450, up by 13% over last June, based on 112 sales. Listings spent an average of 30 days on the market, up 8 days compared to last June.

Livingston County: The Median Sale Price for Livingston County rose to $358,000, up by 3.8% over last June, based on 288 sales. Listings spent an average of 15 days on the market, up 5 days compared to last June. The Livingston county median sale price reached an all-time high of $379,900 in May of this year.

Macomb County: The Median Sale Price for Macomb County surpassed the $250K threshold for the first time at $252,500, up by 14.8% over last June, based on 1,293 sales. Listings spent an average of 15 days on the market, down 1 day compared to last June.

Oakland County: The Median Sale Price for Oakland County surpassed the $350K threshold for the first time at $355,000, up by 10.1% over last June, based on 1,856 sales. Listings spent an average of 13 days on the market, down 6 days compared to last June.

Wayne County: The Median Sale Price for Wayne County passed the $200K threshold for the first time at $217,500, up by 17.6% over last June, based on 1,784 sales. Listings spent an average of 19 days on the market, down 3 days compared to last June.

All Residential & Condos Combined (ALL MLS)

• Median Sale Price increased by 8.8% from $239,000 to $260,000.
• The average days on market (DOM) decreased by 13.6% from 22 to 19 days.
• The average % of the last list price received decreased by .1% from 102.6% to 102.5%.
• New Listings increased by 2.7% from 17,035 to 17,501.
• Average Showings per Home decreased by 4 from 13 to 9.
• Pending Sales decreased by 12.2% from 12,941 to 11,368.
• Closed Sales decreased by 11.4% from 12,999 to 11,516.
• Listings that were both listed and pended in the same month were at 6,772.
• This represents 38.7% of the new listings for the month and 59.6% of the pended listings.
• Months-Supply of Inventory increased by 21.4% from 1.4 to 1.7.

Wayne County Housing Market Report

Wayne County is the most populous county in the U.S. state of Michigan. As of 2020, the United States Census placed its population at 1,793,561 making it the 19th-most populous county in the United States. The county seat is Detroit. 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.

As per Realtor.com, in July 2022, the median list price of homes in Wayne County, MI was $177.8K, trending up 1.6 year-over-year. The median sale price was $220K. Homes in Wayne County, MI sold for 2.07% above the asking price on average. Wayne County was a buyer’s market as it had a total sales to total listings ratio below 0.12 which tends to favor buyers.

In other words, it means that the supply of homes is greater than the demand for homes. Northville has a median listing home price of $550K, making it the most expensive city. Detroit is the most affordable city, with a median listing home price of $84.9K.

According to the Greater Metropolitan Association of REALTORS®, the monthly supply of homes in Wayne County is 2.1. The Median Sale Price is $212,500, an increase of 18% from last year. Closed Sales were down by 12.9% and active listings were up 21.6%.

Detroit Housing Market Forecast 2022 & 2023

In the last decade, Detroit has seen some of the highest home appreciation rates in the country. Let us also look at the price trends recorded by Zillow over the past few years. Since the last decade (Sept 2012), the typical home value in Detroit-Warren-Dearborn Metro has appreciated by nearly 154% (Zillow Home Value Index).

ZHVIreflects the typicalvalueforhomes in the 35th to 65th percentile range. Currently, the typical value of homes in Detroit-Warren-Dearborn Metro is $243,049. Over the past year alone, home values in this region have gone up by 12%. The latest forecast is that home values will rise by 2.1% between July 2022 to July 2023.

• Home values in Detroit City have increased by 23.7% in the last year.
• Home values in Wayne County have increased by 13.9% in the last year.
• Home values in OaklandCounty have increased by 11.4% in the last year.
• Home values in Warren have increased by 13.2% in the last year.
• Home values in Dearborn have increased by 13.4% in the last year.

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 thebest neighborhoods to invest in Detroit rentalsbecause they have the highest appreciation rates since 2000 (List by Neigborhoodscout.com).

1. Rosa Parks Southeast
2. University West
3. West Village
4. Mcdougall Hunt South
5. Condon East
6. Corktown
7. Jeffries
8. Brush Park
9. Mcdougall Hunt West
10. University

Detroit Real Estate Investment Overview

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 rental property in Detroit is a 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 forecast for answers on why to put resources into this market.

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. New data from the 2020 U.S. Census shows Michigan’s largest city continued a seven-decade trend of losing residents. Detroit’s population decline has been evident in every census since the city’s peak in 1950 when 1.8 million people lived there. Detroit was home to 639,111 residents in 2020, according to new data released by them, a drop of 10.5% or almost 75,000 residents from a decade ago.

It’s also the seventh straight decade Detroit’s population has declined since the census showed the city with nearly 1.85 million residents in 1950 However if you consider the metropolitan area, known as Metro Detroit, is home to 3.53 million people, a0.51% decline from 2020. According to Wikipedia, it is 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 could be an upward population growth trend soon.

Although, this article alone is not a comprehensive source to make a final investment decision for Detroit we have collected ten evidence-based positive things for those who are keen to invest in the Detroit rentals in 2021 or 2022. 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.

Is Detroit’s Economy Growing?

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 of the housing boom (led by the pandemic). The city also has the headquarters of 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 anyone city by the nation’s biggest bank.

Between 2010 and 2019, the Detroit metropolitan area’s economy expanded, and labor force participation increased. Automobile manufacturing continues to be Detroit’s largest industry. Despite losing nearly 40% of its manufacturing jobs in the 1980s, the automotive industry continues to be the city’s primary economic driver. According to UofM, between 2012 and 2019, Detroit’s poverty rate plummeted from 42.3% to 30.6%. This equates to 77,000 fewer Detroiters in poverty in 2019.

Detroit’s nearly 12 percentage point decline in poverty was larger than that of most large industrial cities in the Midwest and Northeast. For comparison, Cleveland and Philadelphia saw declines of 5.3 and 3.6 percentage points, respectively. Detroit’s poverty rate in 2019 was the city’s lowest in more than a decade and below what it was in 2007, before the last major economic downturn.

The city of Detroit is making clear progress in its economic recovery from the pandemic, notching gains in employment and wages and drops in joblessness that are expected to continue over the next few years, according to a University of Michigan study.

RSQE is a modeling and forecasting unit that has been in operation at the University of Michigan since 1952. Its most recent forecast for the city of Detroit’s economy was released on February 18th, 2022. They estimate that Detroit residents have now recovered four-fifths of their job losses from the start of the pandemic. They are forecasting strong growth to continue in 2022, with 12,200 job gains at Detroit establishments.

Detroit’s job growth will then moderate over the rest of our forecast horizon, to 8,900 jobs in 2023, 3,500 in 2024, and an average of 1,300 per year in 2025–26. The city’s job count will return to pre-pandemic levels in 2023 and then climb to a level of 8,500 jobs higher than in 2019 by 2026. We expect blue-collar jobs to lead the way, with services industries returning to roughly their pre-pandemic employment levels by the end of our forecast.

• In 2022, UofM projects the city’s unemployment rate to register at 9.9 percent, which is likely to be substantially lower than the revised rate for 2021.
• In their forecast, the city’s unemployment rate falls to 8.7 percent in 2023 and then remains near that level through 2026.
• UofM is expecting average wages to climb by 4.1 percent in 2022 and 3.6 percent in 2023.
• Average wage growth will then hover around 3 percent per year from 2024 through 2026.
• That is slightly faster wage growth than we are projecting for the state overall.

Increasing Detroit Home Values

Since residential properties in Detroit still have price tags that vary significantly from other real estate markets, investors can find properties at lesser a price than in other markets. However, within the city, these prices are increasing at a rapid pace (+23% YOY) and investors are encouraged to consider this market since the growth is expected to stay for a long time. The typical value of homes in Detroit is $69,804 (ZHVI). This value is seasonally adjusted and only includes the middle price tier of homes.

Detroit is an Affordable & Growing Housing Market

While the general rates of the Detroit real estate market are increasing, buying a property here is still more affordable than in other competitive markets. Even though housing prices in Detroit are rising, among large cities, Detroit is still pretty affordable. There are an estimated 500,000 rental units in the Detroit-Warren-Dearborn metro area that are affordable to someone making up to 60% of the area median income, according to an analysis of 2019 American Community Survey data. 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.

Detroit Rental Market

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’s 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 of years. A majority of that construction has been in the Detroit housing market, and even more so rentals. A report from RentCafe.com showed the metro areas around the country building the most apartments, and while metro Detroit is pretty far down the list, but 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.

The Zumper Detroit Metro Area Report analyzed active listings last month across 6 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Michigan one bedroom median rent was $963 last month.Birmingham was the most expensive city with one bedrooms priced at $2,230 whereas Ypsilanti was the most affordable city with one bedrooms priced at $960.

The Fastest Growing Cities in Detroit Metro Area For Rents (Y/Y%)

• Birmingham had the fastest growing rent, up 66.4% since this time last year.
• Detroit saw rent climb 32.1%, making it second.
• Novi was third with rent increasing 20.5%.

The Fastest Growing Cities in Detroit Metro Area For Rents (M/M%)

• Ann Arbor had the largest monthly rental growth rate, up 5.2%.

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 several businesses and consequently, families that choose to live here. Many large corporations already have their presence in Detroit and many more businesses are being attracted to the city owing to its fast growth. This growth directly translates to increased jobs in the city, which also means more demand for 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 many festivals are organized regularly, 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 the 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.

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’s 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.

Education

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.

Health

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

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.

Summary

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 INVESTMENTSstrives 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. growthmarkets.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 likeAtlanta, 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. Savannah home values have gone up 17.1% over the past year and are projected to continue to increase over the next twelve months.

The other good 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 typical value of homes in Chico is $444,278.

Chico home values have gone up 14.2% over the past year. In August 2021, Chico home prices were up 5.5% compared to last year, selling for a median price of $445K (source: Redfin). On average, homes in Chico sell after 19 days on the market compared to 20 days last year. Many homes get multiple offers, some with waived contingencies.

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://gmaronline.com/resource-library
• https://www.mirealtors.com/housing-statistics
• 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/
• http://www.freddiemac.com/research/indices/house-price-index.page
• https://www.realtor.com/realestateandhomes-search/Wayne-County_MI/overview
• https://www.neighborhoodscout.com/mi/detroit/real-estate
• https://www.pioneerhomesus.com/why-detroit
• https://en.wikipedia.org/wiki/Detroit
• 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
• https://detroitmi.gov/news/uofm-economic-forecast-shows-detroits-employment-recovery-covid-exceeding-expectations