Discover Detroit’s hot housing market outlook for 2023-24. The market is affordable, booming, and ripe with investment opportunities.
You probably know Detroit as America’s ‘Motor City’ and one of the most populated cities in America’s Midwest. However, it is one of the nation’s most affordable cities. Despite its infamous decline in the 2000s, Detroit’s housing market is one of the strongest in the country.
It’s no secret that the Great Recession in 2007-08 heavily affected the housing market in Detroit. Much of the population picked up and left, a trend that sadly continued into the following decade. Real estate fluctuations were common back then. Decrepit homes lined neighborhoods for several years, with no takers.
Now, the market is stabilizing. Single-family homes are affordable for first-time buyers and investors who want to flip them for rent. The Detroit rental market is strong and can offer good returns on investment.
There is a steady supply of homes, with Detroit’s inventory levels increasing. Buyers can also choose from diverse neighborhoods, thanks to the city’s recent rehabilitation efforts. It is a hot buyer’s market for Detroit, with a promising real estate forecast for the coming year.
Some of the key trends and factors influencing the Detroit real estate market to keep an eye on are:
· City revamp efforts
· New housing developments
· Detroit’s economic growth and job opportunities
· Out-migration trends
· Detroit’s mortgage rates
If you’re a homebuyer, be prepared for Detroit’s home prices to rise in the coming year. Despite this, it will remain a strong buyer’s market.
Detroit, MI, Real Estate: Market Trends
More people are moving to Detroit for its attractive job opportunities and close-knit community vibe. This has strengthened its position as a strong buyer’s market.
Even then, Detroit remains among the most affordable cities in the country. Check out Detroit’s real estate trends for a better understanding.
· The median sale price of a home in Detroit was $85,000 in September 2023. This suggests a 6.3% increase from last year. This price is lower than the U.S. average of $436,000, which is good news from an affordability point of view.
· Sellers are selling their homes pretty quickly despite Detroit’s buyer demand. Homes remain on the market for an average of 33 days. This suggests a 10% year-over-year decrease compared to last year.
· The number of homes sold this year was 536, a 17.3% increase year-over-year in home sales.
· The sale-to-list price ratio was 100% last month. This means that homes sold for almost the same as the asking price.
· Detroit’s housing prices are lower than other American cities but are rising faster than the U.S. average. The S&P Dow Jones indices confirm this statistic.
· Detroit’s rental market shows promise, with a median monthly rent of $1,428. This rate is 5.4% above the national average.
· Despite the high mortgage rates, Detroit’s high buyer demand is responsible for quick sales.
As you can see from the above statistics, Detroit’s real estate market will likely continue to strengthen over the next year. If you wish to invest or buy your first home here, now is a good time. Sellers will also see healthy competition but shouldn’t be too concerned as Detroit is in a good position, supply-wise.
Detroit Housing Market Drivers
Detroit no longer has the same bleak outlook it had during the 2000s recession. Things are looking up for the city, with its unemployment rate at its lowest in 33 years.
According to the Michigan Chronicle, Detroit’s economic growth will stabilize in the coming year as nearly 4,300 jobs are added. We anticipate an average of 1,900 jobs per year to be added by 2028. Amazon’s new fulfillment center in the city and GM’s plans to redevelop a former AMC warehouse will also create new job opportunities.
The great thing about this expansion is that it will attract employees beyond Detroit’s city lines, increasing the demand for homes. A strong workforce will mean great things for the economy, which shows signs of prospering in the coming year.
Detroit’s Population Growth
Detroit experienced one of the worst out-migration trends across the country in the past few decades. Since 1950, every census report showed a significant drop in population. But the latest census data shows that Detroit’s population decline may be a thing of the past.
After many challenging decades, the city has a new lease on life. New jobs are on the horizon, and the government is revamping parts of the city. Houses in Detroit’s old, abandoned districts are receiving an upgrade, adding to the housing supply.
Detroit’s rental market is also at an all-time high, with people interested in short-term and long-term rental options.
Detroit’s New Developments
The city’s real estate infrastructure will receive a boost in the coming year. Residents will see many projects on the horizon, both commercial and residential. If you’re considering buying a home in Detroit, here’s what you need to know about the city’s upcoming residential real estate projects:
· As part of the historic Lafayette Park revamp, you can soon choose from 318 new homes. These apartments offer a mix of one-bedroom, two-bedroom, and studio units.
· Detroit’s famous Book Tower building has recently reopened with a luxury housing plan. You can choose from over 200 high-end homes.
· Another mixed-use development is ongoing in Greektown. Upon completion, you can choose from 165 new homes.
· For mixed-income buyers, the new Brush Watson development offers 124 new homes to choose from.
If you intend to sell your property, you may want to wait a little longer. Check if your home is close to any of the above projects before selling, as your home value may appreciate over time.
Buyers should also look into any upcoming project developments in their local area. This could help you to speed up the buying process and secure a home before prices in the area skyrocket.
Quality of Life in Detroit
Like any other city, Detroit has its good and bad moments. Over the years, the city has shaped up. It is better than it was a decade ago. You might fit in if you like being part of a growing city with a wholesome community vibe. Here’s what you need to know about Detroit’s quality of life before you consider moving:
· Yes, Detroit is known majorly for its auto industry. But there’s more to the city than meets the eye. It is home to cultural landmarks, parks, and historic architecture. If you’re outdoorsy, you will enjoy the access to its great outdoors, such as lakes and forests.
· You will have access to good healthcare in Detroit. It’s home to several medical centers, facilities, and health clinics.
· Detroit’s public transportation system has no subway system. However, the public bus system by operators like DDOT and SMART is quite robust.
· Buses provide great local and cross-country services in many suburbs. You will still need a car to get around most of the city.
· Public schools in Detroit are better than a few years ago but still need to be funded. They rank below average, with a D+ rating by Niche.
· Detroit’s crime rate is higher than the national average, which may concern many homebuyers looking into its housing market.
· Detroit ranked among Niche’s list of cities with the lowest cost of living. Poverty is prevalent in many pockets of the city, but you can still see the cost of living increasing every year.
· Housing prices in Detroit are lower than others in the country, but so is the median household income.
Detroit Real Estate Market Outlook
Detroit’s housing market looks promising for the coming year.
Investors can expect to see a 4.9% growth in the market by July 2024. The good news for sellers is that home values will appreciate over time, allowing them to earn a sizable profit from sales.
The rental market in Detroit will also continue to fare well as the demand for rental homes rises. The rental vacancy rate is a low 4.4%, which means homes are picked up quickly.
You can expect to pay $1,200 in rent for a standard apartment in Detroit. This is substantially higher than the median mortgage payment, resulting in a profitable return on investments.
Detroit Neighborhood Forecast 2023
Detroit is one of Michigan’s largest cities. It has several vibrant neighborhoods. Some of its residential districts are:
· Midtown
· Downtown
· North Side
· East Side
· West Side
· Southwest
· New Center
You may find a cluster of smaller neighborhoods and suburbs within the above districts.
As per a report, some Detroit neighborhoods showed a jump in sales in the past decade. Midwest Detroit saw a 186% increase in sales, whereas Chadsey Condon saw a 227% increase. Core City saw the highest jump in sales, with a whopping 450% increase. Experts attribute these increases to a housing price rebound since the 2008 recession.
If you intend to buy a home in Detroit today, here are areas worth looking into:
· Jefferson-Chalmers
· Midtown
· West Village
· Sherwood Forest
· Gold Coast
· North Rosedale Park
· University District
Detroit Investment Opportunities: Neighborhoods to Watch Out For
Those with a budget between $200,000 and $500,000 can consider neighborhoods like Indian Village, West Village, Sherwood Forest, or the University District.
The reason is that these neighborhoods have a low inventory of homes due to their proximity to downtown Detroit. They’re also more expensive due to this reason. If you’re looking for single-family homes with downtown access, these are the right neighborhoods to invest in.
If you’re looking for a more affordable purchase, the emerging North Village neighborhood is seeing a development spurt. The price of your home will likely appreciate in the long term, thanks to the surrounding development.
Those looking in a lower range, say between $100,000 to $200,000, can consider these:
· Jefferson Chalmers is an excellent option if you love waterfront properties due to its Detroit River access.
· If you’re looking for newly developed properties, Piety Hill and Woodward Village are also areas to watch out for.
Experts suggest being open to neighborhood options, given the high market demand in certain areas. Before setting your sights on a specific neighborhood, you should determine your affordability range by working with a reliable lender.
If you’re a first-time homebuyer, this can help you avoid disappointments and be more realistic about your home search.
First-time home buyers can also check if they qualify for mortgage programs to help with home loans. For example, First Merchant has the New Horizon program that offers:
· Home financing help, i.e., low to no down payment on purchases below $400,000
· Grant funds up to $7,500
· Down-payment assistance
· Lower interest rates
Another thing you want to check is if your home is part of a state-designated Neighborhood Enterprise Zone. You can save money on property taxes or gain potential tax benefits if it is.
Investment Strategies in the Detroit Market
With the market expanding, Detroit’s housing landscape offers diverse investment opportunities. Here are some you can consider:
Invest in Fixer-upper Homes
The last time Detroit’s real estate boomed was in the 1950s when a slew of homes sprung up in a short time. After the market crash in 2008, many of these homes lay in neglect. This prompted the government to donate some homes or give them away for a nominal $1 sale price to attract residents.
We’re past that point today, but Detroit still has several old homes on the market that investors can flip or use for turnkey investments. If you’re a first-time homebuyer, you can navigate the competitive prices by buying and renovating a distressed home.
Rental Investments
Millennials make up 35% of the U.S. workforce, and many are flocking to Detroit because of its low cost of living. This demographic prefers to rent rather than own, driving up the demand for rental homes. Airbnb and short-term rentals are also in demand due to the post-pandemic travel rebound.
If you’re an investor looking for a steady cash flow each month, renting may be the right investment decision for you. Single-family homes in Detroit sell at low prices, so you can snap up a home and turn it into a long-term rental project. Renting also protects you against inflation as you receive a steady monthly income.
Passive Real Estate Investments
If you’re looking for a more indirect way to invest in Detroit’s housing market, REITs are the way to go. REITs are real estate investment trusts that have a diverse property portfolio. As an investor, you can buy shares in a trusted REIT and earn passive income without having any direct role in the project.
Detroit is huge, and finding the right property for investment can be challenging. Here’s how you can effectively identify, manage, and maximize your investment:
· Detroit is expanding in a way it never has before. This means new projects and housing developments are always on the horizon. Researching these projects and identifying neighborhoods that are changing can help you maximize your profits over time, as the property will appreciate.
· Another tip is to study the rental market and identify the neighborhoods with the highest rent. If the purchase price suits your budget, you can earn a sizable rental income.
· Talk to trusted realtors or seasoned investors to find the most reliable Detroit real estate investment trusts.
· If you’ve made a remote investment, managing your rental property can be a hassle. As a result, many renters rely on property management companies to take care of their home while away.
These companies typically handle repair issues and inspections and provide cleaning services to keep your rental property in good condition. You’ll need to pay a portion of your rental profit toward these services.
· You can attract a steady stream of tenants or guests with the right marketing strategy. Ensure you populate your online listings with updated photos of the property. Share them on social media platforms to target the right audience.
· Having the wrong tenant in your home can hurt your rental income. If your home isn’t maintained well, it may incur unnecessary repair costs.
· You must spend sufficient time vetting tenants, especially for a long-term rental. You want a reliable tenant who pays timely rent, keeps the house clean, and has no glaring records.
Detroit Real Estate Outlook: 2023-24
After years of housing struggles, the Detroit market is finally on the upswing. This trend is not expected to slow down any time soon. Factors impacting this upward trend are:
· Detroit’s low cost of living
· Affordable housing
· City rebuilding efforts
· Job creation
· Decline in out-migration
As a result of the above factors, median home prices are on the rise. You can also see a strong demand from buyers.
Old and new neighborhoods are seeing a spurt in housing developments. This spells good news for the city’s housing supply. If you’re an investor looking to expand your portfolio or a first-time homebuyer, now is a good time to consider that purchase. Another good news is that Detroit’s buyer market trend is likely to continue over the next year as we see home prices starting to appreciate.
Besides the home prices, things are also looking up for Detroit’s rental market. Due to the robust demand for rental homes, investors are acquiring homes at affordable prices and flipping them for rent.
If you’re keen on investing in the Detroit housing market, you should study various investment strategies to maximize profits. Take advantage of the buyer’s market while it lasts, and watch your investments grow in value.
