A new forecast for the Detroit real estate market suggests that home prices could rise much more slowly over the next 12 months compared to the last year or so. But price growth in the Detroit area will likely continue to outpace the national average, due to growing demand from buyers.
From a housing market perspective, Detroit, Michigan is a unique case. It was hit particularly hard by the recession, with major job losses (many in the auto industry) and home price declines. Things got so bad that the city had to file for bankruptcy in 2013.
But now, Detroit is one of the hottest real estate markets in the country, according to at least one report. The latest housing forecasts suggest that it could be a strong performer in 2018 as well.
One of the ‘Hottest’ Real Estate Markets in the U.S.
In August, the Detroit-Warren-Dearborn, Michigan metropolitan area showed up on Realtor.com’s list of the hottest housing markets in America. And it basically came out of nowhere.
According to Danielle Hale, the chief economist for Realtor.com:
“Detroit jumped into [our] top five hottest housing markets last month. While prices are increasing in Detroit, homes are still priced about 20% below the national average, which has made the market a hotbed for buyers.”
Homes in the metro area are also selling more quickly this year (2017) compared to last, with the “median days on market” down to 39. That’s 27 days below the national average, according to Realtor.com. Page views on the company’s website have also risen, suggesting increased demand among home buyers in Detroit.
The metro area was ranked #5 out of 300 metros in the country for the month of August 2017. The company called it a “very hot” real estate market that is heating up compared to last month. Their “hotness index” ranks markets based on various factors relating to supply and demand, as well as the amount of search activity for homes on their website.
Unlike other hot housing markets, Detroit has a pretty good supply of homes available for sale. This is another factor that makes it unique from other major cities across the country. A “balanced” real estate market is said to have around five to six months worth of supply, according to economists. In July 2017, Detroit had about a five-month supply of homes.
Many other metro areas across the country had around three months of supply, or less, during the same month. Highly competitive markets like Seattle had less than a two-month supply.
So while the Detroit real estate market remains competitive for buyers, they should have plenty of properties to choose from in the fall and winter of 2017, and early 2018. Beyond that, it’s hard to say.
Home Price Forecast for Detroit, Michigan
Looking forward, a recent forecast for the Detroit real estate market through 2018 suggests that home price appreciation might slow considerably over the coming months.
According to the housing analysts and economists Zillow, the median home value for Detroit rose by a whopping 21% over the last 12 months.
But this market is really just making up lost ground, following the tremendous price declines that occurred during the recession. Despite the significant gains of the last year, homes in the Detroit are still priced well below the national average.
The median home value in August 2017 was just over $40,000, according to Zillow.
As for a forecast, the company’s research team expects prices in the Detroit area to rise by another 6% over the next 12 months. So clearly, they’re expecting a slowdown where annual appreciation is concerned. (These predictions were offered in September 2017 and extend through the same month of 2018.)
Detroit is also becoming more popular as a destination for educated millennials seeking affordable housing. In some ways, the city is experiencing a kind of renaissance, with more people moving in instead of out. This could continue to put upward pressure on home prices, bolstering the local housing market.
Disclaimers: This article contains various statistics, predictions and forecasts for the Detroit, Michigan housing market through 2018. These forward-looking statements were provided by third parties not associated with our company. As a general rule, we make no claims or assertions about future housing conditions.