Detroit Housing Market: Prices, Trends, Forecast 2023 (2023)

Detroit Housing Market: Prices, Trends, Forecast 2023 (1)

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

The Detroit housing market has seen a lot of fluctuations in the past few years. The city has been slowly but steadily recovering from the Great Recession, which hit the area particularly hard. In this blog post, we will take a look at the current state of the Detroit housing market, based on the most recent data available. We will analyze key metrics such as home prices, days on the market, and buyer/seller competition to provide insights into what to expect in 2023.

Decline in Home Prices

According to Redfin, as of July 2023, the median sale price of homes in Detroit stands at $86,050. This marks a significant decline of 10.1% compared to the previous year. This decline could be attributed to various factors, including changes in the local economy, supply and demand dynamics, and overall market sentiment. Despite the decline, Detroit continues to offer affordable housing options for both buyers and investors.

Competitive Market Dynamics

The Detroit housing market is somewhat competitive, with homes typically receiving two offers on average. Homes tend to stay on the market for around 34 days before being sold. This is an increase from the previous year's average of 28 days, indicating a slightly slower pace of sales. The Redfin Compete Score™, which rates the competitiveness of an area on a scale of 0 to 100, suggests that Detroit's competitiveness is in the middle range. Some homes even receive multiple offers, indicating pockets of high demand within the market.

Sale-to-List Price Ratio

The sale-to-list price ratio provides insight into the negotiation dynamics between buyers and sellers. In Detroit, the sale-to-list price ratio for all home types is approximately 95.6%, indicating that homes are generally selling for about 5.4% below the list price. This suggests that buyers have some room for negotiation in their favor. However, it's essential to note that individual negotiations can vary based on the property's condition, location, and demand.

Migration Trends

Detroit's migration trends provide valuable insights into the city's desirability as a place to live. According to Redfin's data, 0.78% of homebuyers from various metro areas searched to move into Detroit. The most significant number of potential migrants came from Washington, DC, followed by Los Angeles and San Francisco. On the other hand, 74% of Detroit homebuyers searched to stay within the Detroit metropolitan area, indicating that a majority of residents are looking for local moves.

Possible Forecast

The Detroit housing market's current trends suggest a mix of opportunities and challenges. While the decline in home prices might attract budget-conscious buyers and investors, the competitive market dynamics indicate that well-priced and desirable properties can spark bidding wars. As Detroit continues to undergo economic transformations, the housing market is likely to be influenced by factors such as job growth, urban development initiatives, and overall economic recovery.

ALSO READ: Michigan Housing Market Forecast

Detroit Housing Market Forecast 2023-2024

The Detroit housing market presents an average home value of $67,745 (Zillow), indicating a 1.2% decrease over the past year. Homes typically go pending within 19 days, reflecting a dynamic environment. Notably, 28.3% of sales have occurred over the list price, while 54.4% have been under the list price, as of June 30, 2023.

Additionally, the median sale-to-list ratio stands at 0.980. Looking ahead, the Detroit Metropolitan Statistical Area (MSA) is anticipated to experience a gradual upswing, with projected growth rates of 0.6% by August 2023, 1.1% by October 2023, and 4.9% by July 2024 (based on data available as of July 31, 2023).

Key Metrics at a Glance

  • Typical Home Values: $67,745
  • 1-year Value Change: -1.2%
  • Median Sale to List Ratio (June 30, 2023): 0.980
  • Percent of Sales Over List Price (June 30, 2023): 28.3%
  • Percent of Sales Under List Price (June 30, 2023): 54.4%
  • Median Days to Pending (July 31, 2023): 19

Detroit Metropolitan Statistical Area (MSA) Forecast

The Detroit Metropolitan Statistical Area (MSA) is poised for a positive trajectory in the coming months. As of its baseline date on July 31, 2023, the MSA, represented by Detroit, MI, demonstrates a forecasted growth rate of 0.6% by the end of August 2023, followed by a further increase to 1.1% by the end of October 2023. Looking ahead, the market anticipates a robust expansion, with projected growth reaching 4.9% by the conclusion of July 2024. This projection underscores a promising outlook for Detroit's real estate landscape in the near future.

Here is the graphical representation of the historical Detroit metro house price growth by Zillow.

Detroit Housing Market: Prices, Trends, Forecast 2023 (2)

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

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

  1. 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 $67,745, there is plenty of room for appreciation in the long term.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
Detroit Housing Market: Prices, Trends, Forecast 2023 (3)

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.

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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.


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