While some markets are feeling the sting of lower sales and contract signings, other markets are thriving in the midst of a too-hot-to-touch housing market — namely, Detroit.
Detroit suffered greatly after the recession with a population growth slump, unimpressive job growth and neighborhoods filled with abandoned or foreclosed homes. Some buyers and investors immediately saw an opportunity to take advantage of rock-bottom prices, and it seems that the rest of the country is beginning to turn to “The Motor City” as a haven for affordable housing.
For the first time in four years, Detroit has landed in the top 5 of realtor.com’s “Hottest Markets List” thanks to home prices that are 20 percent below the national average ($258,300). Moreover, homes in Detroit are currently selling within 39 days — 27 days faster than the national average.
“Detroit jumped into realtor.com’s top five hottest housing markets last month,” said realtor.com Chief Economist Danielle Hale in a statement. “While prices are increasing in Detroit, homes are still priced about 20 percent below the national average, which has made the market a hotbed for buyers.”
“On top of that, the market’s median income is nearly identical to the national average, which gives those looking for a home a lot of buying power in this metro,” she added.
Last week, Forbes listed Detroit as the most undervalued market in the nation, with homes, on average, being undervalued by 11.7 percent. Forbes considered five economic metrics, such as nominal income growth, population growth, unemployment, change in rental prices and change in home prices in the ranking.
Here are the numbers that put Detroit at the top of the list:
- Detroit’s median housing price is $225,200. (2016 price — Q1 2017 numbers weren’t available)
- Nominal Income: 4.78% year-over-year change
- Population: 0.01% year-over-year change
- Rents: 0.88% year-over-year change
- Unemployment: 6.27% year-over-year change
- Home Prices: 6.52% year-over-year change
But, before you hitch up your britches and go to Detroit, Forbes writer Samantha Scharf offers a word of advice: “If you’re short on money but long on time consider Detroit. Housing is cheap in the Motor City and recovery is always just beyond the horizon.”
Unfortunately for buyers, there aren’t many markets like Detroit, and they’ll have to remain steadfast through the seemingly never-ending inventory shortage.
“As we enter the last days of summer, many frustrated house hunters know this tale of steep prices, limited options and intense competition all too well,” Hale concluded. “For first-time buyers, those conditions aren’t likely to improve much during the fall, unfortunately, though there could be the start of some relief in the mid- to upper-tier.”