Metro Detroit’s real estate market continues to boom amid soaring demand and sky-high prices. Planning to buy or sell soon, or know someone who is?
Read on to get up to speed on interest rates, inflation, new construction trends and more.
Inflation and market trends
Many consumers will feel an even greater financial squeeze as interest rates climb in the months ahead. Sticker shock will keep hitting car loans, credit cards, mortgages and more.
Rising mortgage rates have yet to dampen buyer demand in metro Detroit’s housing market, where prices continue to soar amid a dwindling inventory of available homes. Real estate agents say that among potential buyers this spring, the overwhelming concern is the same as last year: getting an offer accepted.
Relentless rent hikes continue to take a bigger chunk out of paychecks earned by young consumers, people of color and others as inflation sizzles. As rents rise, many renters will face greater financial vulnerability in the months ahead when they are not able to keep their rental costs at or below 30% of their total income.
Across metro Detroit, median home prices rose to $229,450, up 5.7% from a month earlier. The median home had 1,446 square feet, at a list price of $163 per square foot.
Overall across southeast Michigan, home prices were up nearly 15% last fall compared to 2020, according to the closely watched S&P CoreLogic Case-Shiller index covering Wayne, Oakland, Macomb, Livingston, St. Clair and Lapeer counties.
Home mortgage approvals have been going up in the city of Detroit, but lenders still approve Black borrowers at a lower rate than whites, even in some instances when Black applicants have higher incomes, according to findings in a report from a Detroit nonprofit.
Income eligible homeowners can apply to the Michigan Homeowner Assistance Fund for up to $25,000 per household through the program made possible by $242.8 million in federal COVID-19 pandemic recovery funding.
It’s a move advocates say is a major step forward in a city where tens of thousands of eviction cases were filed each year and where most tenants didn’t have legal representation compared with landlords, before the COVID-19 pandemic.
Detroit City Council urged the statewide housing authority responsible for administering millions of dollars in emergency rent aid to speed up the application process in Wayne County, where it can take approximately 90 days to get funds approved.
Builders are constructing fewer than 5,000 new houses each year, even as limited inventory frustrates potential buyers and drives prices up. New construction has stalled at this rate since 2013, according to data from the Home Builders Association of Southeastern Michigan.
Building industry insiders say that while they are currently seeing an uptick in contracts for new houses, overall home building activity in metro Detroit never rebounded from the 2007-09 housing market collapse and remained stuck for more than a decade at historically low levels.
As costs continue to rise for both materials and labor, a handful of entrepreneurs in metro Detroit are testing nontraditional building methods to create affordable housing options. From 3D-printed homes to tiny houses to dwellings made of shipping containers, these creations are generating buzz and showcasing new possibilities for the future of home construction.