The once dead Greater Detroit residential real estate market is finally showing signs of life. According to the latest Standard & Poor’s/Case-Shiller Home Price Index, home prices in most areas are back to fall 2007 prerecession levels, making them 60% higher than the lowest point, in April 2011, but still about 18% below the region’s price peak, registered in late 2005 and early 2006.
A growing economy
This revival is a direct result of the state’s improving economy, better consumer confidence, low mortgage rates and tight inventories. According to another report, from the Detroit Free Press, 2015 saw more than 66,600 homes change hands. It’s the largest number of sales since the recession.
The region’s inventory keeps getting better, thanks to new construction. It’s expected to continue on this same path as mortgage rates increase and prices begin to stabilize. And data from Farmington Hills-based Realcomp Ltd. II also said that the for-sale inventory in Wayne, Oakland, Macomb and Livingston counties has dropped by 16.3% in the last three years, from 15,537 listings in January 2013, to 12,997 listings this March.
The time a home spends on the market has also decreased. It went from 78 days three years ago, to 52 days now. During the same time period, median home prices have increased by an impressive 85%, from $80,000 to $148,000.
The Greater Detroit housing market started the year in force, showing all the signs of a seller’s market in Q1. However, experts still expect the rise in mortgage rates to affect it to some degree in the remaining months of 2016.
“While low inventories and short supply are boosting prices, financing continues to be a concern for some potential purchasers, particularly young adults and first time home buyers,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.
In a December 2015 interview for MSNBC, Bill Emerson, CEO of Detroit-based Quicken Loans and chairman of the Mortgage Bankers Association, warned people looking to buy a house or to refinance their mortgage that they only had a six-month window in which they could take advantage of the very low mortgage rates.