What's Going On With Detroit Real Estate? - When the economy crashed, Detroit struggled even more than most cities. After all, Detroit didn’t just have to deal with the recession. It also had to deal with the crash of the auto industry, skyrocketing unemployment, and a glut of underwater mortgages. But now things are starting to turn the corner – the biggest thing being Detroit’s housing market. In fact, Detroit saw a 12% jump in home prices in November, which was the 3rd-highest increase in the nation. Experts say this is no fluke; instead, they’re calling for continued growth over the next few years.
So far, the numbers are bearing that prediction out. In January 2013, the median sales price was 26% higher than it was in January 2012. The number of home sales was nearly 11% higher, too. In fact, each county in the Detroit metro has seen its sales go up this year. And although it’s not growing as dramatically as some places, Detroit’s housing market is heading in the right direction. Plus, the increase in sale prices could encourage more people to sell.
Hopefully the increase in value of homes will help to spark the housing market in Detroit. Part of the problem with the current housing market is that because so many people have underwater mortgages, it does not make sense financially to sell and take such a large financial hit. But with the limited amount of homes for sale, the city hopes to see a continuing trend of price growth fueled by this low demand, which in turn will encourage more people to sell.
The increase in demand coupled with the projected value increases will likely help to grow the housing market. As soon as people who may have been reluctant to sell in the past see the value increase and bidding wars on available homes, they will be more willing to put their house on the market where they may have been hesitant in the past.
There has also been significant improvement for higher-end homes – with sales of homes valued at over a million dollars likely to jump as high as 60%. Several industries, such as the energy market and the financial markets, have ignited an influx of wealthy buyers moving into the area and purchasing these higher-end homes.
Although these improvements are finally positive signs for a city that has desperately needed it, this city still has a long way to go. The Detroit News recently provided a shocking example of how far this city has plunged by talking about a $429,000 home that was only on the market for seven days before receiving multiple offers. While that is a positive sign for the market, the unfortunate side is that the home would have sold for an estimated $700,000 before the economy crashed.
Detroit’s housing market has lots of strides to make, but this latest news is definitely an improvement and should be considered a major step forward. Should the current trends stick around (and experts say there’s no reason to believe that they won’t), the future here in the Motor City could be bright!
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