Last year, over 11,000 residential properties were sold across Detroit at a median price of $260,000. However, the Detroit real estate market is constantly changing.
Understanding the current market will ensure that you get a good deal when selling your property. It can also help you choose the right time to put your home on the market and when to explore alternative options.
So what will the Detroit housing market look like in 2023 and how will this affect homeowners? Read on to find out everything you need to know about Detroit housing prices and real estate market trends for the year ahead.
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1. Prepandemic Detroit Housing Market Developments Resume in 2023
Before the COVID-19 pandemic began back in 2020, Detroit was preparing for a number of huge construction projects.
As the world returns to business as usual, these projects are back on the agenda. And this is great news for Detroit’s infrastructure and redevelopment.
Let’s take a closer look at some of the commercial and residential projects that are due to be completed in Detroit this year.
Major Real Estate Developments Opening in Detroit This Year
A number of huge real estate projects have been under construction for the last five years around the city. According to JC Reindl of the Detroit Free Press, these seek to transform existing landmarks in the city into hubs of business and community.
They offer a combination of retail spaces, event spaces, office facilities, hotels, and residential units. Some developments set to open this year in Detroit include:
- The Book Tower and Book Building development
- The Lee Plaza
- The Enclave
- Michigan Central Station
So be sure to check out these new attractions and everything they have to offer!
Godfrey Hotel
A number of amazing hotels are due to open around Detroit over the next year. These don’t just benefit tourists either!
They also create jobs within the community and offer amazing restaurants and event spaces.
Godfrey Hotel on Michigan avenue plans to do just that! This 227-room hotel in Corkwtown is due to open its doors at the end of spring.
Housing Developments in Detroit
Of course, real estate investors aren’t just interested in commercial spaces around Detroit. A number of huge residential projects are set to welcome their first residents this year.
These include:
- 229 residential apartments in the Book Tower and Book Building development
- 318 new homes near Lafayette Park (part of the Lafayette West housing development)
- 124 new homes in the Brush Park neighborhood (part of the Brush Watson development)
- 165 new homes in The Exchange in Greektown, an eye-catching, top-down housing development
So these new homes may have an impact on house prices in your local area.
Community Spaces
Community spaces are incredibly important in Detroit. This is probably why a lot of new developments try to incorporate community spaces into their design.
For example, the Book Tower, Lee Plaza, and Michigan Central Station will offer a host of restaurants, office spaces, and event spaces.
However, these aren’t the only community-focused spaces opening in Detroit this year. The Detroit Food Commons will also be opening its doors. This is a new, full-service grocery store on Euclid Street supported by the Detroit People’s Food Co-op.
This year we can also expect to see a decision about Detroit’s 60 empty school properties and how these will be used to serve the community.
What Does This Mean For Homeowners?
Investment in Detroit’s real estate infrastructure is great news for homeowners in the area. These projects improve the attractions around your neighborhood and create jobs for people moving to the area.
This can have a huge impact on home prices in your ZIP code. If a new project is due to open in your area then you may want to hold off selling for a month or so. Once it is up and running the value of your home could soar.
It is also worth looking at which areas real estate investors are interested in developing. Real estate developers are always looking for valuable land around Detroit.
If your home is in a valuable location it could be worth a lot to them, even if the building itself needs work. In that case, selling to an investor or iBuyer is a great way to get a fair price for your home.
2. Changes to Detroit Housing Prices Will Vary by ZIP Codes
As ever, home prices vary depending on where you live in Michigan.
In fact, around Detroit itself, some ZIP codes can expect to see price increases of more than 3.5%. However, neighboring ZIP codes have seen a drop in home value by 3.5% or more.
This is because changes in your neighborhood can have a huge impact on the value of your home. These developments might include:
- Job opportunities (or lack of opportunities) within your neighborhood
- Local crime rates
- Transport links
- Real estate developments in your area
- Local school rankings
For example, investment in real estate development can increase the value of your home. In comparison, a rise in crime or lack of employment opportunities can lower the value of your home.
ZIP Codes Expected to See an Increase in House Prices in Detroit
According to Joe Guillen and Annalise Frank at Axios Detriot, ZIP codes in south Detroit can expect to see the greatest value increase in 2023. These include:
- 48226 (an increase of 5.2%)
- 48216 (an increase of 8.1%)
- 48209 (an increase of 12.3%)
- 48210 (an increase of 9%)
- 48218 (an increase of 3.8%)
- 48229 (an increase of 4.4%)
A few areas in northeast Detroit can also expect to see increases in their property value. However, these won’t be quite as impressive as areas in the south of the city.
Properties in 48204, 48203, 48202, 48234, and 48224 will see rises of between 0.5 and 2.9%.
ZIP Codes Expected to See a Decrease in House Prices in Detroit
In some areas, the value of property is set to drop this year, especially in the east of the city. Homes in the Jefferson Chalmers neighborhood have dropped around 4% in value already.
Properties with 48207, 48213, 48214, and 48212 ZIP codes can expect to see a drop in value between 0.9 and 3.5%.
What Does This Mean For Homeowners?
Understanding the current market is vital if you are planning to sell your home. This can tell you the right time to sell your property or buy a new one.
For example, if your home has recently dropped in value it might be worth delaying selling it. In comparison, buying a property during a price lull could give you a great return on your investment well you come to sell it.
If you are looking to sell your home but its value has dropped, you may want to consider renting it out for the time being. This gives you additional income to tide you over until property prices start rising again.
Alternatively, you could look for an iBuyer. These buyers offer instant quotes and buy properties for development. So they are likely to give you a fair price.
3. The Detroit Real Estate Market is Still Running on a Lower Inventory
According to Whitney Burney at WXYZ Detroit, there are currently fewer houses on the Detroit real estate market.
Several months ago experts expected to see around a six-month supply of homes for sale. Now that figure has dropped to a one-month supply.
This could be a contributing factor to the increase in Detroit housing prices. With fewer properties on the market, buyers have to be more competitive with their offers.
However, it isn’t all good news for homeowners in Detroit. Rising interest on mortgage rates is putting a lot of potential buyers off searching for their dream homes.
This means that people may look to offer below the asking price or postpone their search altogether. As a result, the market is moving more slowly than it was about six months ago.
What Does This Mean For Homeowners?
The slower real estate market in Detroit will have a big impact on homeowners looking to sell a property.
If you are planning to put your home on the market then you can expect to wait longer for offers on it. You may also receive offers below your asking price. So some homeowners may prefer to wait it out until the offers start coming back up.
Alternatively, you could look into other options for selling your home quickly. Contacting real estate developers and iBuyers is a great way to do this.
On the plus side, the low real estate inventory also means that the value of your home could have gone up. If you have the financial stability to wait for a good offer, you could get a lot for your property.
4. Home Sales and Sale Prices Dropped in November
It’s fair to say that the US is in a state of economic uncertainty. With rising inflation, GDP contractor, and high-interest rates, many people are becoming reserved about how they spend their money. And this is set to continue throughout 2023.
So it’s hardly surprising that Detroit saw a drop in home sales figures in November last year. In fact, Candice Williams of The Detroit News reports that this figure fell by 33.8%.
This has had an impact on housing prices within the city, especially due to the mortgage interest that potential buyers face. While the inventory of homes available is still low, buyers are more reserved about making high offers.
As a result, sales prices for homes have also dropped in Detroit in the past months. Of course, this depends a little on where you live.
That said, this could change with time. For the last few years, buyers in America have enjoyed incredibly low interest rates. So the sudden rise in these rates may temporarily put the off buying.
As these rates stabilize and become the norm, buyers may start accepting them as part and parcel of owning a home.
What Does This Mean For Homeowners?
At the moment, real estate agents predict that, for the next few months, the market won’t favor buyers over sellers or vice versa. This means that making a return on your investment could be more challenging in 2023.
However, this depends a lot on the interest rates that buyers can expect to pay on your home.
This depends on how much your property costs and how much potential buyers need to borrow. If your property is within the 3% interest range, this isn’t too steep for potential buyers. In comparison, people looking at paying 5 to 6% or more are likely to offer below your property’s value.
So if you are selling a smaller property then you should still get a fair price for your home. If you’ve made a bigger investment you may want to hold off until interest rates have leveled out. Experts expect this to happen later in the year.
5. The City’s Persistent Housing Issues Aren’t Going Anywhere
It is no secret that residents of Detroit have faced a whole range of housing issues. This is partly due to poor quality accommodation and a lack of housing infrastructure.
Aaron Mondry interviewed a number of Detroit residents about their housing disasters over the last three years. Their experiences, published by Outlier Media, included:
- Rental scams
- The use of lead paint in properties
- Lack of access to water in homes
- Risk of flooding in the Canal District
The end of the COVID Emergency Rental Assistance Program in June 2022 also increased the demand for rental properties in Detroit.
What Does This Mean For Homeowners?
At the moment, you may face challenges when it comes to selling your property in Detroit. However, if you are a homeowner looking for additional income, you may be able to rent out an existing property.
In that case, it may be worth looking at what your property has to offer. Excellent rental properties need to:
- Be in a good location
- Be in great condition
- Offer useful amenities (such as laundry facilities, built-in appliances, and plenty of storage space)
Some buyers may also be looking to invest in real estate to rent out. Making sure your home accommodates renters easily will help to attract these buyers.
Key Takeaways For Homeowners in Detroit
As you can see, over the next 12 months a lot is going to happen within the Detroit housing market.
Although Detroit housing prices have dropped, the rental market is opening up. On top of this, the latest real estate developments could add value to your home in the coming months.
However, if you are looking to sell a property quickly, the Detroit real estate market might not be your best option. Low sale prices and slow movement mean that it could take a while to get a fair price for your home.
Fortunately, iBuyers are here to help. This is a quick and easy way to get a cash offer for your home that reflects its worth. So what are you waiting for?
Get a free home valuation from iBuyer today. We’re here to help.
