Will home prices go up in the next 2-3 years in Metro Detroit? (Warren: sales, foreclosed)

[Wolverine607]

Originally Posted by DaniellaG

I would meet with a financial advisor and get their thoughts. I also would question using all your savings to purchase. You never know what may happen in life and it is good to have savings. Are you sure you will remain in MI and in the same area? If there is any question I would really factor that in. I know people who have paid cash but if sold their home now would lose money.
Good luck with the future plans

I intend to have some extra cash on the side after I purchase the home. I am not actually purchasing it right now, but will in 2-3 years when I have more saved up.

I plan to purchase a house for about $100K to $130K while haivng about $150K saved up which would leave me about $30K left over. I do not have that much saved up right now, but I think I will have about that much in 2-3 years after saving some more because I am able to save 99% of my paycheck as I still live with my parents and hardly have any expenses.

[Wolverine607]

I need some updates on this question. I was at the haircut place a couple of days ago and some lady said she knows a realtor that said that home prices are going up here in Metro Detroit. She said though that she only expects like 3% appreciation per year. That is not too bad, but it scares me because I still do worry about big increases coming if the economy recovers. Now I have talked to other people and they said they really aren't going up. I have also heard that there have been cases where homes in Metro Detroit were receiving multiple bids and that the inventory was low. I have heard that and that part scares me because whenever you here bidding, that leaves the potential for big price increases. However, is that really due to many nice starter homes being priced well below $100K that are undervalued. And also is supply short just because banks have taken foreclosures off the market and many who are underwater have taken homes off the market.

But as soon as prices rise seen a little, is it likely these homes will flood the market putting a lid on any price appreciation?

So based on the market trends in Metro Detroit today in December 2011 and going all the way into 2012, what are your opinions. Do you think there is a serious threat of significant appreciation in the next 2-3 years? Or is that very unlikely and home prices will be flat or only go up slowly?

Basically, I just want to ensure I will be able to buy a decent starter home in an ok area within my price range of $100K to $130K in 2-3 years when the time comes when I am ready to move out. So as long as home prices do not go up enough to take homes out of that price range. I should be fine.

[Coldjensens]

Originally Posted by Wolverine607

I need some updates on this question. I was at the haircut place a couple of days ago and some lady said she knows a realtor that said that home prices are going up here in Metro Detroit. She said though that she only expects like 3% appreciation per year. That is not too bad, but it scares me because I still do worry about big increases coming if the economy recovers. Now I have talked to other people and they said they really aren't going up. I have also heard that there have been cases where homes in Metro Detroit were receiving multiple bids and that the inventory was low. I have heard that and that part scares me because whenever you here bidding, that leaves the potential for big price increases. However, is that really due to many nice starter homes being priced well below $100K that are undervalued. And also is supply short just because banks have taken foreclosures off the market and many who are underwater have taken homes off the market.

But as soon as prices rise seen a little, is it likely these homes will flood the market putting a lid on any price appreciation?

So based on the market trends in Metro Detroit today in December 2011 and going all the way into 2012, what are your opinions. Do you think there is a serious threat of significant appreciation in the next 2-3 years? Or is that very unlikely and home prices will be flat or only go up slowly?

Basically, I just want to ensure I will be able to buy a decent starter home in an ok area within my price range of $100K to $130K in 2-3 years when the time comes when I am ready to move out. So as long as home prices do not go up enough to take homes out of that price range. I should be fine.

You are joking right?

In making decisions about where and when to spend your $100,000, You are not really taking into account what the lady at the haircut place said that she heard a realtor of some kind say about an unspecified area of Detroit/

There is a housing shortage downtown. however there arent really any houses downtown, just condos. I do nto think that prices are going up, but I have heard that some places have wiating lists.

There is no housing shortage in Detroit in general.

[BayAreaHillbilly]

Good houses in great neighborhoods are cheap. Laws of supply and demand being what they are, I'd say, yes.

[animatedmartian]

There's no threat of significant appreciation. They'll go up in the better areas, however, they won't reach go terribly high(er) until the end of 2012 unless the government intervenes with the housing market on a national level. People not being able to get mortgages is what's really keeping prices down (no one can buy houses if the banks aren't giving out loans).

So yes, prices will go up, but you won't make a whole lot of money if you sell in 2-3 years unless the mortgage issue is dealt with between now and then.

[Wolverine607]

Originally Posted by BayAreaHillbilly

Good houses in great neighborhoods are cheap. Laws of supply and demand being what they are, I'd say, yes.

What constitutes good houses in good neighborhoods and what is your definition of cheap. Are there lots of good homes in good neioghborhoods selling for way less than $100K. Now that would be cheap. That lady at the haircut place said there was a good home for $60K that had multiple bids on it.

I would hope that the definition of good homes being cheap means small starter homes selling for way under $100K and that $100K to $130K is fair market value. Because when small starter homes were going for like $175K or more back in 2004-2005, that was extremely overvalued IMHO.

I would agree that starter homes in good neighborhoods in good shape selling for way under $100K are undervalued. But I definitely feel that $100K to $130K for starter homes depending on the size is definitely fair market value.

What do you think and what prices constitute cheap homes? Is it my price range, or just the homes selling for way under $100K

[urbanliving99]

If you want to buy a house for a good investment - look in the Royal Oak/Clawson area (14/Crooks) - there are a number of condos available for sale in the 20-50K range. See below.

Then you can rent this out to someone for $800/month - easy rent for a Royal Oak address for someone with less than perfect credit. Your rent would be 10K a year. In 3 years - you'd have this condo paid off completely and the rest is free cash flow.

Coworkers have told me most inner ring suburbs from St Clair Shoes to Warren to Royal Oak have condos like this for sale (and you don't have to worry about upkeep like a regular house) and after a nominal time frame - its all cash in your pocket.

Moderator cut: link removed, advertising

[Wolverine607]

Originally Posted by animatedmartian

There's no threat of significant appreciation. They'll go up in the better areas, however, they won't reach go terribly high(er) until the end of 2012 unless the government intervenes with the housing market on a national level. People not being able to get mortgages is what's really keeping prices down (no one can buy houses if the banks aren't giving out loans).

So yes, prices will go up, but you won't make a whole lot of money if you sell in 2-3 years unless the mortgage issue is dealt with between now and then.

When you say that, do you mean they will go up, but only very slowly from today's levels like 1-3% appreciation in the next 2-3 years.

And I do not intend to buy a house and flip it make money. I basically want to pay cash for a house to live in that I can call my own home with the peace of mind of having a roof over my head while being mortgage and rent free.

I have about $110K in savings and plan to have more in the next 2-3 years. I basically just want to ensure it does not lose much purchasing power in relation to home prices between now and the time when I am ready to buy a house.

Now I would buy a house as an investment if there was a reasonable threat of significant appreciation in the next 2-3 years. It would not be for the purpose of selling it later for a profit, but for the purpose of locking in the price and renting it out so that way in case homne prices went up a lot, I would already be locked in and oculd move into that house later or sell it and get the more money that would be needed to pay for another more expensive house if such a situation of significant appreciation were to occur.

I hope I do not have to do what I said above due to the hassles with tenants and having to pay property taxes before I am ready to move out, but would do it or seriously look into it if there was a serious threat of significant appreciation in home prices.

And I would consider any appreciation over 5% per year to be significant. What would be your definition of significant increases in home prices.

[jerky1280]

Since you're talking buying with the possibility of selling in a few years, one thing to consider is the realtor commissions - they'll take 6% of a traditional sale.

Housing values are closely tied to the performance of the local economy. With the auto industry continuing to leave Detroit, I see no increase in home sales in the future. I live in Royal Oak, and have watched $300k houses become $200k houses in the last two years. To me, that's still not a good deal, because if that house looses another $50k (which is entirely possible), that's money out of my pocket. Add in the costs of home ownership (repair, taxes, etc) and I'm perfectly happy renting in this economy.

FYI, I do own a home that is currently being rented in the Washington DC suburbs for far less than my mortgage.

[Wolverine607]

Originally Posted by jerky1280

Since you're talking buying with the possibility of selling in a few years, one thing to consider is the realtor commissions - they'll take 6% of a traditional sale.

Housing values are closely tied to the performance of the local economy. With the auto industry continuing to leave Detroit, I see no increase in home sales in the future. I live in Royal Oak, and have watched $300k houses become $200k houses in the last two years. To me, that's still not a good deal, because if that house looses another $50k (which is entirely possible), that's money out of my pocket. Add in the costs of home ownership (repair, taxes, etc) and I'm perfectly happy renting in this economy.

FYI, I do own a home that is currently being rented in the Washington DC suburbs for far less than my mortgage.

I would only buy a house now and slel it in 3 years if there was a seriosu threat of appreciation which I hope I do not have to do. And according to you, I should not have to. And I hope your right. I do not wnat home prices to go up, but if they werem I would need to ensure my money does not lose purchasing power in relation to home prices between now and the time when I am ready to buy a house.

As for th coment about the uato industry leaving Detroit, I thought the auto industry was still in Detroit and doing much better if you are referring to American made cars. Or were their foreign auto companies in Michigan that are now leaving and is the state still losing jobs despite the recnet improvements in employment. I did hear that much of the decline in the unemployment rate in Michigan was due to people leaving the workforce.