Will home prices go up in the next 2-3 years in Metro Detroit? (Warren: sale, renters)
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I would think it's pretty obvious the difference between Phoenix and Detroit. The City of Detroit is going through a financial crisis and has horrible city services. That situation doesn't exactly produce high demand for people looking to move to Detroit. The recovery of the auto industry bumped up prices a little bit, but without Detroit improving its situation, the metro as a whole will likely stay around where it's currently at with only modest increase.
I would compare Detroit to the real estate market of other Midwestern cities because Phoenix is a Sun Belt city with ridiculously high demand.
Between now and 2013-2014 is still very dependent on what happens to Detroit within the rest of this year. Bankruptcy would likely bring a quicker surge in prices the year after bankruptcy is filed (assuming that the budget is then balanced and city services improve). There's also the possibility for job growth in IT industry that may bump up prices. No matter what comes first, however, Metro Detroit's prices are likely past the lowest they'll ever be in this current economy (assuming the national economy doesn't crash again).
For you, it's not looking too sunny, but there's not exactly a storm on the horizon.
I would think it's pretty obvious the difference between Phoenix and Detroit. The City of Detroit is going through a financial crisis and has horrible city services. That situation doesn't exactly produce high demand for people looking to move to Detroit. The recovery of the auto industry bumped up prices a little bit, but without Detroit improving its situation, the metro as a whole will likely stay around where it's currently at with only modest increase.
I would compare Detroit to the real estate market of other Midwestern cities because Phoenix is a Sun Belt city with ridiculously high demand.
Between now and 2013-2014 is still very dependent on what happens to Detroit within the rest of this year. Bankruptcy would likely bring a quicker surge in prices the year after bankruptcy is filed (assuming that the budget is then balanced and city services improve). There's also the possibility for job growth in IT industry that may bump up prices. No matter what comes first, however, Metro Detroit's prices are likely past the lowest they'll ever be in this current economy (assuming the national economy doesn't crash again).
For you, it's not looking too sunny, but there's not exactly a storm on the horizon.
How come Sunbelt cities have so much higher demand than Midwestern cities? Also, Las Vegas I think is a Sunbelt city, but prices there have not gone up at all and are almost as affordable as in Metro Detroit? Why is Phoenix all of a sudden taking off there, but no other areas? Just curious?
How come Sunbelt cities have so much higher demand than Midwestern cities?
A few factors; climate, job growth, and the downfall of manufacturing. Many people who moved into Sun Belt cities are actually from the Midwest. As we lost jobs, other cities who began diversifying their economies became more attractive. Sun Belt cities happen to be able to diversify quicker than the manufacturing-dependent Midwest so that's where the jobs went. This is going back like 20 years though and not just the last few years.
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Also, Las Vegas I think is a Sunbelt city, but prices there have not gone up at all and are almost as affordable as in Metro Detroit?
Las Vegas's economy is pretty much dependent on tourism whereas Phoenix is a bit more diversified.
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Why is Phoenix all of a sudden taking off there, but no other areas? Just curious?
Why Phoenix specifically had such high prices was probably because it's a city in the desert with lots of room to expand. And since it's a desert, resources are expensive. It may have also been because of the type of housing that's required for that area for similar reasons. I'm not really sure but that's just my guess.
For you, it's not looking too sunny, but there's not exactly a storm on the horizon.
When you say that, do you mean my price range is in trouble, or just that they are past the lowest point they will ever be and may only go up somewhat, but I should still be able to find something reasonably nice and safe in good condition for $120K, but may have to downgrade from like 1300 to 1000-1100 square feet or something like that?
Last edited by Wolverine607; 07-14-2012 at 01:31 PM..
When you say that, do you mean my price range is in trouble, or just that they are past the lowest point they will ever be and may only go up somewhat, but I should still be able to find something reasonably nice and safe in good condition for $120K, but may have to downgrade from like 1300 to 1000-1100 square feet or something like that?
Well since you aren't buying until almost 2014, it's a pretty long time to be trying to guess what the market would be like by then. Especially with a market as unpredictable as the current one. A lot can happen within a year that can affect prices. Detroit could file for bankruptcy, or a big name company could come in a create jobs, or even the auto companies have massive layoffs again that'll reduce prices. (I feel this is like a stock market discussion) But I'm more optimistic that prices will rise (as most homeowners are hoping that they do).
Of course as a buyer, it's better for the prices to stay low. However, I just thought about this, but if prices happen to rise just slightly fast enough, it might become a buyer's market since people are looking to get from underwater on their homes and you might be able to get good deals. But again, I'm stressing that there's only a chance of this happening and it might not be in the price range you'd want. I'm certainly not a schooled expert on real estate, but I do spend a lot of time researching about it.
Well since you aren't buying until almost 2014, it's a pretty long time to be trying to guess what the market would be like by then. Especially with a market as unpredictable as the current one. A lot can happen within a year that can affect prices. Detroit could file for bankruptcy, or a big name company could come in a create jobs, or even the auto companies have massive layoffs again that'll reduce prices. (I feel this is like a stock market discussion) But I'm more optimistic that prices will rise (as most homeowners are hoping that they do).
Of course as a buyer, it's better for the prices to stay low. However, I just thought about this, but if prices happen to rise just slightly fast enough, it might become a buyer's market since people are looking to get from underwater on their homes and you might be able to get good deals. But again, I'm stressing that there's only a chance of this happening and it might not be in the price range you'd want. I'm certainly not a schooled expert on real estate, but I do spend a lot of time researching about it.
I remember last December, you had said you thought I would be fine in terms of my price range and that I should not hold my breath over it but to keep eyes on any news that would affect Detroit's local or regional economy.
I am also looking at the areas of Madison heights, Sterling Heights, Auburn Hills, Warren, Clinton Township, etc... Aren't there homes, especially in Madison Heights and Warren that are decent in mo ein condition for modestly under $100K like for around $80K? I mean if prices only rose modestly,isn't that like only 3-5% which would still keep my within the price range for starter homes. I remember you had stated that prices riisng more than 5% would be quite significant. Based on the current market, I could probably withstand a 5% or maybe even a 10% increase and still be able o get a starter home in my price range or even below it in cities like Madison Heights or Warren.
And also, if Detroit filed for bankruptcy, why would that cause prices to go up more? I would think that would hurt confidence in home buying because it would be looked at as a negative upon the region?
And even when I own a home, I have no desire to see prices rise. Now if my home was the only home that went up and no one else did, then yes that would benefit me. But if my home goes up because homes in general are going up, I gain absolutely nothing from that and in fact it would only rause home owners insurance and property taxes which is bad for me. A house is not an ATM machine. It is a place to live in IMHO that I can have the peace of mind of having my own place while being rent and mortgage free!!
And based on your post, it sounds like your saying my price range could be in jeopardy in any area that is not unsafe even though you are not sure as it is so hard to predict like you expect? And that to me is like holding my breath that there could very well be a storm on the horizon, if I had to spend anymore than $125K for a 1000 SF bungalow with a 1 car garage and a really small basement in good condition in a reasonably safe community.
And also, aren't credit conditions still tight enough to prevent too much demand from taking off? Because now you actually have to have a decent sized down payment and good credit to qualify for a mortgage.
I remember last December, you had said you thought I would be fine in terms of my price range and that I should not hold my breath over it but to keep eyes on any news that would affect Detroit's local or regional economy.
I am also looking at the areas of Madison heights, Sterling Heights, Auburn Hills, Warren, Clinton Township, etc... Aren't there homes, especially in Madison Heights and Warren that are decent in mo ein condition for modestly under $100K like for around $80K? I mean if prices only rose modestly,isn't that like only 3-5% which would still keep my within the price range for starter homes. I remember you had stated that prices riisng more than 5% would be quite significant. Based on the current market, I could probably withstand a 5% or maybe even a 10% increase and still be able o get a starter home in my price range or even below it in cities like Madison Heights or Warren.
Depends on how far from 8 Mile the homes are. The farther north you go, the more expensive the housing. Though looking at prices pre-2008 it seems like they'll probably still be affordable even after all that hub bub I was talking about in Madison Height and Warren at least. The more desirable areas like Sterling Heights and Auburn Hills would be likely to see higher increases. Don't know by how much though.
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And also, if Detroit filed for bankruptcy, why would that cause prices to go up more? I would think that would hurt confidence in home buying because it would be looked at as a negative upon the region?
After the first year that it occurs maybe. But looking at some other cities who just recently filed for bankruptcy, they were saying things would likely improve after a year. But I don't really have any evidence that shows something like that already happened so I'm not really sure.
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And even when I own a home, I have no desire to see prices rise. Now if my home was the only home that went up and no one else did, then yes that would benefit me. But if my home goes up because homes in general are going up, I gain absolutely nothing from that and in fact it would only rause home owners insurance and property taxes which is bad for me. A house is not an ATM machine. It is a place to live in IMHO that I can have the peace of mind of having my own place while being rent and mortgage free!!
And based on your post, it sounds like your saying my price range could be in jeopardy in any area that is not unsafe even though you are not sure as it is so hard to predict like you expect? And that to me is like holding my breath that there could very well be a storm on the horizon, if I had to spend anymore than $125K for a 1000 SF bungalow with a 1 car garage and a really small basement in good condition in a reasonably safe community.
Yep, location, location, location. I'm sure you'll be able to find that type of house depending on areas you might like.
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And also, aren't credit conditions still tight enough to prevent too much demand from taking off? Because now you actually have to have a decent sized down payment and good credit to qualify for a mortgage.
There's that too. In the long term that's what keeps prices from skyrocketing.
I remember you said that any new business moving to the area could be a game changer. Although did you mean them just moving like a big main headquarters to the region, or even just a location to the region even if the main head quarters are else where?
And if this happens with Amazon, is this some kind of huge game changer that could have a big impact on home prices real fast everywhere in the region real fast, or is it not much of anything if it happens. Or is it unlikely to have much of an impact real fast, but could in a really long time like 5 years down the road or more, but unlikely anything to be worried about in only a little over 1 years time frame?
Eh, not really. However, it does show that Detroit's job market is improving and that housing prices could continue to increase over the next year. Metro Detroit has increased by 1.4% the past year for homes under 120K. But factoring in Detroit's financial problems, it'd be surprising if the increase managed to go past 2% by this time in 2013.
I remember in April in this thread you said if some type of large company or something came into the region, that it would be a game changer?
Since you don't really consider this Amazon example a game changer, what would be an example of a company moving in that would be a game changer and how/if it happened would it end up happening?
I mean is the reason you really do not consider that a game changer is because it is just a very small part they would be opening with a limited number of jobs? Or is it something else like a mid size company that is growing fast would have to move their regional head quarters to the area?
Is the Amazon example just a very small part that just continues to show slow and sometimes moderate improvement in the regional economy of Metro Detroit because they are not moving much of their business here, but just a very small part? Or is it something else?
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Depends on how far from 8 Mile the homes are. The farther north you go, the more expensive the housing. Though looking at prices pre-2008 it seems like they'll probably still be affordable even after all that hub bub I was talking about in Madison Height and Warren at least. The more desirable areas like Sterling Heights and Auburn Hills would be likely to see higher increases. Don't know by how much though.
Also, how come Sterling Heights and Auburn Hills are more desirable and expensive than even the North side of Madison Heights and Warren which I know are more desirable than the south sides of those cities?
And also, why is most of Sterling Heights more expensive than even the north side of Madison Heights and Warren, but still quite a bit less expensive than Troy and Rochester Hills?
And also, a realtor from Keller Williams realty had told me that there are only 2 parts of Auburn Hills and that one is like Rochester Hills and just as expensive where the other is like Pontiac? Is that really true? Are the areas in Auburn Hills that are affordable as bad and as dangerous as Pontiac? Is that really true? Or is anywhere in Auburn Hills safe as long as it is at least 1 mile away from Pontiac?
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