While the pandemic slowed down the growth of the Detroit real estate market in 2020, the market made a comeback in 2021. Growth is expected to continue into 2022, with significant investment opportunities available in the city and its surrounding areas. As of the end of 2021, home prices in Detroit increased by over 12% compared to the same time last year. In Michigan as a whole, median home prices are also up. This means that whether you’re interested in buying property in Detroit itself, houses in Ferndale, MI, or hip Royal Oak real estate, current trends indicate that investing in Michigan is promising.
As one of the most populated cities in the American Midwest, Detroit is full of investment opportunities. In 2021, homes in the area were bought up quickly, spending an average of 24 days on the market
compared to 51 days in 2020. Detroit and the surrounding metropolitan area are expected to be hotbeds of investment this year. If you’re looking to make a move in the Detroit market, take the time to learn about current market conditions and take note of what’s going to help you optimize your investments. When you look at investment properties in Royal Oak or Ferndale, MI — consider how increasing rents and mortgage rates can benefit you. In addition to rent prices and mortgage rates, factors like seasonal trends, the seller’s market, and home prices will come into play. Here’s what’s in store for the Detroit real estate market in 2022.
Return of seasonal trends
The Detroit real estate market appears to be stabilizing, as indicated by a return to seasonal market trends
. During the autumn of 2021, the number of homes sold decreased month-over-month, which is an expected fall trend. (Home sales tend to rise in warmer months.) For example, the number of home sales decreased from 4,550 in August to 4,163 in September 2021. Oakland County, home to the Ferndale and Royal Oak real estate markets, saw home sales decrease by 13.2% during that same period. However, the drop was less drastic year-over-year, with September 2021 seeing only a 2.2% decrease compared to September 2020. In the long term, home sales are still up, with traditional seasonal trends likely to become more regular as we head into 2022.
Seller’s market will remain strong
As is the case with many metropolitan areas across the country, Detroit is in the midst of a strong seller’s market. In markets like these, more people are trying to buy than there are homes available on the market. This creates increased competition among buyers interested in Detroit’s suburban communities as well. Sellers in the Detroit real estate market are poised to do quite well through 2022.
If you’re a potential buyer, take into account the return of seasonal trends, which indicate that more homes sell in the spring than in the winter. If you’re looking to buy, winter will present you with the lowest home prices as demand cools. Buyers who jump in and purchase Ferndale, MI property in early 2022 will have more negotiating power and lower prices, as listing prices will only increase as the year progresses.
Homes values will continue to appreciate
The value of homes in Detroit has jumped over 12% in the last year, though prices are still low when compared with other areas in the U.S. This growth is expected to continue in Detroit, as well as Oakland County. 2022 is the ideal time to invest in property in these areas — growing but not yet red-hot, investments will appreciate in value as time goes on. With home values increasing across the country, the earlier you jump in, the better. You’ll have the added benefit of prices that are far lower than other areas of the country.
Rental properties will remain profitable
For those interested in buying houses as rental properties, there’s good news. Rent in the Detroit metropolitan area has increased 19.5% over the last year. In Ferndale, 32% of residents
are renters, and 33% of Royal Oak residents
rent. This means that a significant portion — about one-third — of the population in these areas are in need of homes to rent. When you invest in Detroit area real estate, you’ll have a large pool of renters ready to take up residence. You can rent out your properties as they appreciate in value, gaining extra income in the short term while setting yourself up to profit in the long term.
Mortgage rates are set to increase
Mortgage rates stayed low throughout 2021, which increased the affordability of homes for interested buyers. As we approach 2022, it’s predicted that mortgage rates will change, which could change the game for potential buyers. Many experts have come to a consensus that in 2022, the U.S. will see increasing mortgage rates. While that increased rate is not yet known, predictions by experts
indicate that 30-year fixed mortgage rates will range between high 3% through low 4% figures. When compared to 2021 rates that were in the low 3% range, this is no small increase. While mortgage rate increases won’t eliminate all potential buyers from the market, it will definitely impact when and where they will invest. Those looking to buy in 2022 should make use of mortgage rates while they are still low. The earlier in the year you purchase a home, the lower your payments will be in the long term.
All in all, we can expect to see a thriving Detroit real estate market throughout 2022. Whether you’re planning to buy houses in Ferndale, MI, or want to sell Royal Oak real estate, a knowledgeable local real estate agent like Austin Black II
can help you make your move in the Detroit metro market. Austin will guide you through choosing an investment and can help you purchase a property, even in this tough seller’s market. If you plan on selling, Austin will help you close quickly and get you the best price for your home.
*Header Credit: Bridge Michigan