Detroit’s housing market was in a state of crisis even before the pandemic. The city had one of the highest foreclosure rates in the nation. On top of that, the city was losing its population because many people couldn’t afford to live in the city anymore. The state of Michigan had done nothing to create more affordable housing, and even the federal government was slashing affordable housing programs. Even Detroit’s city council had cut the city’s housing budget by over 50% in the last few years.
So, when the most populous city in Michigan began its shutdowns during the early pandemic stages, people were subjected to prolonged remote work hours at home, which for some were in cramped quarters, and many people developed a general aversion to traveling. This resulted in many homeowners spending more time at home with nothing more than reassessing their domestic priorities. Many either had to move or desperately wanted to.
From Pre-Pandemic Housing Market Volatility to Real Estate Rebound in 2021
New and active listings were down about 25% in 2021 compared to the previous year, and homes were listed for about a week longer. Given that the median listing price was up roughly 3.7% from 2020 to 2021, it seems likely some folks are buying based on the hope that prices won’t continue to rise. But buyers are coming back to the market but slowly. Perhaps, because Detroit has a shrinking inventory of available homes. There is currently only one home for every five families. Still, it seems safe to say today’s real estate market will have recovered nicely by 2022.
With active listing prices increasing by over $10,000 in less than two months and houses selling on average more than two weeks faster, sellers now have a significant advantage over buyers in the real estate market. The November 2021 housing report from RE/MAX of Southeastern Michigan indicates a slight decline in house sales but an increase in the average price of houses in the Detroit metro region.
The market’s limited but solid supply of buyers continued to generate activity last year, contributing to 2021 being a great year for home sales in Detroit. Despite the seasonal slump, low mortgage rates and strong buyer demand kept house prices climbing in November.
Housing Market Experts’ 2022 Forecast for the Detroit Metro Area
There are a couple of things we can take away from last May’s real estate market in Michigan. New listings decreased by 21%, and property showings have increased by 6%, which is a sure indicator that there isn’t enough inventory for people to get exactly what they want. It seems the only way to alleviate the pressure is to lower prices, but the experts all seem to agree that the market is unlikely to see a price decline in 2022.
If you’re not in dire need of relocating or buying a home, it might be best for you to wait until fall, at which time you can find better deals during less competitive times of the year. There are always other options if you don’t want to settle on buying now because it’s conceivable that sellers may be more concerned with your sense of commitment to residing in the home than the length of time you are prepared to wait for an ideal property or the closing costs themselves.
It is ideal for sellers because of the limited number of buyers, which means there will be many offers at or over the asking price. Experts encourage sellers of Detroit homes to enter the market while the going is good. The way the pandemic plays out will impact this year’s real estate market.
The expert forecast for 2022 is that there will be more sellers than those in the pool of buyers, who will likely bid at or above the asking price. This will make it challenging to get an extremely fair price for homes this year.
As the November housing report indicated, the median sales price in Metro Detroit is up 12% compared to the fall of 2020. Property prices are expected to see a continual rise, but maybe not at quite as robust of a rate as has been seen over the last two years. Hopefully, there should be more inventory coming to the market. However, with buyer demand still high, homes will probably be scooped up so quickly that the list will almost be negative.
The Federal Reserve foreshadowed a more aggressive hike in interest rates in mid-December, but it is unclear when or if this will occur. However, forecasters reference some recent federal statements and feel confident that interest rates could rise by up to 3% between now and June 2022.
Pre-Approval for Mortgage Loan Detroit Will Save You Time
If you have a family with school-age children, you may not want to wait until fall to purchase a home, as many brokers suggest for the fairest pricing. Or you could be a first-time homebuyer, and you feel ready. Regardless of your reason for wanting to move now, if you’re going to move sooner rather than later, keep in mind these three critical pro-tips for house-shopping in 2022:
- Be sure you get pre-approval for your loan.
- Don’t spend more than you can afford.
- Stay prepared to bid with your best offer.
People are “buying lifestyles,” as one Oakland County broker put it. It’s predicted that luxury real estate will see a golden year in 2022. Many people are not thinking of traveling much but would prefer homegrown amenities in the upper echelons of neighborhoods.
Detroit’s housing market has seen good and bad days throughout the pandemic. As COVID still leaves many things uncertain, the demand for buyers is sure, with an increase of 167% in buyer demand since last spring. If you are looking to purchase a home this year, you need the support of a lending institution, like Direct Financial Credit Union, that knows how to navigate the housing market expertly. With a team of mortgage officers experienced in mortgage financing, you will be sure to get a home you love in as little time as possible.