Report: Detroit Home Prices Hit High Water Mark
The housing bubble burst during the beginning of the Great Recession, but Detroit homeowners were rocked by the aftershocks of the collapse for years. However, the region’s housing prices have finally rebounded to their level in January 2008, when the real estate market crashed nationwide.
For the last 45 consecutive months, metro Detroit has experienced year-over-year housing price gains. And according to the latest Standard and Poor’s/Case-Shiller Home Price index, home prices rose 4% in March compared to the year prior. Prices still remain about 23% below their 2005 peak, but those prices were most likely artificially high because of the housing bubble.
Furthermore, David Blitzer, the chairman of the index committee, does not believe the market is experiencing a new bubble effect.
“I would describe this as a rebound in home prices, not a bubble and not a reason to be fearful,” said Blitzer.
“All of this suggests that some future moderation in home prices gains is likely…Moreover, consumer debt levels seem to be manageable.”
Despite the upward trend, average wages are rising much less quickly, leading to a shrinking pool of potential home-buyers. This could mitigate additional gains over the rest of 2015.
The rise of housing prices in Detroit mirrors national trends. But so far, the increase has not encouraged many residents to put their homes up for sale. Despite the steady gains in the housing market, there are actually fewer homes being built in metro Detroit compared to a year ago, while the number of homes for sale has also fallen.
Instead, it seems some homeowners are opting to improve their homes, which could help account for the rise in values. Even simple renovations like replacing old fixtures can drive up the value of a home. For example, 71% of homeowners who replaced their garage door reported an increase in the price of their house.
According to the Case-Shiller index, metro Detroit includes Wayne, Oakland, Macomb, Livingston, St. Clair, and Lapeer counties. The March numbers are the most recent data available.