Detroit Named One Of The “Hottest” Real Estate Markets In The Country
The Detroit housing market isn’t just showing signs of life, it’s turning into a veritable Gold Rush for investors looking to flip homes.
The Detroit Land Bank has been selling off city-owned houses at rock-bottom prices, with some houses being auctioned for starting prices of just $1,000. The first home auctioned by the Land Bank sold for $10,500, but just re-sold for $86,000. The original buyer spent $35,000 on remodeling work, yielding him almost $40,000 in profit.
Investors have taken notice, helping to lead a major rebound in the Detroit real estate market. This May, metro Detroit was ranked the 10th hottest real estate market in the country by the National Association of Realtors, and moved up to the ninth spot in June. Part of that success comes from the Detroit Land Bank, which is selling homes in need of rehabilitation to eager investors.
Nationwide, property damage repairs account for 36% of remodeling jobs, and even a modest kitchen remodel can see a return on investment of 82%. But in Detroit, where scrappers have stripped thousands of vacant homes to the bones, many auctioned homes require more extensive repairs. Fortunately, with real estate prices rising nationwide, many Detroit residents see a chance for opportunity in those vacant homes.
Even young people are getting in on the boom, like Oakland University students Chris Griffin and Andrew Fylak. The duo recently purchased a vacant home at auction for $6,000, a home they described as “totally destroyed.” Griffin and Fylak spent their combined savings on rehabilitating the home, almost $50,000. Now, they’re confident they can sell the home for about $80,000, and plan on purchasing a second auction home when they do.
It’s further proof that Detroit’s plan to fight urban blight is paying dividends. The enterprising students say that after they began repairing the Prescott Street home, other homeowners on the block followed suit.
“It’s a ripple effect,” Griffin said. “We did this one and now the next three houses are all fixing up.”