Are you looking to invest in the Michigan real estate market in 2022? The thought of real estate investments in Michigan has made many investors feel stuck between a rock and a hard place. Mainly, this has been due to the effects of the Covid pandemic.
The good news is that the effects have slowly been wearing out. The Michigan housing market is slowly but steadily recovering. Coupling this with the fact that the Michigan market has been resilient throughout the years, it can only be right to say that the market will present mouthwatering opportunities in 2022.
Consider the following statistics:
- Properties in the Michigan housing market have seen an appreciation of 7.8% over the past year
- Properties in Michigan have experienced an appreciation of 37.0% over the past 5 years.
So, what should real estate investors in the Michigan real estate market expect in 2022? Here’s the ultimate Michigan housing market forecast 2022.
2022 Michigan Housing Market Outlook
As we’ve mentioned, the real estate market in Michigan has remained steady over the years, despite the pandemic. As such, home prices have been rising as more investors scramble over the state’s inventory.
Residential home sales data compiled by the 42 regional listing boards that form the Michigan Association of Realtors show that average home sale prices have increased by 13.71% from one year earlier in October 2021. Median home prices in Michigan went up to $257,986 from $2226,875.
The total residential home sales declined by -10.1% year-over-year, from 14,812 to 13,315 annual sales. While the state inventory is seeing fewer homes being sold, the lower interest rates are still attracting investors.
The rising home prices indicate a healthy Michigan real estate market. Many Michigan communities are experiencing record numbers of property sales.
According to Redfin, a real estate firm, property prices in Michigan were up 7.8% year-over-year in October to $222,000. The number of homes sold within the same period fell by 9.0%. Similarly, the number of homes being sold declined by 20.0%.
The latest Michigan housing market forecast 2022 shows that the real estate market is becoming more competitive. Bidding wars are also becoming more common as an increasing percentage of properties are selling higher than the initial asking price. For example, in October 2021, 42.9% of properties sold for more than the asking price. This represents a 6.8% increase year-over-year. Two years earlier in October 2019, this figure was 21.8%.
Top 5 Most Competitive Housing Markets in Michigan in 2022
From the Michigan housing market forecast 2022, here’s a list of the top 5 markets to invest in:
Detroit, Michigan (Wayne County)
- For-sale Listings: 390
- Traditional Listings Available: 1918
- Median Property Price: $378,956
- Average Price per Square Foot: $249.51
- Days on Market: 133
- Traditional Rental Income: $1578.08
- Traditional CoC: 2.04%
Jackson, Michigan (Jackson County)
- For-sale Listings: 137
- Traditional Listings Available: 9
- Median Property Price: $205,353
- Average Price per Square Foot: $116.2
- Days on Market: 78
- Traditional Rental Income: $978.31
- Traditional CoC: 3.34%
Grand Rapids, Michigan (Kent County)
- For-sale Listings: 209
- Traditional Listings Available: 268
- Median Property Price: $362,100
- Average Price per Square Foot: $206.71
- Days on Market: 18
- Traditional Rental Income: $1147.53
- Traditional CoC: 1.88%
Flint, Michigan (Genesee County)
- For-sale Listings: 111
- Traditional Listings Available: 63
- Median Property Price: $107,299
- Average Price per Square Foot: $84.67
- Days on Market: 72
- Traditional Rental Income: $632.24
- Traditional CoC: 3.51%
Clinton Township, Michigan (Macomb County)
- For-sale Listings: 121
- Traditional Listings Available: 54
- Median Property Price: $253,293
- Average Price per Square Foot: $1398
- Days on Market: 55
- Traditional Rental Income: $1509.76
- Traditional CoC: 3.45%
Detroit Housing Market Trends in 2021
The Michigan housing market forecast 2022 wouldn’t be complete without a closer look at Detroit. Here are some 2021 Detroit real estate market trends compiled and released by the Greater Metropolitan Association of Realtors. The residential stats include but are not limited to communities in Oakland, Lapeer, Washtenaw, Macomb, and Wayne counties.
- Single-family properties sold were 6,086
- Median property sales price was $226,500
- The average property selling price was $273,763
- Months supply of inventory was 1.8
- The inventory compared to the previous year decreased by 10%
The combined year-over-year residential and condo stats comparisons looked like this:
- Median sales price increased by 8.9% from $214,900 to $234,000
- The average day on market (DOM) decreased by 52.9% from 51 to 24 days
- The average percentage of the last list price received climbed by 1.4% from 99.2% to 100.6%
- New listings decreased by 3.7% from 15,269 the previous year, to 14,704
- Average showings per home decreased from 10 to 9.5
- Pending sales decreased by 9.7% from 12,932 to 11,675
- Closed sales decreased by 11.8% from 13,850 to 12,220
- Listings that were listed and pended the same month were 5,639
- Months supply of inventory decreased by 22.7% from 2.2 to 1.7.
Wayne County Housing Market Trends in 2021
Wayne County is Michigan’s most populous county. The United States Census in 2020 placed Wayne county’s population as 1,793,561. This makes it the 19th most populous county in the US. Detroit is Wayne county’s county seat.
Single-family detached homes are the most popular housing type in the city. They account for 66.04% of the housing units in the city. Three and four-bedroom single-family detached houses are the most common housing units in Detroit. When it comes to renters and owners, Detroit city is a mixed bag. Owners make 47.23% while tenants are 52.77%.
According to Realtor.com, in October 2021, the median listing price of properties in Wayne county was $169,500, which was an increase of 9.4% year-over-year. The median listing price per square foot was $134, while the median sale price was $182,800.
Homes in Wayne county averagely sold for approximately the asking price in October. Northville is the most expensive city in Wayne county, with a median listing price of $472,400. Detroit has a median listing price of $78,000, making it the most affordable city.
Here are some of the latest stats published by the Greater Metropolitan Association of Realtors for September 2021:
- Median sale price increased by 12.3% from $165,000 to $185,250
- Pending sales increased by 5.9% from 1,876 to 1,918
- Closed sales decreased by 6.3% from 2,006 to 1,758
- The average days on market (DOM) went down by 34.4% from 32 to 21 days
- The average percentage of the last list price received went up by 1.6% from 98.8% to 100.4%
- New listings climbed by 3.2% from 2,384 to 2,460
- Months-supply of inventory decreased by 13.6% from 2.2 to 1.9
Detroit Housing Market Forecast 2022
Now that we’ve looked at the 2021 stats for some background, what’s the Detroit, Michigan housing market forecast 2022?
Detroit has experienced some of the highest home appreciation rates in the US within the last decade. According to the Zillow Home Value Index, the typical home value within the Detroit-Warren-Dearborn Metro has appreciated by almost 148% since December 2011.
The Zillow Home Value Index represents the typical home value in the 35th and 65th percentile range. As of now, the typical value of homes in the Detroit-Warren-Dearborn Metro is $225,066. Due to vigorous housing demand and low mortgage rates, home values within the same region have increased by 17.1% over the past year.
Here are some statistics for you to consider:
- Detroit-Warren-Dearborn Metro home values have climbed over the past year by 17.1%. This value is expected to climb further by 12.5% over the next 12 months.
- The home value in Detroit city has climbed by 40.2% over the past year. The current home value is $63,834. The home value is expected to rise steadily over the next year at the same rate.
- Wayne county’s home values have increased by 20.6% over the past year. The current home value is $147,166. This value will continue to rise in the next year.
- Oakland county home values have increased by 14.9% over the past year. The current home value is $315,764. This value will continue to rise in the next year.
- Warren home values have increased by 19% over the past year. The current home value is $182,857. This value will continue to rise in the next year.
- Dearborn home values have increased by 18.8% over the past year. The current home value is $196,487. This value will continue to rise in the next year.
According to Neighborhoodscout, Detroit real estate has appreciated by 75.30% over the last decade, which equates to an average annual appreciation rate of 5.77%. This places Detroit at the top 20% of all cities for real estate appreciation.
Within the last 12 months, the appreciation rates in Detroit have remained among the highest in the US, at 12.35%. This is higher than the appreciation rates in 85.92% of the country’s cities and towns.
Short-term real estate investors have also found success in Detroit over the last year. The appreciation rates in the city were 2.98% in the most recent quarter, which represents a 12.47% annual appreciation rate.
According to Neighborhoodscout.com here’s a list of some of the best neighborhoods in Detroit to invest in rentals, since they have the highest appreciation rates since 2000 (ranked in no particular order):
- 3rd St / W Forest Ave
- Woodward Ave / W Forest Ave
- Gratiot Ave / Antietam Ave
- W Jefferson Ave / W Forest Ave
- Michigan Ave / Trumbull St
- Trumbull St / Ash St
- E Ferry St / Russell St
- Saint Aubin St / Holbrook St
- Russell St / Wilkins St
- Ecumenical Theological Seminary / Beaubien St
Detroit Real Estate Market Investment Overview 2022
Investing in real estate has, since time immemorial, been a surefire way to become wealthy and get a handsome return on investment. So, should you invest in the Detroit real estate market? Is buying real estate in Detroit a great idea? To answer these questions, you need to dig deeper to get an in-depth insight into the Detroit, Michigan housing market forecast 2022.
As we’ve already seen, Detroit is the most populous city in Michigan state and the seat of Wayne county. In 2016, Detroit had a population of 672,795, making it the 23rd most populous city in the US. As demonstrated by newer data from the 2020 census, the city has been on a seven-decade streak of population decline. Take, for example, in 1950 when the city was at its peak at a population of 1.8 million people. In contrast, the 2020 census showed that the city has a population of 639,111 people. This represents a drop of 10.5%, 75,000 residents from one decade ago.
This is also the 7th straight decade that Detroit’s population has declined since its peak in 1950. The metropolitan area, known as Metro Detroit, is home to nearly 3.53 million people, which is also a 0.51% decline.
However, consider that many older residents are moving back to Detroit. New businesses are also bringing in more opportunities for workers and business people in the city. This means that there could be an upward trajectory soon. As such, it’s going to be lucrative to invest in rentals in Detroit in 2022.
We’ve broken down 6 positive factors why we’re likely to experience a positive change in the Detroit real estate market. These are factors that you may consider when buying property in Detroit in 2022.
Detroit Economy’s Growth
In comparison to other real estate markets across the country, Detroit city presents a great environment to invest and rent out property in the current housing boom driven by the pandemic. Many Fortune 500 companies have their headquarters in Detroit city, which is directly proportional to the city’s economic and employment development. The most represented industries are:
- Manufacturing, especially automotive
According to the University of Michigan Economic Forecast, Detroit city’s employment recovery from the Covid pandemic is exceeding expectations. The unemployment rate has declined at a higher rate than expected. The forecast shows that Detroit is recovering at a stronger rate than statewide.
The study further shows the following insights:
- Unemployment in Detroit has recovered to about 3% below its pre-pandemic level
- The city’s unemployment rate spiked more than 38% in May 2020 and averaged 22% for a year is rapidly declining
- In 2021 alone, the unemployment rate has averaged 9.9% and registered at 8.5% in June
- This year, the unemployment rate is expected to average 9.5% and decline gradually to 6.9% by 2026
Increasing Detroit Home Values
Residential properties in Detroit still have price tags that vary significantly from other markets. As such, investors in Detroit can find great investment opportunities at a lesser cost than other housing markets.
However, within the city, these prices are increasing rapidly at +20% year-over-year. Investors are encouraged to consider this market since the growth is expected to remain steady over a long time.
Detroit’s Affordability and Growing Housing Market
While the home values in Detroit are increasing, the properties remain more affordable compared to other markets. The city remains affordable among other large cities.
According to a 2019 analysis by the American Community Survey data, there are an estimated 500,000 rental units within the Detroit-Warren-Dearborn Metro area that are affordable to people making up to 60% of the area’s median income.
Investing in the Detroit market today will give investors a wide range of properties at cheaper rates. Investors can either rent the property out for positive cash flow or wait for the market to soar high and sell them
Thriving Downtown in Detroit
Detroit’s downtown is also experiencing significant progress and growth due to the rapid development in the demographics of Detroit in recent years. In the central section of Detroit, the populations of young professionals, artists, and other transplants are also growing, which has led to growth in the retail sector.
This dynamic is enticing to new residents. Former residents are also returning from other cities and to Detroit’s downtown. There are popular eateries, sports teams with large fan bases, frequent concerts, and generally an active nightlife.
The scene was quite different a few years ago. In contrast, many families are now choosing to live here and it also attracts many businesses.
Tourism in Detroit
Detroit has experienced a rising preference as a tourist destination in the past few years, due to its distinctive architecture, unique culture, and revitalization and urban renewal efforts. The New York Times ranked Detroit as the 9th best destination in its list of 52 places to go in 2017. In 2018, the travel guide publisher Lonely Planet named Detroit as the 2nd best city to visit in the world.
Metropolitan Detroit has many entertainment options that regularly organize festivals, including musical shows and cruises. There’s also a wide range of hotels to choose from. The city also has parks and museums that act as tourist attractions all year round.
Due to the many tourist attractions, the city is constantly in need of short-term and affordable residential options.
Detroit Government Initiatives
The government in Detroit has played a significant role when it comes to the development of the housing market in the city. The government has developed parks and green zones in Detroit and helped improve the urban quality of life in the suburbs. This is one of the core reasons why the housing market in Detroit is growing.
Here’s a breakdown of the government initiatives that are improving the housing market in Detroit:
- Education: Detroit is an education hub hosting several higher-learning institutions, such as Wayne State University and the University of Detroit Mercy. In addition, the Detroit Public Schools (DPS) district has about 66,000 public school students, making it the largest school district in Michigan.
- Health: The city of Detroit has over a dozen major hospitals, including Detroit Medical Center (DMC), St. John Health System, Henry Ford Health System, and the John D. Dingell VA Medical Center. DMC is the single largest private employer in Detroit.
- Transportation: Detroit is a significant transportation hub due to its proximity to Canada. It also has major international airports, highways, ports, rail connections, and facilities.
Investing in real estate is one of the most important decisions an investor will make in their lives. The Michigan housing market forecast 2022 shows that the housing market presents great opportunities for investors in 2022 due to the expected growth. The real estate market in Detroit is a budding prospect for investors looking for affordable rentals and properties in growing markets.
Before investing your hard-earned cash, ensure to carry out investment property analysis. Once you’ve identified a potential deal in your desired location, run through the numbers to ensure the property will be profitable in the long term. While it may seem like a strenuous process, you don’t have to lose your sleep over it. Luckily, you can use the Mashvisor Investment Property Calculator to carry out an in-depth property analysis. Start out your 7-day free trial with Mashvisor now.