Detroit Real Estate Market 2020

Detroit Real Estate Market Trends & Statistics 2020

Data Sources:

• https://www.zillow.com/
• https://factfinder.census.gov/
• https://www.deptofnumbers.com/
• RealWealth Property Team Data

Detroit is more affordable than many other U.S. markets today.

• In 2019, the median price of 3 bedroom homes in the Detroit metro area was $207,000. This is 7% lower than the national average of $222,000.
• However, in neighborhoods where RealWealth members invest the median price of 3 bedroom homes in 2019 was only $87,000. This is 61% lower than the national average.
• This shows us that real estate in Detroit is more affordable than many other U.S. markets today. This is especially true in the Detroit neighborhoods where RealWealth members are investing today.

It’s possible to generate more monthly rental income in Detroit than many other U.S. cities today.

• In 2019, the median monthly rent for 3 bedroom homes in Detroit was $1,462, which is 0.71% of the purchase price of $207,000. This is 6% lower than the national purchase-to-rent ratio of 0.75%.
• However, in the Detroit neighborhoods where RealWealth members invest the median monthly rent for 3 bedroom single family homes was $1,000 in 2019. This is 1.15% of the purchase price, which is 53% higher than the national average.
• This shows us that, in some Detroit neighborhoods, there’s a strong opportunity to generate rental income at a significantly higher rent-to-purchase ratio than the national average.

Detroit home values have been appreciating quickly.

• In January 2012 median price of 3 bedroom homes in Detroit was $104,000. This means that, in the last 7 years (2012 to 2019), 3 bedroom homes in Detroit have appreciated by a whopping 99%. This is 79% faster appreciation than the national average.

The median monthly rent in Detroit has been rising consistently over the last seven years.

• Between 2012 and 2019 the average rent for 3 bedroom homes in Detroit increased by 23%, which is below the national average of 37% during this period.
• Although Detroit rents rose more slowly than the national average, they have been rising consistently year over year. This is a good sign for investors looking to invest in a market that’s growing steadily, making it likely more stable.

Detroit’s population has been growing very slowly.

• Since 2010, Detroit’s population has only increased 0.82%. During the same period the national population grew by 5.76%.
• Despite very slow growth, the Detroit metro still outperforms similar markets at attracting educated millennials; this is likely due to a number of research universities in the area, including Wayne State University.
• Detroit also has a few billionaires on their side, including Dan Gilbert (Quicken Loans CEO) and Mike Ilitch (Owner of Little Caesars Pizza Chain, the Detroit Red Wings, and the Detroit Tigers) who have pledged over $4 billion to help with the city’s revitalization efforts.
• All this attention from millennials and billionaires is a good sign that future growth in Detroit is possible.

Detroit is creating jobs, but not as many as other markets.

• In the past year, the number of jobs in Detroit decreased by 0.51%. This is considerably lower than the U.S. annual job growth rate of 1.47%.
• Despite very slow/ negative growth, the Detroit metro still outperforms similar markets at attracting educated Millennials to their workforce. Likely this is due to a number research universities in the area, including Wayne State University.

Detroit is Very Affordable

• In the Detroit neighborhoods where RealWealth members invest the median price of 3 bedroom homes in 2019 was only $87,000. This is 61% lower than the national average.
• This shows us that real estate in Detroit is more affordable than many other U.S. markets today. This is especially true in the Detroit neighborhoods where RealWealth members are investing today.

Detroit has Strong Rental Income Opportunities

• In the Detroit neighborhoods where RealWealth members invest the median monthly rent for 3 bedroom single family homes was $1,000 in 2019. This is 1.15% of the purchase price, which is 53% higher than the national average.
• This shows us that, in some Detroit neighborhoods, there’s a strong opportunity to generate rental income at a significantly higher rent-to-purchase ratio than the national average.

Detroit is Rapidly Appreciating

• In January 2012 median price of 3 bedroom homes in Detroit was $104,000. This means that, in the last 7 years (2012 to 2019), 3 bedroom homes in Detroit have appreciated by a whopping 99%. This is 79% faster appreciation than the national average.
• During the same period the average rent for 3 bedroom homes in Detroit increased by 23%, which is below the national average of 37% during this period. Although Detroit rents rose more slowly than the national average, they have been rising consistently year over year. This is a good sign for investors looking to invest in a market that’s growing steadily, making it likely more stable.
• This shows us that there’s a strong opportunity for equity growth and increased income potential over time in the Detroit area.

Millennials & Billionaires Love Detroit

• Despite very slow population and job growth overall, Detroit has been attracting more educated Millennials than similar cities across the nation.
• Plus, with investors like Dan Gilbert investing billions in redevelopment and corporate expansion, future growth in Detroit seems likely.