Let’s get some dialogue going on the topic of the projected future of Detroit real estate.
It’s predicted by many that the average house price in Detroit is going up soon.
As an investor, knowing what’s going on (now and in the future) is crucial to
mapping out a good strategy.
I’ve done some reading on the topic, and I invite you to give me your feedback on my findings in the comment section at the bottom of the page.
Let’s move on.
Detroit – Top 10 Market in 2014
An article on MSN.com rated Michigan number 3 in their list of the top 10 housing markets of the future.
They projected a home-price increase of 33.1 percent in 2014 for Detroit, Dearborn, and Livonia.
From what I’ve read, these projected increases in prices are due to all of the short sales and REO purchases that are taking place on lower-end properties in the area.
To me, this means that investors that are buying and holding in the city should get even more aggressive in buying and holding,
…That is, if they’re in it for the long-term appreciation.
Heck, our current focus is on the wholesaling market, but after reading this stuff, I’m considering buying and holding more properties in the near future myself.
More Proof that the Time is Now to Buy in Detroit?
I also checked out an article called “Midwest Housing Market Climbing Back” on CNBC’s website, and David Blitzer, the Chairman at S&P/Case-Shiller said that housing “prices” are usually the last thing that start going up when a market
turns around for the better.
When I consider the projection that median housing prices are going up 33 percent in 2014, I interpret Mr. Blitzer’s statement as more proof that we’re on the cusp of a huge upswing in the market; again, that “if” Mr. Blitzer’s comment is true.
(I couldn’t think of a good way to explain that, hopefully that made sense.)
He mentioned that home sales and housing numbers are on the rise, so it’s only a matter of time before the prices do as well.
International Buyers Buying in Detroit
They say that millionaires are created during times of famine and during bad times. And I think that definitely applies to Detroit right now.
From all the people I see buying in Detroit, it’s fair to say that there are a lot of people that understand that, not just here, but from all around the world as well.
As we all know, there’s a lot of international investors buying pre-tenanted homes in Detroit.
Better Returns than Stock Market
But why? Well I’m sure the main reason is because of the 20 percent annual yields investors are able to get renting single family houses in the city; if they buy wisely, of course.
I read that investors tend to expect about a 10 to 15 percent annual return on their stock market investments yearly, but that the average annual rate for the S&P 500 has really between 5.63% and 5.85 since 1871.
That’s powerful, because that’s a huge selling point on investing in Detroit. In a nutshell:
They can make more on their money on their investment yearly in Detroit real estate as a long distance landlord than they can in the stock market.
I went to the US Properties website and noticed that the phone number for the company isn’t even a US number! But yet and still, they’ve established a business model that’s focused on matching prospective buyers with properties right here in Detroit!
In my opinion, this is a clue that those of us still active in the investment community are on the right track, and that if you’re getting frustrated, hang in there, because you’re probably in the right place at the right time.
I also read that there was a 3.3 percent increase in property investment in the city of Detroit from October to December 2011.
I don’t know what the numbers are going to be for 2012.
To me, the numbers are telling us that the time is now to buy in Detroit. I was always told that “numbers don’t lie.”
Check back soon for part two, where we’ll talk about the downsides to all of this projected appreciation in our market.
P.S. What do you think about these projections? Is there more to it than what I’m talking about? Are you optimistic about the Detroit real estate marketplace?
‘Till next time.
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“33.1% Rise in Detroit House Price Prediction Leads to Launch of New US Property Investment Website” (via Prweb.com)
“Midwest Housing Market Climbing Back” (via MSNBC.com)
“Here’s How Annual Stock Market Returns REALLY Look” (via businessinsider.com)