The last couple of years have been nothing short of a wild ride for the real estate industry in Detroit — but real estate agents say the market could return to something closer to normal as we move into the new year.
At the end of 2020, on the heels of the COVID-19 pandemic, the real estate market in Southeast Michigan surprised many by holding strong despite widespread business closures and layoffs, with closed sales of single-family residential homes and condos increasing 12.5% year-over-year in November 2020 compared to the previous year,
according to data from Realcomp, even despite a 4.4% year-over-year decrease in new listings across the region. In Detroit, though, closed sales fell by around 10% that month following a 20% jump in September 2020.
Southeast Michigan closed out 2021 on a similar note, with just a 0.1% year-over-year decrease in closed sales of residential homes and condos,
according to Realcomp, alongside a 5.1% increase in new listings. Unlike the previous year, however, Detroit saw its total sales jump by 8.8% year-over-year that month, with the city’s on-market listings increasing by 19% compared to the previous year.
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Gordon Hawkins, of Hawkins Realty Group, has been selling real estate for 19 years and says he's never witnessed the likes of what has happened in the industry during the COVID-19 pandemic.
“Particularly during a pandemic, I’ve never seen anything like it in my whole career, with the amount of offers on properties, the removing of appraisal contingencies, inspection contingencies — it’s unheard of,” says real estate agent Gordon Hawkins of
Hawkins Realty Group, who has been selling real estate for 19 years with a focus on Detroit’s East Side.
Still, Hawkins doesn’t anticipate the chaos lasting much longer.
“I think in the spring, we’re probably going to see some normalcy,” Hawkins says. “I don’t think we’re going to continue to have that craziness.”
In spite of the increase in on-market listings in the city toward the end of 2021, Hawkins says inventory in the city has still remained low — putting sellers in the driver’s seat when it comes to offers.
“It’s a seller’s market still, particularly because we have low inventory,” Hawkins says. “We did not build during all those years during the recession. We have all these people that were still (having families) and so now, inventory is low. I suspect throughout the country it’s going to be like this for the next 36 months, but in Detroit I suspect probably a little longer because we’re not building single-family homes.”
Hawkins says low inventory has also created fierce competition among buyers over the last couple of years, with cash purchases, corporate investors, and waived contingencies making the process even more contentious.
“A lot of buyers are getting buyer’s fatigue. I’ve had several clients where we put in 20 offers and you know, all of them got rejected,” Hawkins says.
Still, Hawkins says there are plenty of gems to be found in Detroit for those with a desire to own a home in the city.
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A rich history and beautiful architecture on the city’s East Side
“All of the houses on the East Side are on the historic side now, because we’re hitting the 100-year mark for almost all of them,” Hawkins says. “Historic properties are just really well-built — I mean, they were built to last forever. The structure, the bones are great. But besides that, you get this magnificent woodwork and a lot of them have these beautiful hardwood floors.”
In particular, Hawkins favors
Islandview due to the neighborhood’s quality historic architecture and the amount of development happening there in recent years. Hawkins also predicts
Morningside will be popular among buyers in 2022, due to the neighborhood’s large colonials and bungalows, which can be particularly appealing for families.
Pingree Park, which sits just north of Indian Village, is another notable neighborhood for Hawkins due to its quality architecture and sprawling historic homes.
“[Pingree Park] has these beautiful, large homes that were well-made […] for upper-class people at the time, and they’re just gorgeous,” Hawkins says.
As real estate agent Ryan Cooley of O’Connor Real Estate
told Model D last year, it’s worth noting that contemporary construction costs are often too high to build new homes comparable in quality to historic homes. According to an analysis of data from the Bureau of Labor Statistics and Oregon State University, in the early 1920s the purchasing power of one U.S. dollar was
around 13 times higher than in 2019 — adding to the value of purchasing a historic home today.
Despite their beauty, though, Hawkins cautions that historic homes can sometimes have drawbacks and advises buyers to have sewers inspected due to the potential for age deterioration and the effects of flooding in the city over the years.
Hawkins also encourages homebuyers to learn about potential tax benefits that might be available to them in districts designated
Neighborhood Enterprise Zones, as these can help homeowners reduce property taxes.
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A listing off Kerchal Avenue, Detroit.
Neighborhoods offer price points for a range of budgets
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Matthew Richmond / Photo supplied“Detroit is such a unique city for highs and lows,” says real estate agent
Matthew Richmond of
O’Connor Real Estate in Corktown. “There are price points less than $100,000 in some neighborhoods that could be considered hot for some people, and then there are price points that are in the fours, fives, and sixes (in neighborhoods) that could be considered hot.”
For buyers looking for lower price points who are willing to invest extra funds into fixing up or restoring less well-maintained homes, Richmond recommends
Grandmont Rosedale, where he says he’s seen three-bedroom bungalows sell between $100,000 to $200,000.
Richmond says
East Village and
Southwest are also great areas for buyers on a budget, noting that Mexicantown near
Clark Park and Vernor has been a favorite recently due to the
city’s planned improvements in Clark Park and its surrounding area.
For buyers with budgets falling between $250,000 to $450,000, Richmond recommends focusing on the
University District, the
Boston-Edison Historic District, and
West Village, where he says homes have appreciated in value over the last several years.
“Some of the highest prices per foot have occurred this past year, especially in the University District,” Richmond says, adding that the likelihood of finding available properties there is often higher due to the larger number of houses in the district.
For buyers with budgets north of $450,000, Richmond recommends focusing on neighborhoods like
Indian Village,
Sherwood Forest, and
Palmer Woods, where he says he’s seen fixer homes sell for around $400,000 recently, with well-maintained properties going for anywhere between $550,000 and $700,000.
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North End is one of the places to watch in 2022, particularly because of the options it provides, according to Detroit realtors.
Housing options add to appeal of city living
For buyers seeking alternatives to single-family homes in the city, real estate agent Kevin Hill of
The Detroit Realtor says he expects to see some solid options in 2022.
Hill, who specializes in luxury condos, townhomes, and lofts in the greater downtown area, says that while single-family homes have been especially popular amid the pandemic, he’s started to notice more stabilization in the market recently and anticipates the condo market will also begin to normalize in the coming year alongside the city’s industry at large.
“[COVID-19] hit us pretty hard in the greater downtown area, and now we’re realizing it’s becoming more of a buyer’s market,” Hill says. “It’s the best time for a buyer to really buy in the greater downtown condo market.”
Hill says his prediction is based on an increase in available condo inventory spurred on by sales and new construction, as well as the recent reopening of businesses, sports, and entertainment venues downtown.
In
Brush Park, Hill says a new development expected to break ground this year shows promise, with plans to build new townhomes and carriage homes for sale in the neighborhood. For condo buyers looking for a home outside the bustle of downtown, Hill recommends
North Corktown, where he also expects new developments to create fresh inventory.
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Real estate in Corktown also provides alternatives to the single-family stand-alone real estate offerings.
“North Corktown is just such a good location. It’s very close to everything. I see a lot of new construction, a lot of new condo projects coming up. And there is also a lot of vacant land to really still build,” Hill says.
Other neighborhoods of note for buyers, according to Hill, include
Bagley, which he says offers more affordable single-family historic homes with great character, and the
North End, where Hill says there’s still a lot of land to be developed as well as single-family homes and inventory to be tapped into.
For those considering buying a home in the city, Hill recommends having a quality inspection done and learning about potential tax abatements to reduce annual costs, noting that it’s important for buyers to take their time when deciding on a new home. While choosing the right real estate agent can help, he says it’s also important for buyers to become familiar with the city’s neighborhoods by visiting local businesses and attractions before making a purchase.
“I know we’re in a crazy market right now, and I know things are moving fast, but like I always tell my clients, what’s meant for you will end up with you,” Hill says. “You just want to make sure you’re getting a smart investment — something you’re going to enjoy and be able to live in and call home.”
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Historic homes in North Corktown.