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article imageMetro Detroit real estate prices surge as many residents move to suburbs

Here, we learn from Metro Property Group Detroit about the future of home sales in the region.
Since the 1950s, when Detroit’s population peaked at about 1.9 million, the suburbs have been mostly taking population (or the city giving population, depending on your view.) According to a 2013 U.S. Census estimation, the city’s population has slumped to below 700,000, less than that of places like Fort Worth, TX and Charlotte, NC.
Since 2000, the city itself has seen more than a quarter of its residents (27.1 percent, to be nearly exact) leave the almost 140 square mile city feeling emptier than ever.
At an incredibly quickening pace, most of these now-former city residents appear to be fleeing for other Detroit suburbs, as many of those populations have seen recent growth.
As Kurt Metzger, director emeritus of Data Driven Detroit, noted, “Sprawl is back.”
According to a spokesperson for the Metro Property Group Detroit, “The people of Detroit have been leaving the city for years. The problems facing our city are well-documented, but people are opting for the suburbs. Homes were a lot cheaper and it was helping boost the economy. Detroit was in a state of revitalization; however, this may stunt our growth. Poverty is, and will remain, the main reason why the city will continue to struggle. Until that issue gets tackled, the area will continue to be in a state of flux.”
In other words, these real estate increases in the suburbs will keep poor city residents stuck. However, the middle class that has left for the suburbs is one of the reasons for this price increase. In the suburbs, median home sales prices in January climbed 38 percent to $110,000. But the number of sales actually shrunk—falling 14 percent to 3,336 units in January.
Of course, real estate prices have also shot up in Detroit. According to MLive, in the Detroit area - which includes the city of Detroit, Hamtramck, Harper Woods, and Highland Park - the median selling price rose 19 percent to $11,913. And like the suburbs, home sales took a tumble, dropping 21 percent to 380 homes.
The Mayor of Detroit, Mike Duggan, wants to bring resident back to the metro area. He said, “I am going to be judged on one thing: whether the administration can reverse that trend. We are totally focused on salvaging our housing stock and moving people back in the city.”
Duggan and his administration have launched an auction website selling Detroit Land Bank-owned homes in maintained city neighborhoods, including Boston-Edison, Osborn, and East English Village. Homes have been selling for as low as $5,600 to a much more favorable $87,100. However, one home nearly sold last week for $135,000. Due to a glitch in the website, there was no clear winner. A new auction will soon commence for that home. With the slogan “Neighbors Wanted,” homes can be found on www.buildingdetroit.org.
These homes, however, are mostly anomalies, selling in established neighborhoods for prices that generally have well exceeded the median. Even still, they do have an effect on the median of home prices in Detroit, and represent an interest in the city that has not been seen in decades.
According to Reuters, housing prices all over the United States are continuing to increase, although this is expected to stall over the next two years, as the market is “curbed by tight lending standards, slow wage growth and lack of first time buyers.”
Some residents are not sure why they are seeing a lack of home sales, as people have been showing interest in the city, now more than ever.
In an online comment section discussing the lack of property sales in the city, Grant Grobbel of Detroit wrote, “The price for property is very affordable and those willing to make the investment are coming into the neighborhood. Would love to see property go up in value, but not if it’s only to increase for me to have to pay more property taxes.”
Metro Detroit’s rise in real estate prices mirrors the increase across the nation. The relationship between the city and suburbs plays a big role in the individual decision of where to move.
Will growth in certain pockets of the city, such as Midtown, downtown and many established neighborhoods, be enough to level out the numbers of Detroiters leaving for the suburbs? According to experts like Metro Property Group Detroit, only time- and sales - will tell.
More about Detroit, Metro Property Group Detroit, Real estate, Home prices, Michigan
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