Metro Detroit Home Prices Cool, But Still Higher Than Last Year

METRO DETROIT — Home prices in metro Detroit remain considerably higher than last year, making the market hot for sellers and frustrating for potential buyers, according to the latest S&P CoreLogic Case-Shiller Indices.

"If I had to choose only one word to describe September 2021’s housing price data, the word would be ‘deceleration," Craig J. Lazzara, Managing Director at S&P DJI said. "Housing prices continued to show remarkable strength in September, though the pace of price increases declined slightly."

Low Inventory

Gino Tozzi, an associate broker for Johnstone and Johnstone Realtors, Governor for Realcomp and the 2022 President elect for the Grosse Pointe Board of Realtors told Patch one of the reasons why home prices remain high in metro Detroit is because there's not a lot of inventory on the market.

"There's so little on the market right now," Tozzi said. "Its obviously a vicious cycle of people staying in their homes more."

In fact, Tozzi also said its a "reverse 2006" where we're seeing more potential buyers than inventory, as opposed to 2006 when the market was filled with houses but saw fewer buyers.

Even though prices have cooled a little since earlier this year, Tozzi said he expects the market to pick back up and return to similar levels the metro area saw in April by next January and February.

Rental Rates Have Gone Up

Another reason why the housing market has remained high is because rental prices continue to increase as well, Tozzi said. The average rent in the City of Detroit alone is over $1,100, which is a 4% increase from last year, according to Rent Cafe.

So the rising rents have thrusted many potential home buyers into a market that's already hampered with a low inventory. And labor shortages are only contributing to the higher home prices because there causing delays in materials home builders need to produce more houses on the market.

"Not just homes, rental rates have gone up was well," Tozzi said "A lot of people have retired, which has constituted a smaller labor force."

Infrastructure Will Help Over Time

Tozzi said he expects new infrastructure to help increase the inventory on the market, but not right away. In fact, he doesn't expect any new infrastructure will make a considerable difference with housing prices for at least five years.

Instead, he put a stronger emphasis on fixing the current issues revolving around the supply chains, which is effecting homebuilding companies to build new homes. The supply chain problems are causing massive delays for materials homebuilding companies need to help increase the inventory, he said.

"Over many years, infrastructure will help connect communities," Tozzi said "Keeping country connected will bring down prices."

Tozzi said he expects the supply chain issues to resolve itself in roughly a year from now, in which home prices should return to 2019 levels.