Metro Detroit Home Prices Still Rising: Here's Why

METRO DETROIT — As the S&P CoreLogic Case-Shiller index showed home prices in the metro Detroit area rose faster year-over-year in September than any other major market in the nation, Patch reached out to an expert for an in-depth analysis.

Gino Tozzi, President of the Grosse Pointe Board of Realtors, told Patch in a phone interview that one of the reasons for the price growth in the metro Detroit area is because of record high demand and low inventory, especially for starter-type homes in the metro Detroit area.

With interest rates so high right now, Tozzi said a lot of potential home sellers are opting to stay in their homes, especially those who refinanced their mortgages during the COVID-19 pandemic when interest rates low.

"You have all these people that now have two-and-half percent, three-and-half percent rates, and if they leave their home without cash to buy the next home, they'll have to get a rate around 7 percent," Tozzi said. "That's a problem for a lot of people because they don't want to pay more, they want to stick with their lower budget they have."

Although Tozzi said he doesn't believe prices will keep increasing six percent year-over-year, he doesn't expect prices in the metro Detroit area to come down anytime soon.

"In some of the more affordable suburbs like Warren, Roseville, Garden City and Westland...those prices are just going to go up, because the demand for those areas are very high," Tozzi said.

Tozzi said unless more homes are built in the area, prices will just keep going up into the future.

"This is a long-term issue, it's going to on for the next five to ten years, at least, unless the government intervenes and starts building homes everywhere, which I don't see them doing," Tozzi said.

In the Detroit area, home prices increased 6.7 percent in year over year in September, the largest growth among 20 major urban markets in the index. The national average price increase was 3.9 percent, according to the index.