Evidence in Detroit’s housing market shows mixed results
A large, diverse group of stakeholders has dedicated significant time and resources to revitalizing and stabilizing Detroit, including repairing Detroit’s housing market. Since the third quarter of 2015, the Housing Finance Policy Center’s quarterly Detroit Housing Tracker has offered these stakeholders a reliable way to monitor progress and identify areas of concern in Detroit’s housing market.
The data in the tracker’s latest edition show mixed results for the first quarter of 2016. There are signs of hope with fewer underwater loans, rising equity, and mostly steady home prices. But there are also signs of concern with low home prices and a continued prevalence of cash sales.
Share of underwater loans is decreasing
The share of underwater mortgages continues to fall in Detroit and, for the first time, Detroit’s household equity is almost even with Wayne County’s average. Detroit’s share of mortgages with negative equity, at 21.6 percent, is closing in on Wayne County’s 18.0 percent. Detroit trails Wayne County by 3.6 percent, compared with a 4.9 percent difference at the same time last year. Rising equity is unevenly spread across the city, but the strength in Detroit’s core pockets is improving city averages.
Home prices are mostly steady but still very low in parts of the city
Home prices across the seven tracked districts appear steady, although many districts remain at historic lows. In this edition of the tracker, we separate home prices in downtown Detroit from prices in Upper Woodward Corridor for the first time, which highlights the fast pace of growth downtown and the slower progress in the Upper Woodward Corridor. Home prices in parts of Detroit’s Westside and Northeast appear stagnant, but prices are rising downtown. The average home price is over $250,000 in zip code 48201 (downtown), while prices in Detroit’s Westside remain at an average of $15,976, well below the city average of $27,051. The upper Woodward corridor, when separated from the downtown boundary, shows a modest average sales price of $43,775.
Cash sales remain prevalent
As past tracker data have shown, the level of cash sales in Detroit remains significantly higher than the level in Wayne County and the rest of the United States. And although home sales were down overall in the first quarter, many of these were cash sales, indicating that investors are still heavily involved in the market. More scrutiny of these cash sales would help stakeholders understand the impact they have on existing residents who may be displaced because they can’t compete with cash buyers.
Drilling into Detroit’s neighborhood housing market with this level of detail identifies how and where revitalization efforts, new program development, and community development initiatives are most effective. As Detroit expands its recovery, we hope the Detroit Housing Tracker tool will help stakeholders monitor their progress and adjust their efforts as needed.
People stand in line to board a bus before touring one of twelve homes being auctioned off in the East English Village neighborhood April 27, 2014 in Detroit, Michigan. Photo by Joshua Lott/Getty Images