Tuesday, June 18, 2013

Median House tops $100k in Metro Detroit

This is an important milestone for this area, as it is the first time in four years it has topped this mark.  Here is what it means and what to think about:

  • Inventories of homes available for sale, which had been bloated for the last three years with foreclosures, are dwindling.  Be warned, however, that listing inventories are also market-sensitive.
  • In that same vein, keep in mind that, as prices go up, there is a backlog of people who wanted to sell or move and did not because they did not want to sell for less than what they owe or paid for the house.  Rising prices mean that these people may put their homes on the market, which would increase inventories and negatively impact prices.
  • I am no longer seeing the jaw-dropping bargains that used to comprise about five per cent of the market a year ago.
  • Detroit prices are still low, with a median of $11,000 or so.  Keep in mind that figure includes houses in exclusive neighborhoods that can significantly  impact that number.  I am a big believer in Detroit, and I have invested there, but I would still be selective about where to buy there.
  • Banks still have a large number of foreclosed properties on their books, which they have not yet released to the market.  That overhang is still being worked off.
  • Early estimates that the County Treasurer's tax foreclosure auction will set records in volume this year.  That is not a favorable sign.
Anyways, a Freep article with a lot of quotes not on point is here: