Michigan Real Estate Market Trends and Forecasts
As the pandemic slowly loses its grip on the nation, Michigan is focusing on regaining its economic reputation as an industry heavyweight, as well as a thriving hub of sociocultural significance. Once host to the automotive capital of the world in the metro region of Detroit, the industries of Michigan may have changed, but its economic base, consisting primarily of agricultural production, manufacturing and tourism, have kept the state afloat and will continue to buoy Michigan’s fortunes as it undergoes a significant resurgence.
Whilst Michigan’s property market is in recovery mode, it is presenting some excellent opportunities for savvy investors, thanks to its continual urban renewal focus and thriving rental markets. The average Michigan home price in May 2021 was $205,353, a significant increase of 13% from the previous year. For buyers wanting to move into a solid family community offering great value, Michigan has a lot to offer, particularly in the western suburbs of Detroit and the Grand Rapids area.
Statewide current market trends
Rental market boom
Although the state’s economy has been hit hard by the pandemic, there are some signs that Michigan’s property market is encouragingly stronger than it was ten years ago, when the economy last crashed. During Covid-19, house sales increased dramatically in many regions – cities like Flint, Detroit and Saginaw have experienced sizable median sales price increases year-over-year.
These increases have been driven largely by investors capitalizing on a booming rental property market, particularly centered around the greater Detroit metro area. According to Rentcafe.com, Detroiters are facing a 4% increase from last year, with average rents currently sitting at over $1,100.
There are some conflicting views on current affordability in Michigan. In Grand Rapids and its other highly competitive suburb markets, such as Cedar Springs, homes are still relatively affordable when compared to prime property markets elsewhere. At the same time, however, the state has been hit harder by the pandemic than many other parts of the U.S., and is still battling with higher unemployment rates. A year-on-year increase of 12.98% in average home sale prices throughout the state has resulted in many families being priced right out of the market.
Low inventory has been a significant issue nationwide of late, and Michigan is no exception, with its most sought-after areas having very few available homes on the market, and affordable homes in even shorter supply. There is also a significant shortage of newly developed entry-level homes, with the current average new build price sitting at $330,000.
Up-to-date market reports for key growth areas
Located near Lake Michigan to the west of the state, Grand Rapids is currently one of the hottest property markets in Michigan. Niche ranks it the 39th Best City to buy a home in America. The median sale price has increased 14.1% year-over-year and is currently sitting at $200,000.
This affluent suburb of Detroit has low crime, good public schools and an ethnic diversity, with most of the residents being homeowners. The median home sale price soared by an impressive 20.3% in 12 months, and currently comes in at $250,000. Properties are currently staying on the market for an average of just 12 days, with the more desirable homes receiving multiple offers and creating bidding wars.
Wyoming is a suburb of Grand Rapids, and received an overall A rating from Niche. With diversity, a thriving nightlife and good public schools, the town boasts one of the most competitive real estate markets in Michigan. Properties are currently remaining on the market for less than a week, and almost 70% of them are selling for over the listing price. Up 16% year-on-year, the median home sales price is $185,500.
This small city in the Great Lakes region is a former manufacturing city still struggling to adjust to the declining industry. The median home sales prices in Saginaw lept by 25% year-over-year, but still remains at a particularly affordable $121,250. Properties are sitting on the market for approximately 17 days and are selling for an average of 3% less than the asking price.
With a median sale price falling below the national average, the Michigan property market offers a lot of bang for your buck, and for investors, a thriving rental market is facilitating some positive cash flow. Paradoxically, however, there is a current lack of affordable housing, particularly in new-build starts.
Whether Michigan will remain a seller’s market through to the end of 2021 will depend largely upon whether it receives vital funding to invest in communities still in recovery from the devastation of 2008. There are some positive signs, but currently, property analysts are unsure exactly how the next year or two will play out for the Wolverine State.