{"id":165144,"date":"2024-01-24T14:09:38","date_gmt":"2024-01-24T21:09:38","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=165144"},"modified":"2024-02-19T08:39:47","modified_gmt":"2024-02-19T15:39:47","slug":"home-prices-climb-as-detroit-becomes-a-hot-spot","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/home-prices-climb-as-detroit-becomes-a-hot-spot","title":{"rendered":"Home Prices Continue to Rise, and Detroit Just Beat Miami for the First Time"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC1410571283\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">The U.S. real estate market appears indestructible, with home prices nationwide continuing to increase. The latest&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.corelogic.com\/intelligence\/us-home-price-insights-january-2024\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">report<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;from analytics company CoreLogic shows impressive growth of 5.2% year over year in November 2023.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s not an anomaly, either\u2014home prices grew 4.7% year over year in October 2023. CoreLogic\u2019s projection is a steady home price growth throughout 2024, forecasting a 2.5% year-over-year increase in November 2024 compared to November 2023.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">We know that the biggest issue facing the real estate market right now is&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-145\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">affordability<\/span><\/a><span data-preserver-spaces=\"true\">. And it\u2019s actually decreasing. According to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/share-of-homes-affordable-new-2023\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Redfin<\/span><\/a><span data-preserver-spaces=\"true\">, it hit rock bottom in 2023, with just 16% of all homes for sale in the U.S. affordable for the typical buyer. So, why, despite this seemingly dire situation, are prices still going up?&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Do Prices Keep Rising?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">There is a tightly knit interdependence of several factors at play. The first is the by-now infamous spike in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgage<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;rates that has squeezed buyers\u2019 budgets and made housing that was just about affordable completely unaffordable for many.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Even though mortgage rates began coming down in late 2023, from their peak of over 8% to just under 7% as of November, this isn\u2019t enough to make homeownership affordable in areas that were already mostly unaffordable&nbsp;<\/span><em><span data-preserver-spaces=\"true\">for the majority of their residents<\/span><\/em><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Dr. Selma Hepp, chief economist for CoreLogic, explained as part of the report that the result is that \u2018\u2018in some metro areas, such as those in the Mountain West and the Northwest, higher interest rates are having a greater impact on homebuyers\u2019 budgets, which is contributing to a larger seasonal slump.\u2019\u2019 The report shows that Idaho (-1.3%), Utah (-0.4%), and Washington, D.C. (-0.2%) all experienced annual house price decreases.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">On the other hand, areas that can still offer buyers \u2018\u2018relative affordability\u2019\u2019 while offering a reduced inventory recorded large home price gains. These were in the double digits in the Northeast markets of Rhode Island (11.6%), Connecticut (10.6%), and New Jersey (10.5%). \u2018\u2018Markets where the prolonged inventory shortage has been exacerbated by the lack of new homes for sale recorded notable price gains over the course of 2023,\u201d commented Hepp.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Basically, people in these areas can afford a home there because even with rising interest rates, local wages are high enough to cover the mortgages. As demand for these semi-affordable areas grows, so do home prices.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Rise of Detroit<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s a different story in cities. Some metro areas showed surprising home price surges inconsistent with the overall pace of growth in their surrounding areas.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Detroit, in particular, emerged as the surprise leader, recording the highest year-over-year home price growth among the metro areas examined in the report and beating Miami for the first time in 16 months. As Hepp explained to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/2024\/01\/09\/home-prices-surge-detroit-gains-beat-miami.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">CNBC<\/span><\/a><span data-preserver-spaces=\"true\">, Detroit, which saw appreciation of 8.7% as of November 2023, was playing \u2018\u2018catch up\u2019\u2019 after lagging behind in home price growth during the pandemic. But there\u2019s more to it than that.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Detroit is a metro area that\u2019s become increasingly popular as an affordable destination for higher-tier housing. Having overcome its reputation as a city in decline, it\u2019s become a city where people with a bigger budget go because their money will go a little bit further. Detroit has attractive housing stock in its historic neighborhoods that is expensive for the area but well-priced for what\u2019s available.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Technically, Detroit is one of the overvalued metro markets surveyed in the report. This means that home prices in Detroit are high in comparison with local wages. It\u2019s not unique in that regard\u2014about 82% of the 397 metro areas examined in the report are also overvalued. \u201cIt really depends on who is buying in the area, and we\u2019ve seen more higher-income folks buying in those areas,\u201d Hepp told CNBC.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Apart from Detroit, other major cities that saw home price jumps were Miami (8.3%), San Diego (7.7%), and Chicago (6.5%).<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Real estate investors investing in a city like Detroit really need to be picky about the properties they choose. The higher-income folks identified by CoreLogic want better-than-average properties, and they want value for money. So, while that issue of affordability hasn\u2019t gone away, it just has that slightly different angle to it in a large metro area.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you\u2019re an urban investor, look for homes that aren\u2019t just cheap. Instead, focus on homes with the potential to really stand out after a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rookie-330\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">renovation<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">On the other hand, if you\u2019re investing outside a major city, the value-for-money factor really trumps everything else, so focus on offering buyers the best possible price first.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Florida May Be Heading for a Slump<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Finally, if you\u2019re wondering about housing markets to avoid, the CoreLogic report makes some fairly alarming forecasts about not one but four Florida markets. They are:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Palm Bay-Melbourne-Titusville&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">West Palm Beach-Boca Raton-Delray Beach<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Tampa-St. Petersburg-Clearwater<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Deltona-Daytona Beach-Ormond Beach<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">All of these markets have a \u2018\u2018very high\u2019\u2019 probability (over 70%) of a home price decline during the next 12 months.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Taking a quick look at the local data in these areas and comparing them makes it easy to see why they may be headed for home price declines. Let\u2019s take the Palm Bay area. It has a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realtor.com\/realestateandhomes-search\/Palm-Bay_FL\/overview\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">median home price of $345,000<\/span><\/a><span data-preserver-spaces=\"true\">, an&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.ziprecruiter.com\/Salaries\/-in-Palm-Bay,FL\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">average salary<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of $49,356, and an&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/ycharts.com\/indicators\/palm_baymelbournetitusville_fl_unemployment_rate_msa#:~:text=Palm%20Bay%2DMelbourne%2DTitusville%2C%20FL%20Unemployment%20Rate%20is%20at,long%20term%20average%20of%205.89%25.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">unemployment rate<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of 3.2%. On the other hand,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/moving-to-miami-could-save-thousands-but-what-is-that-doing-to-prices\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Miami<\/span><\/a><span data-preserver-spaces=\"true\">, which is experiencing a housing boom, has a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realtor.com\/realestateandhomes-search\/Miami_FL\/overview\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">median home price of $699,000<\/span><\/a><span data-preserver-spaces=\"true\">, an&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/gusto.com\/resources\/research\/salary\/fl\/miami\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">average salary<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of $60,900, and an&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/ycharts.com\/indicators\/miami_fl_unemployment_rate#:~:text=Basic%20Info,long%20term%20average%20of%207.15%25.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">unemployment rate<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of 1.3% (decreasing steadily since June 2023).&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Miami is one of the overvalued markets, as identified by the CoreLogic report. Its homes, on average, are worth more than the local population can afford. And yet, it\u2019s easy to see how the technically more affordable area, like Palm Bay, is actually less attractive to buyers who may have more trouble finding employment in the area. Miami is sucking up both wealthier buyers who want a nice home in the warm city and in-state movers who want more and better-paying employment opportunities.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Real estate investors in Florida should take note of these trends. It doesn\u2019t necessarily mean that you should only buy in Miami, but buying in at-risk areas will require a different approach\u2014one that prioritizes local buyers\u2019 capabilities.&nbsp;<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_622d718c00f55dbc03ed85fd48ddb6ef\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_92c945d6b1c332d2f2df345dd0f3595a\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_f22a42f2835353cd4f8c3c9ee4be057a class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/home-prices-climb-as-detroit-becomes-a-hot-spot&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/home-prices-climb-as-detroit-becomes-a-hot-spot&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Home prices have grown year over year through the last several months and show no signs of slowing down. Some markets have more momentum than ever and have emerged as early hot spots this year. Here&#8217;s what you need to know.<\/p>\n","protected":false},"author":613618,"featured_media":165147,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7381,7119],"tags":[],"class_list":["post-165144","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-prices","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=165144"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165144\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/165147"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=165144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=165144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=165144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}