The rental real estate market in Detroit is crazy right now, which is just the thing real estate investors want to hear. Demand for single-family rentals is skyrocketing, and the median price of a single-family home in Detroit is well below $100K, offering an amazing opportunity for rental property with solid yields and cash flow.
The Motor City is famous for its innovation and work ethic, yet the decline of the domestic auto industry and the devastating effects of 2008 had some questioning whether Detroit could make a comeback.
The verdict? Detroit real estate investing has attracted many new investors, especially those who know where to look.
With high-end retailers like Whole Foods moving in, and high tech stalwarts like Microsoft, Google, and Pinterest opening offices, Detroit’s future is looking bright. That’s good news for the housing industry and good news for investors.
So what are the upsides and challenges of investing in the Detroit real estate market in 2021 ?
Population Growth
Although the population of Detroit has been slightly declining, the city is seeing an influx of millennials. As the Detroit Chamber reports, over the last decade metro Detroit saw the second highest growth among peer cities for populations between the ages of 24 and 35.
Key Population Stats:
Detroit is home to about 670,000 people in the city and more than 4.3 million residents in the metropolitan area.
Detroit is the most populous city in Michigan, the largest city on the U.S.-Canadian border, and the second largest metropolitan area in the Midwest after Chicago.
Median age in Detroit is 39.9 years with 38% of the population between the ages of 20 and 49.
Per capita income in Detroit is $35,315 while median household income is $63,474.
Job Market
The 11-county Detroit region is home to more than 300 municipalities and 300,000 businesses, including 11 Fortune 500 companies and numerous educational institutions. As the Detroit Chamber reports, metropolitan Detroit is home to robust technology infrastructure and a workforce recognised around the world for its skills, expertise, and productivity.
Key Employment Stats:
GDP of the Detroit-Warren-Dearborn, MI MSA is over $237 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 28% over the last 10 years.
Employment growth in Detroit is 1.77% year-over-year with the metro area home to over 2 million employees.
Median household incomes in Detroit grew by 3.6% year-over-year while median property values increased by more than 5% over the past 12 months.
Unemployment rate in Detroit is down to 8.9% (as of Nov. 2020) with the construction, information technology, and financial activities sectors showing the fastest signs of new growth.
Key industry clusters in Detroit include automotive and mobility, defence, health care, information technology, and transportation, distribution, and logistics.
Largest employers in the Detroit region are Ford Motor Co, General Motors, Ally Financial, University of Michigan, Beaumont Health, and Quicken Loans.
Major colleges and universities in Detroit include University of Michigan, Wayne State University, and Lawrence Technological.
91% of the residents of Detroit are high school graduates or higher, while over 32% hold a bachelor’s degree or advanced degree.
Real Estate Market
Northern Michigan’s housing market is “on fire”, according to The Detroit News. The real estate market is helping to fuel the red hot market, with the median list price of a single-family home in Detroit well below $100,000.
Opportunistic real estate investors may find Detroit the perfect market to acquire very affordable rental housing for all cash, then refinance at a later date. As The Wall Street Journal reports, lack of credit is making it hard for local residents to buy a home. That may be one reason why almost half of the households in Detroit rent rather than own.
Key Market Stats:
Zillow Home Value Index (ZHVI) for Detroit is $43,113 through November 2020.
Home values in Detroit increased by 12.0% last year and are projected to grow by another 12.2% during the next 12 months !!
Over the last five years home values in Detroit increased by over 92% !
Median listing price of a single-family home in Detroit is $65,000 based on the most recent report from Realtor.com (Nov. 2020).
Median list price per square foot for a home in Detroit is $58.
Median selling price of a single-family home in Detroit is $60,000
Sale-to-list price ratio is 95.05%, meaning that homes in Detroit are selling for 4.95% below the asking price on average.
Strong Renters’ Market
According to ClickOnDetroit.com, single-family rentals are skyrocketing, as tenants leave apartments to rent a home they can call their own.
Key Market Stats:
Median rent in Detroit is $983 per month for a 3-bedroom home, based on the most recent research from Zumper (Jan. 2021).
Rents in Detroit have increased by 16% year-over-year.
Over the past three years average rents in Detroit have grown by nearly 23%.
Renter-occupied households in Detroit account for 44% of the total occupied housing units in the metropolitan area.
Millennials and Generation Z make up 38% of the population in Detroit.
Quality of Life
Many real estate investors are surprised to learn that Detroit has been experiencing a renaissance over the last few years. New housing and businesses in the city’s Midtown, Downtown, and New District areas are attracting residents and visitors. Millennials are attracted to Detroit by the low cost of living, affordable rentals, and vibrant neighbourhoods.
Key Quality of Life Stats:
Cost of living in Detroit is 18% less than Chicago, according to NerdWallet’s cost of living calculator.
Forbes ranks Detroit as one of the best places for business and careers in the U.S., with the city home to a variety of companies in emerging technologies such as nanotechnology and hydrogen fuel cell development.
Detroit is one of the best places to live and a great place to retire, based on the most recent research by U.S. News & World Report.
The 73-story, 7-skyscraper GM Renaissance Center in Detroit is one of the most photographed landmarks on the Detroit skyline while the Eastern Market is the go-to place on Saturdays for fresh flowers, meat and local produce.
Championship Detroit Tigers, Detroit Red Wings, Detroit Pistons, and Detroit Lions give sports fans in Detroit plenty to cheer about.
Major theatres in Detroit include The Fillmore Detroit and Orchestra Hall.
Conclusion
Detroit is going to be very hot for Global Investments in 2021.
If you are ready to invest in the Detroit housing market, or wish for a call and more information on the latest properties Global Investments can offer then please email us today at :
invest@globalinvestmentsincorporated.
