www.globest.com/2024/07/03/this-is-the-most-overvalued-housing-market-in-the-us/?slreturn=2024070373728
This is the Most Overvalued Housing Market in the US
Are those neighborhoods? Or are they towns? I couldn't find them on Google / Zillow.
Towns about 10-15 minutes north of downtown Detroit. I can’t imagine this article just referencing Detroit city limits housing values.
I’m certain it is the Detroit Metro statistical area. That’s a pretty broad area. For example Rochester and nearly all of Oakland is in there.
For those not from Detroit - Rochester is a a good 30-45 minutes outside of Detroit city limits.
I sold a place for 240 in royal oak in 2019.
Today’s it’s worth about 390.
Sooooo I’m closing on my first home at 40, in Ferndale Mi, 10 mins from downtown Detroit and 5 mins from 8 mile, in two weeks.
I understand I may be overpaying for a $240k mostly all updated including roof 3br 2 bath with a privacy fenced 5500sq ft lot with no basement and no garage.
But it’s Me vs Blackrock and rich uncles at this point so let me finally have my peace and it is what it is.
if you plan to stay there long term then price doesn't matter as much. congrats on your new home.
No garage in Michigan? ☠️
No garage = apartment.
It doesn’t snow much in Detroit
Compared to where 😂
A lot of other places in the Great Lakes that get much more lake effect snow. Detroit gets about 40 inches a year, which isn’t that much by Great Lakes standards. I also live in MI and the town I live in gets around 200 inches a year
Greenland.
Not sure why the downvotes.
Have lived in plenty of places with a true winter and Detroit’s has been by far the mildest.
Unless Ferndale pulls a Redford, you should be fine.
Pulls a Redford?
Redford is a town on the border of Detroit's west side that got hit really hard during 2008 and never really recovered. It was a safe, middle-class suburb with decent schools like Livonia. Now it's Detroit-lite like Brightmoor. Prior to 2008, the "bad" areas of Detroit's West side started past Outer Drive, but has since moved 3 miles West to Inkster where Livonia begins. Redford became Brightmoor, Livonia became Redford, basically.
That's what happen when the riff raff move in & turn the area into a ghetto.
At some point the riff raff can’t afford a neighborhood and maybe that one will move in the right direction.
Ferndale is a cool spot I think you’ll be fine
Outside of A2 I think Ferndale is the most progressive part of the Metro Detroit area.
It’s not called Fabulous Ferndale for nothing
Although sweet baby Darwin the property taxes are bad even for metro D standards
$4500/year on average sound about right?
That’s on the low end. Some of the houses we looked at would have been $6-7K, and these weren’t huge or expensive houses. The millage rate in Ferndale is insane.
What were the values of the houses you were looking at if you don’t mind me asking? This is relevant as I am shopping around.
275-350K. Ended up buying in RO. Taxes will probably be around $5K, but we get RO schools. Ferndale has the highest millage rate in all of metro Detroit. Homestead is ~55. Clawson is also up there, but every other city is in the 30s or 40s, including Royal Oak, Bloomfield, Birmingham, etc.
What others said - surprisingly painful rate for what you get.
Good for you. Not much more us average humans can do nowadays. We’ve been conquered by money hungry soulless ghouls.
This article asserts that they're over valued, then trashes its own argument by saying the valuations are based on low supply and high demand, which makes their value completely reasonable
They'd be overvalued if nobody was buying them, but everyone is buying them
Don't take this the wrong way..... But it's not like Detroit didn't have the cheapest real estate in the country the last 20 years.
$240k?! Haha nah dude you're fine. Enjoy the home. Right now in my NH Market we have crazy people listing gutted homes for $250k+... Literally saw a house over the weekend listed or $299k with only A toilet, Shower and ZERO kitchen... Like I said enjoy your home man.
Detroit and surrounding areas are way too under the radar in regards to value. Prices have jumped up but in relation to, specifically to housing itself, other major cities you can’t beat the price for architecture, space, and land.
Not going to talk about other factors but a great landing place for starters to forever homes.
Congrats on your home purchase, and ignore this sub. They’ve been calling the top of the housing market for years now.
it’s too bad Biden is a friend of Blackrock. I’m sure Trump is too. Time for these guys to get out of here. They are ruining the American dream.
RFK24!
Yeah the young guys are not friends of investors......
Sure they are everywhere but doesn’t change the fact that the two current options are as well.
You claim Biden and trump are ruining the American dream. They work along party lines. Every dem and gop will do the same thing they will do. Why blame them specifically?
The Uniparty is ruining the dream and has collectively for 40 years. Only one person running has a plan to change that and it’s neither of those two.
😂😂😂😂😂😂
Fair points, but just want to point out Black Rock doesn't own or buy houses.
Blackstone* 😂
Blackrock owns zero single family homes.
lol just no
They own zero homes. Can you show me where they own a single for rental home?
You are obfuscating the issue. They have massive stakes in companies that exclusively invest in rental properties like American homes 4 rent, and invitation homes.
Saying stuff like “sHoW me OnE hOmE” doesn’t mean they don’t influence the housing market
I agree. I work for a mortgage lender that Blackrock holds 8% of our company. Make it make sense they can be both invested in the demise of ownership and the growth of it.
They are an index fund provider. Their stakes in those companies are FBO individual retail investors. Surely you know this, right?
Are you actually suggesting that blackrock does not impact the housing market?
Yes. I am suggesting that
They're pouring money into mortgage-backed securities, which helps keep the flow of mortgage money going, affecting how easy (or hard) it is for folks to get home loans
They’re also big on funding new housing projects, especially rental properties. So, while they’re not buying homes directly, they’re backing the construction of new rental units. This helps keep rental supply up doesn’t do much for those trying to buy a home.
Plus, BlackRock owns stakes in companies like American Homes 4 Rent, which has thousands of single-family homes. Even though BlackRock isn’t buying these homes directly, their investment supports these companies' growth, which can drive up property prices and make it tougher for regular people to compete
So, while BlackRock might not be your direct competition in buying a home, their moves in the market definitely have a big impact.
$MBB is a mbs etf. Sum of only $31b. Tiny in the scheme of mbs market. Again Blackrock owns nothing, investors own the assets and Blackrock provides the ETF vehicle. In MBB Blackrock makes around $12.5 million in revenue annually. Not profit, revenue!
Again, investors own these securities, not Blackrock. If Blackrock didn’t provide the vehicle another company would! If ishares didn’t own shares in Signature homes then vanguard would, or state street, or first trust, or capital group!
You blame Blackrock, but what you don’t like is capitalism, which is fine. But Blackrock offering ITOT and owning shares in these companies or offering MBB is not altering the market at all.
Y r u trying to educate and ruin the hate?
Dafuq. 240k literally is 1/3 the cost of a 1200-1600 sq ft old ass house where I live. Go gunshots pop off every week where you live or am I missing something lol?
I seen 240k and was like that’s great price. I don’t even think there’s a house for 250k in my school district.
My redfin is so depressing, not a SINGLE thing comes up within a 10 mile radius of my office. NOT 1! I working on the city of Kirkland which I understand is a nice area.. but fr 700k and nothing? Filters: Max price: 700k Style: Home: Minimum size: 750 sqft, 2 or more bedrooms
Nope just a city the gays brought back 20 years ago
48 years old here and not getting any peace yet. Just renting. All my life And be mindful. You are not against Blackehatever. We are all against Californians
It has to be Miami. Housing doubled in a two year span based on a WFH pop that was temporary. Those WFH folks drove up rents and housing costs. They have mostly left and Miami’s average income has not gone up a tick. The “tech hub” was a fallacy. We have the highest income to housing cost disparity.
Yeah any 3/2 in Miami that’s halfway decent is 700k minimum.
A lot with a unit in dire need of demolition goes for 700k in most of Miami.
True, the Miami market has my head so messed up that I consider a small fixer upper for 700k a good deal
It's depressing, tbh
Also it’s slowly sinking into the ocean
Can’t read the whole article. How did they determine overvalued? I did see they said stagnant population growth but housing can’t keep up with the demand…so if supply is less than demand, it’s over valued? Yet how is the demand so great with stagnant population growth.
I almost registered just to find out haha
I can't access it either. My guess is they're not comparing alike population sets. Census data for Detroit-Warren-Dearborn looks healthy to me regarding population (which is growing, slowly), incomes, and home prices.
Lots of demand from flippers / investors. Detroit is the most lopsided city in the US in terms of investors vs occupant owners.
Just won a bid on a house in berkley. 10% over asking. House had multiple all cash offers at and over asking, waiving all contingencies. And guess what, yep they were all made by mega corporate investment firms.
Luckily the seller and their agent had a heart and picked my bid over the investors.
Shits crazy out there.
But that doesn’t make it overvalued. If you and others are willing to pay it, that’s the current value. Doesn’t mean it will be worth the same, more or less in the future but currently that’s it.
That could be true with any housing market in the world though. No one knows what it’ll be worth in the future.
Metro Detroit was a hidden gem for a while, I think it’s more on the map now that Detroit is making a fantastic comeback
Right which means you cannot say it is overvalued. The value is what people are paying for it. Just because you don’t see the value, is a different story.
Now if all comps are selling for $500k and a listing is $10M then it is overvalued but it won’t sell for that.
I totally disagree with this. I’m considering relocating to the Detroit metro area from the DMV because of the combination of 1) low housing prices 2) excellent, accessible airport 3) cultural diversity and 4) relatively good work opportunities. I can’t speak to Detroit proper, but I really don’t think the metro area is overvalued.
You basically just described Baltimore too though, why go all the way to Detroit instead of just moving next door?
Because I want an acre of land, colder weather, and climate-change resistant areas. The Baltimore suburbs aren't nearly as cheap as the Detroit suburbs. But the Baltimore burbs are an attractive place to live! Just a little pricier and doesn't match my idiosyncratic preferences as much.
Go north of 26 mile road on the east side for what you want
Harsens Island is a hidden gem, I used to boat there from my house on the Clinton river in Harrison township MI, it's in the middle channel and the ferry is at 26 mile rd
We would leave on a Friday and never get in car all weekend, just hop over to the island and boat everywhere.
Cold in winter but summers are amazing
Sounds well thought out. (Just to be clear I'm not trying to change your mind here, just continuing the discussion) Regarding climate change, while it's not quite as resistant as Detroit, Baltimore is actually going to weather climate change pretty well. It's quite steep so sea level rise won't affect it as much as people think, the climate is projected to become similar to that of South Carolina, and overall the biggest impact climate change is expected to have on the city is a doubling of the number of stormy days. I did a ton of research about Baltimore and climate change before buying my house here
Have you been to Baltimore?
Metro Detroit is heaven compared to there.
Have you been to Baltimore?
I've lived here for 6 years and loved every minute of it
The issue with Detroit is that the prices are there but what you get aren’t. Mainly, the school system is abysmal. And for all the hype around the Central Station rehab, the vast majority of Detroit proper remains a husk of what it once was. I’ve lived in the area since 1983, when my dad moved us from Canada because “Detroits turnaround was just around the corner.” Still waiting.
The linked article references Metro Detroit. The city of Detroit has an abysmal school systems, but the majority of the Metro area has excellent schools. Especially those in Oakland and Washtenaw counties.
Ok so I’ll be the first to admit I didn’t read the article because it was coming up as an unsecured link for me.
I agree with the suburban schools, but it’s hard for me to believe housing is overvalued except perhaps at the high McMansion end of the scale.
I disagree that Washtenaw County is part of Metro Detroit.
I disagree that Washtenaw County is part of Metro Detroit.
Lol. Yeah. I once heard someone call Ann Arbor a suburb of Detroit. That person had clearly never stepped foot in southeast Michigan.
I tend to agree with both that Washtenaw isn’t part of Metro, but A2 is closer to Detroit than Mt Clemens or Rochester
Anyone that believes Washtenaw is part of Metro Detroit is delusional and doesn't know what they're talking about. I grew up in Flint, went to school in Ann Arbor and commuted to Detroit for a job. They are two very different areas and never combined by anyone except a person that looked at a map and wants to pretend to know the area.
You have no clue what you are talking about. Detroit is 90% black and riddled with, poverty, crime and bad schools.
This article is describing the affluent 90% white suburbs north of 8 mile road that are filled with Starbucks, great schools, and is an idyllic suburban upper middle class paradise.
The population of suburban Detroit is actually 3X-4X larger than the inner city population
I don't think that's right though for metro Detroit broadly. One of the draws of many of the burbs is the schools.
As I mentioned I saw a picture of Detroit and went with it. The link was showing as unsecured for me. I agree that Metro Detroit has some great systems. My kids are in one of them.
You will likely avoid some of the congestion on the DMV roads with this move.
No, don’t come! It’s horrible here.
Has a lot more to do with drinking water and education
Detroit has great drinking water. Flint had issues BECAUSE they disconnected from Detroit water and “went their own way” to save money. That is mostly rectified now I believe.
My bad, education
Depends on where we are talking. I would put about 70% of Oakland county schools amongst the top in the nation. However in Detroit city… I would send my kids to private.
Yeah, Flint is not the Detroit Metro.
Flint is 70 miles away from Detroit.
For the record Detroit has some of the cleanest drinking water in the world
Not that Detroit, he's talking about the Detroit with the "good" school district.
Desirable metro Detroit areas are still going to keep increasing. Even less desirable areas are increasing, as well. We bought in Royal Oak in April, and I couldn’t be happier. It’s an amazing city.
Most of these cities are 100% built up. There isn’t room for new construction without destroying old houses. There is very limited supply, and the area is becoming more desirable hence the increase in prices. With climate change, and the anticipated flocking of people from the south, Michigan in general is set to become the next big booming state within 20 years. I wouldn’t say it’s overvalued in the slightest. People are just starting to become aware of how good metro Detroit is.
Proximity to the Great Lakes will be a major driver as climate change increases.
Bs clickbait
Im buying a home not a stock.
It's a bullshit article. They call it overvalued because they're just using trends to say what it "should" be. Detroit is rebounding hard from depressed prices and for good reason. They're putting billions into the city. It's striking to see how different it is now from 10 years ago.
I bought a house 20 minutes from downtown on a 440 square mile lake in 2021, right when prices started getting nuts, for 500k. Show me any place in the country where you can live on a lake in a 4 million population metro area, 20 minutes from downtown and 45 minutes from an airport that flies almost anywhere for that price. Most lake houses are in the middle of nowhere and cost double that.
whatever. I'm still considering detroit. Currently in Chicago and can't afford a Sfh here unless I get a rehab in south side.
Any suggestions of areas/neighborhoods to check out?
Brush park, corktown, midtown if coming from a nicer part of chicago and can afford it. Royal oak, ferndale are about 20 min out with mini downtowns but access to more suburban things. I just moved to royal oak after living in large cities for most of my life and couldnt be happier.
I’m start to wonder if prices are starting to equalize across the country where it doesn’t matter where you live. Obviously we have outliers, but when a 1200sqft home in bumfuck nowhere is selling for similar to a house just outside a city?
Like in Texas, it doesn’t matter, for a 3/2 you are going to spend close to or above $300k. Obviously consider the actual size of the home but unless it is a literal shithole of a house it is going to be about $300k
If it is a shithole of a house you are still getting over priced bullshit and still have to spend the difference to bring it up to a level of the $300k regardless so in the end it costs the same.
Prices won't be equalized. It's the inflation that set a floor / minimum housing price & pushing it up. As inflation keeps going up, so are the price of the cheap houses.
... meridian house value in my city has surpassed $2 millions, and keep going up more.
Actually, Texas sounds cheaper than the Detroit metro. For $300k in a Detroit suburb you are looking at a 1930-1950s 3/1 house with 1000-1250 square feet and an unfinished basement. If you pick an area with horrifically bad schools like Hazel Park or Oak Park you are looking at the same for maybe $250k.
All of the above are on a postage stamp sized lot. You can reach out your bungalow window and tap in your neighbors window.
I wouldn’t say it’s cheaper, it just doesn’t matter where you live. To get below $300k, it has to be in a bad area/bad house.
To live in a semi decent place near the city all the way out to the middle of nowhere, the prices are kind of still ridiculous. Now I will say you will get more for your buck in possibly land the further you get, but house doesn’t change until you get to shitty areas
…Detroit is the most overvalued housing market? cries in SF, with some emotional support from NYC
Washington DC's shoulder is here
LA has both arms wide open for a hug.
In some sense it seems comforting that one of the cheapest markets (Detroit) is also one of the most overvalued. That could mean that the lower-end markets are catching up, which seems like a requirement for stability.
Great. Just as I was looking to buy a house.
…so far!
Atlanta isn’t overvalued also because people keep moving here. I’m sure it looks bad on paper but there’s so many companies hiring here it’s drawing people.
Significantly less regulation in Georgia plus Hollywood getting fat tax breaks to film all their stuff here.
Couldn’t you buy entire homes for 5 or 10 grand only 10 years ago? What changed in the city to make those homes worth 10 or 20 times that?
Wow. What a clickbate article. Like that topic could be explained or show real numbers in just a few paragraphs. 🙄
If you can afford the property taxes...it's OK. Your Net Worth is good.
It may be overvalued but people like me need a primary home and in desirable areas there is limited supply for what im looking for. I just closed on a place and i dont see housing prices in desireable areas like bham and downtown ro dropping anytime soon. I was in a bidding war and paid overask. Do i regret it? No. Ill be there for the next 20 years.
Part of the evidence presented in the article is that Detroit’s population is stagnant, but interestingly the city is actually suing the census bureau over the population count. I don’t think this holds true if Detriot allegation that the census bureau under counted their population hold true.
The most overvalued housing market so far!
Native Detroiter here, born & raised (though I don't live there currently).
The stagnant popultion is the symptom of a bigger problem, which is the broader local economy. Michigan is (and has been for an eternity now) entirely dependent on 2.5 companies (GM, Ford, and the now mutant company formerly known as Chrysler) that have been on a secular decline the past 40 years. Their market share has cratered, they employ far fewer people (with mass layoffs being a regular occurrence every few years), comsumers in general distrust their products, the compensation they offer is increasingly abysmal (they *WERE* employers of choice once upon a time, but that was long ago) and they're on the verge of failing again having gone all in on the EV bubble that bursting.
Now that being said, what happened is because homebuilders all but abandned the Detroit area after the 2008 real estate & auto industry collapse (very few new master planned communities have been built and the sprawl all but came to a screeching halt), there was a bit of a rubber band effect with the compete dearth of new supply. The Detroit area experienced the most severe crash in home prices during the Great Recession, which really was an overreaction (though for good reason). But as the economy gradually returned back to some level of normalcy and auto sales recovered thanks to ZIRP and lower gas prices, the Detroit area also experience the fierciest rate of appreciation compared to other markets (when you're at rock bottom, there's no place else to go but up) as income recovered.
This is good in that, for the very same reasons, the Detroit area remains affordable compared to other major metro areas. But yes, the article is definitely onto something.
It's a 25-40% discount compared to the Canadian housing market. Still plenty of room to grow.
Congrats FOMO-herd and NAR! You did it, you managed to screw this market up twice in two decades!
Just remember boys and girls, asset prices (especially on financed assets) are wildly dependent on interest rates and access to borrowed funds.
We had our govt stimmiez and all-time-low interest rates that helped push asset prices to all-time highs, but ask yourselves what happens when the Fed raises rates to (checks notes) exactly where they were last time we had a massive bubble that popped.
BTW, the construction sector is now experiencing massive layoffs, the most since Lehman. Anyone care to figure out what that means for the economy?
100%
It took 18 months from 2004 to 2006, and because of the "lag" it looks as if nothing is being affected by the rate increases right now
When the yield curve un-inverts is when the SHTF
The Fed ain't dropping rates until they HAVE to stimulate the economy, that will be after RE tanks, they won't risk inflation flaring back up
With the way markets are set up, I’m not sure anything they do will stop inflation flaring up at the same time as a recession starts. It’ll be 6 months to a year of bad news
Yeah, there were inflated asset prices in 08 as well. But remember, the banks were burned by strategic defaults and also ARM’s that reset with no down payments. This time around if someone walks from a recent loan, they have equity they’re walking away from too. Either appreciation or interest, but it’s a financial hit either way.
"While population growth is relatively stagnant in the area, people are starting to leave their current households to form new ones, placing pressure on a housing market that simply does not have enough units to support this new demand," said Johnson.
Sooo...it's not actually over valued
Well, if a lot of the demand is non-local, then that throws the supply-demand dynamics out of whack, because the supply/inventory is necessary local.
So it’s overvalued according to what local would-be homeowners would be willing or able to pay. But not based on what “investors” at large are willing to pay.
Only vs USD. If viewed against a non inflationary standard such as gold, it’s actually on the historically affordable side of the graph. It’s USD and most importantly, payroll earnings that have depreciated.
This is on Biden’s economy
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Would love to know what cities are included in this… Royal oak, Birmingham, and parts of ferndale are absolutely ridiculous with 1200 sq foot houses going for $300-400K. My friend bought one of these houses in Royal oak in 2018 for $280k and sold late in 2022 for $365k, market seems to still be in that price range in Royal oak.