Detroit’s hot real estate market is tough for first-time homebuyers

0

Laura Herberg /WDET

Cidney Allen, 28, after visiting a house for sale in East Detroit.

Detroiter Cidney Allen’s dream house is somewhat modest.

It’s just something that has at least three bedrooms, two bathrooms, a basement, an upstairs and hopefully a garage and a large backyard, ”says Allen.

I’ve been doing this for 42 years and have never seen a market like this before. —Karen Kage, CEO by Realcomp

You’d think it wouldn’t be too hard to find on the east side of Detroit or in the nearby suburbs where Allen looks. “But with this market, it’s like looking for a unicorn,” says Allen.

After looking for a house for three months, she made several offers, but none were accepted.

It’s been frustrating, especially with the way the market is going right now because it’s so crazy, ”Allen said. “There will be houses that will be listed and when we try to plan to see them, they will be like, ‘No, someone has already made an offer. “”

The real estate market is hot across the country right now, and Detroit is no exception.


Listen: The challenges facing first-time homebuyers in Detroit.


A sellers market

I’ve been doing this for 42 years and I’ve never seen a market like this before, ”says Karen Kage, CEO from Realcomp, Michigan’s largest real estate listing service.

Right now, the housing stock is low and demand is extremely high.

In April, the average Detroit subway house was only on the market for 30 days before it became a pending sale. This is the lowest it was for 18 years. It is an extremely competitive market for buyers. Only those with the most experience and the most money close houses. These are usually people who have previously owned or are investors.

Perrin Emanuel, a realtor with Reach Realty Group in Redford Township, says about half of his sales went to investors.

When people call from New York, Boston, and California and find out that they can buy a house here in Detroit, a single-family home, or even a multi-family unit, for less than $ 50,000, they just don’t get there. to believe it, ”says Emanuel.

The national association of real estate agents reports the median selling price across the country in April was $ 341,600. In the city of Detroit, Realcomp said it was $ 75,000. This means that homes in Detroit are relatively affordable, but they are still out of reach for many buyers. Sales go to people who can bid in cash or who are able to bid above the asking price and make up the difference in cash. “Sellers will take a cash buyer first, then someone who has been pre-approved for a conventional mortgage, and finally a FHA buyer, ”says Emanuel.

How Detroit Homes Are Purchased

FHA the loans are Federal Housing Administration loans. They are government insured for people with low income or low credit rating who cannot quite qualify for conventional mortgages. Many first-time buyers in Detroit can only qualify for FHA ready. But go shopping with a FHA the mortgage makes finding a home more complicated because homes must pass a security inspection, which means properties must be in good repair and most are not in Detroit. If there is a problem, the seller usually needs to make repairs before the sale can be closed. This is why some sellers choose to avoid FHA quite ready right now.

I mean, I get it, ”says Bre’Anna Tinsley, Partner Realtor at Thrive Realty Co and former WDET journalist. “Sellers can put their homes on the market and they can be sold for cash for thousands and thousands of dollars more than asking price. People forgo inspections, people make appraisal guarantees where, basically, they say whatever this house appraises, we’ll pay more than that amount with x amount of dollars. And so sellers don’t even have to worry about FHA or try to do that extra step.

But Tinsley says she wishes more sellers would consider buyers with FHA ready. “Just because their credit might be a little lower doesn’t mean they don’t have the money on hand to do everything that needs to be done to buy the house,” says Tinsley.

Desperate Times call for creative action

La Detroiter Margo Dalal says she and her partner started buying a house in early 2020 with a FHA as well as a loan from the Neighborhood Assistance Corporation of America or NACA. It is similar to FHA in that it requires homes to comply with the code before a sale can be made. Dalal says they made about seven offers and none were accepted.

It was so stressful. We looked at hundreds of homes. I’ve seen my real estate agent more often than I’ve probably seen anyone other than my partner this year, ”says Dalal.

At one point, she and her partner offered $ 119,000 for a 1,000 square foot two-bedroom house in Detroit with a kitchen that needed to be completely renovated.

I like to joke, we have chosen the thousand-year-old path of co-ownership. —Margo Dalal, home buyer

I cannot believe, in hindsight, some of the offers I have made on homes. They just felt like crazy sums for what we were getting, ”says Dalal. “We were, I don’t mean we were desperate, but we really, really wanted this to happen.”

Eventually, Dalal and her partner found a home, but it wasn’t on Zillow or Trulia or any of the other apps. A friend of theirs who lives alone asked them if they wanted to buy in his house, and they all live together. Dalal and his partner said yes.

I like to joke, we took the thousand-year-old path of co-ownership, ”she says. “It will reduce the monthly costs for everyone, everyone can participate in the maintenance of the house. It will work for us. We are therefore satisfied with our decision.

However, most homeowners will not be happy until they are able to buy a home for themselves. This is why some decide to wait until the market becomes more favorable to buyers.

Reliable, precise, up to date

WDET is here to keep you up to date with essential information, news and resources related to COVID-19.

It is a stressful and uncertain time for many. It is therefore more important than ever for you, our listeners and readers, who can donate to continue to support WDETthe mission of. Please make a gift today.

Donate Today »

Share.

About Author

Leave A Reply