Home prices in metro Detroit are showing resiliency amid high mortgage rates and recently notched the biggest year-over-year gains of any metropolitan region in the nation, according to a closely watched home prices index.
The latest S&P CoreLogic Case-Shiller index, released Tuesday, shows home prices in metro Detroit at an all-time high in September and up 6.7% from a year earlier. That was the largest year-over-year increase among the 20 metro regions in the index.
Nationwide, home prices were up 3.9% from September 2022. But three regions in the index experienced price declines: Portland, Oregon (-0.7), Phoenix (-1.2%) and Las Vegas (-1.9%).
The Case-Shiller index considers metro Detroit as Wayne, Oakland, Macomb, Livingston, St. Clair and Lapeer counties.
To be sure, prices for metro Detroit homes — while on the upswing — are still significantly below the national average.
The National Association of Realtors reported the nationwide median sales price was $391,800 in October. In metro Detroit, the median sales price was $250,000 last month, according to the Realcomp multiple-listing service, while the number of sales was down 7% year-over-year.
Real estate insiders say the low inventory of for-sale homes in metro Detroit is a major reason why prices have kept going up, even as mortgage rates have been soaring.
People who refinanced or bought a house back in 2020-21, when rates were at historic lows, have been reluctant to sell and part with their cheap mortgage.
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And even though today’s higher mortgage rates are keeping some would-be buyers on the sidelines, there still are motivated buyers out there — and they’re finding few houses to choose from.
“The inventory is the lowest it’s been in a long time, but the (buyer) interest is still there,” Realcomp CEO Karen Kage said.
Jeanette Schneider, president of RE/MAX of Southeastern Michigan, said the few for-sale homes out there are in some instances fielding multiple offers, and that also has been pushing prices up, even into the fall.
“I think there were a lot of buyers starting to think ‘If I don’t get something now, I may be looking at next year,’ ” she said.
Another potential factor is that metro Detroit didn’t experience the frenzied home price increases that some metro areas did early in the COVID-19 pandemic, particularly areas in warmer weather states. So the housing market here wasn’t due for a major correction once mortgage rates began climbing.
Still, metro Detroit prices were up 41% in September from where they were in March 2020, according to the Case Shiller index.
That was a key moment in time for housing. It’s when the pandemic arrived, which prompted the Federal Reserve to drop interest rates to zero and begin “quantitative easing.” And those actions led to historically low mortgage rates — and housing and mortgage refinancing booms.
But mortgage rates, once below 3%, have gone way up since early 2022 and slowed housing markets across the country. Rates for 30-year, fixed-rate mortgages reached nearly 8% in late October, before declining to an average last week of 7.29%, according to Freddie Mac.
5 metros with highest year-over-year price gains in September
- Detroit — 6.7%
- San Diego — 6.5%
- Chicago — 6%
- Boston — 5.3%
- (tie) Miami — 5%
- Cleveland — 5%
Contact JC Reindl: 313-378-5460 or [email protected]. Follow him on X @jcreindl.
