Detroit Investment Property Market

Detroit Market Overview

Detroit is the 14th largest metro in the U.S. with an estimated population of 4.3 million people1 as of 2016. The Detroit investment property market has experienced significant recovery since the recession, with home values increasing more than 66% since 2011.. While home values still remain 7% below the prior peak, they are expected to increase an additional 12% by 2019. A global business services sector, Detroit is home to top employers such as General Motors, Quicken Loans, and Chrysler. LinkedIn recently announced plans to open a large satellite campus2 there in 2018, and Google is also planning to move its Birmingham office to downtown Detroit.3

Strong Gross Rental Yields, Steady Resale Sales, Employment Growth, Good Affordability

With gross rental yields of up to 14% in 2017, the Detroit metropolitan statistical area outpaces the 8.9% weighted average for 63 top rental markets across the country. Gross rental yields in the Detroit metro area are forecasted to stay strong for the next four years, averaging 12-13% in 2020. Estimated cap rates range from 4.5-7.5%, according to our projections at Roofstock.

Although home sales declined throughout the recession, Detroit’s resale volume has increased over the last four years at a current pace of more than 24,000 annually, with the majority of these sales occurring outside of core Wayne County, or downtown proper. Detroit is considered a very affordable area, with a $49,580 median sales price4. Median household incomes in the greater The Detroit real estate market is considered a very affordable area, with a $49,580 median sales price.

Household growth has largely stabilized, and the local economy added 43,000 more jobs in 2016 - a 2% year-over-year increase compared to 2015. At a robust 2.3%, the current job growth rate is above the 1.6% national average and projected to continue over the next three years.
  • Strong 12-13% gross rental yields projected through 2020
  • Household income levels have increased every year since 2012 and are projected to continue growing through 2020
  • Resale volume has increased year over year since 2014
  • At 91.5%, Detroit’s occupancy rates are below the weighted average for the top 20 single-family rental markets in the U.S. (93.6%)
  • In May 2017, JPMorgan Chase announced it would be adding $50 million to the additional $100 million pledged in May 2013 over five years into the Detroit economy, providing development funding for a variety of projects that would increase employment.5
  • Detroit is one of 13 American metropolitan areas that are home to professional teams representing four major sports in North America6.

Real Estate Investment Insights

Investment Style: Balanced
While each property will differ, this market is likely to have properties that provide a blend of yield and appreciation.
Inventory:
Home Value *
$145,500
$210,200
National Avg
Home Value Growth (YoY)
6.0%
7.6%
National Avg
Rent **
$1,204
$1,445
National Avg
Source: Financial data from Zillow includes single family, condo & cooperative homes, updated on 02/28/2018
Job Growth (YoY)
1.3%
1.6%
National Avg
Household Growth (YoY)
0.1%
1.0%
National Avg
Estimated Months of Resale Supply
1.7%
3.4%
National Avg
Household Income
$45,600
$61,313
National Avg
Supply, Demand & Affordability data includes single family homes only, updated on 04/12/2018
  • Arrows indicate the directional change since the last update. No arrow indicates that there was no change in the data or no previous data is available.
  • * Home Value: includes all types of housing, including primary resident, condos, investment properties, etc.
  • ** Rent: includes all rental properties, including Single-Family Homes, multi family units, etc.