Detroit Housing Market Starting To Stabilize
A new report finds home prices are beginning to stabilize in Metro Detroit after a period of great uncertainty. The results echo trends across Michigan and nationwide, though Detroit home prices remain comparatively low and the city continues to have one of the hardest-hit real estate markets.
Alex Villacorta is the Director of Research and Analytics at Clear Capital, a research firm that conducted the study. He said since the housing market's lowest point in 2009, there has been a 3 percent increase in Detroit home prices. But he added that the figure is deceptive since the housing market has been spiking so wildly over the last few years.
"Overall, Detroit home prices have been very depressed," he told HuffPost. "In total we saw a nearly 78 percent decline from the peak value in late 2005 to the lowest point in 2009."
The city appears to be seeing an uptick in home values since that extreme low point. But Villacorta cautioned reading too much progress into the figures; the new 3 percent gain was measured against what was nearly rock bottom. "Prices are now down 75 percent from that peak level, as opposed to 78 percent," he explained.
Clear Capital assembles its reports by compiling information from multiple public and private data sources. The study's findings reflect data gathered through the end of November.
"All things told, this market has been showing some signs of stability over the last two years," said Villacorta. "Even though prices are currently down almost 9 percent for the year and 1.5 percent for the quarter, that's more of a reflection of the high point we saw this time last year."
In 2010, Villacorta said, home prices were still improving because of a now-expired tax credit and still had a bit of upward momentum.
Metro Detroit home prices have been severely affected by the large number of distressed homes -- houses facing default or foreclosure -- being sold in the region. Villacorta estimated the rate of distressed homes in the area is about 45 percent.
This high rate drives down all home prices in the region, because they serve as the basis of comparable sales for other transactions.
Villacorta thinks homeowners can still expect some uncertainty in the market due to the coming 2012 election, potential legislation against the mortgage industry and fallout from the robocalls scandal. But he thinks prices should be relatively stable for the next year.