Detroit’s hot real estate market is hard on newbies



Sydney Allen, 28, after inspecting a home for sale in East Detroit, Laura Herberg / WDET

Laura Herberg /WDET

Sydney Allen, 28, after inspecting a home for sale in East Detroit.

Sidney Allen’s dream home in Detroit is somewhat modest.

It’s just something that has at least three bedrooms, two bathrooms, a basement, an upper floor 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 Cage, Executive Director Realcomp

You’d think it’s not that hard to find on the east side of Detroit or in the surrounding suburbs where Allen is looking. “But in this market, it’s like looking for a unicorn,” Allen says.

After three months of searching for a home, she made several offers, but none of them led to her buying a home.

This is frustrating, especially given the way the market is developing now, because it’s crazy, ”says Allen. “There will be houses on the list, and by the time we try to schedule them to see them, they will say, ‘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 first-time home buyers in Detroit face.

Seller market

I’ve been doing this for 42 years and have never seen a market like this before, ”says Karen Cage. Executive Director Realcomp, Michigan’s largest real estate agency.

The housing stock is now small and the demand is extremely high.

In April, the average home on the Detroit subway went up for sale just 30 days before becoming unfinished. it the lowest it was for 18 years. This is an extremely competitive market for buyers. Only those with more experience and money close their houses. These are usually people who previously owned houses or are investors.

Perrin Emanuel, a realtor at the Reach Realty Group in Redford Township, says about half of its sales go to investors.

When people from New York, Boston and California call you and they find out they can buy a home here in Detroit, a single-family home or even an apartment building for less than $ 50,000, they can’t believe it. ” – says Emanuel.

National Association of Realtors reports The national average selling price in April was $ 341,600. Realcomp claims it was $ 75,000 in Detroit. This means Detroit homes are relatively affordable but still out of reach for many buyers. The sales go to people who can make an offer for cash or can offer a price higher than the asking price and make up the difference in cash. “Sellers will first take the buyer for cash, then someone who has been pre-approved for a regular mortgage, and finally FHA buyer, ”says Emanuel.

How to buy houses in Detroit

FHA loans are Federal Housing Administration loans. They are government insured for people with lower income or lower credit ratings who cannot qualify for a regular mortgage. Many first-time buyers in Detroit can only claim FHA loans. But shopping with FHA Mortgages make it harder to find homes because homes have to pass security checks, which means properties need to be in good condition and most of them are not located in Detroit. If problems arise, the seller usually has to make repairs before the sale takes place. This is why some sellers choose to avoid FHA loans right now.

I mean, I understand, says Bre’Anna Tinsley, Realtor Partner at Thrive Realty Co and past WDET the reporter. “Sellers can put their homes on the market and they can be sold for thousands and thousands of dollars in cash above the asking price. People refuse to check, people give appraisal guarantees, where basically they say that everything that appraises this house, we will pay in excess of this amount x in the amount of dollars. And sellers don’t even have to worry about FHA or trying to take that extra step. ”

But Tinsley says she wants more sellers to view buyers with FHA loans. “Just because their credit might be slightly lower doesn’t mean they don’t have the cash to do whatever it takes to buy a home,” Tinsley says.

Desperate times call for creative action

Detroiter Margot Dalal says she and her partner began buying a home in early 2020 with FHA a loan as well as a loan from the Neighborhood Assistance Corporation of America, or NACA… It looks like FHA in that it requires houses to be in compliance with the code before a sale can take place. Dalal says they made about seven proposals, but none were accepted.

It was so hard. We looked at hundreds of houses. This year I have seen my real estate agent more often than anyone other than my partner, ”says Dalal.

At one point, she and her partner offered $ 119,000 for a 1,000-square-foot, two-bedroom home in Detroit with a kitchen that needed a complete refurbishment.

I like to joke that we have come a thousand years of joint ownership. ” —Margo Dalal, Home Buyer

Looking back, I cannot believe some of the suggestions I made from house to house. They just seemed like crazy money for what we were getting, ”says Dalal. “We were, I don’t mean to say we were desperate, but we really really wanted it to happen.”

Finally, Dalal and her partner found a home, but it wasn’t in Zillow, Trulia, or any other app. Their friend, who lives alone, asked if they would like to buy his house and live together. Dalal and her partner said yes.

I like to joke that we have come a thousand years of co-ownership, ”she says. “This will reduce everyone’s monthly expenses, everyone can do home maintenance. We can do this. So we are happy with our decision. “

However, most homeowners will not be happy until they buy their own home. This is why some of them decide to wait until the market becomes more favorable to buyers.

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