Detroit is sitting alongside only two other metro locations in the U.S. to see an annual increase in home prices (Denver and Phoenix).  In January, home prices in Metro Detroit roses 1.7%.  While the consistent increases are great for those selling homes, does it spell the end of savings for first time buyers who want to buy homes for sale in Royal Oak, Birmingham or other attractive cities further south in Wayne County?

Buyers don’t have to sweat just yet.  While Detroit has drawn attention for registering increases over the past several years, home prices in southeast Michigan and the Detroit area are still 31% below the values from early 2000.

Patrick Newport, U.S. economist for IHS Global Insight, offered a prediction that we can actually expect to see additional price declines across the nation, and that a turnaround putting us back to home values pre-bubble was “nowhere in sight”.

“Not one of the cities is showing a turnaround in the data — even without factoring in inflation,” Newport said in a statement. “One critical piece of information that is hard to sort through in the data is whether the indices are declining because demand is weak or because the share of distressed sales is high.”

“Despite some positive economic signs, home prices continue to drop,” said David M. Blitzer, chairman of the index committee at S&P Indices.

Supply Still Up in Metro Detroit Homes for Sale

Consider the basic law of supply and demand and you can see why home prices aren’t jumping back up any time soon.  If there’s a demand for housing, costs go up. Look to North Dakota where the oil boom and production is bringing a lot of unemployed workers and you’ll see communities with more jobs and people than housing. Small apartments go for more than $1500/mo and homes are renting out for more than $2-3k (if you can find one).

Imagine making $100k/year but being homeless – thankfully Southeast Michigan is far from suffering a housing crunch like North Dakota.

In Michigan, we still have a saturation of foreclosures and short sales of homes where owners are underwater with delinquent mortgages.  Add to that the other homeowners trying to sell of property among a weak demand and it doesn’t look like prices will be soaring upward any time soon.

But that can be a major benefit to buyers, especially those looking at homes for sale in Wayne and Oakland Counties.

Finding Variety and Value in Metro-Detroit

Living in a cozy neighborhood outside of the city is attractive to many, but there are a lot of benefits to taking advantage of the current housing climate in more populated areas.  While new construction over the last 10 years brought many new communities into the suburban areas around Metro-Detroit, there are still plenty of homes for sale throughout Wayne county and Oakland county that have a lot of character.

That character comes with age, and that means a great deal of variety when searching for a home.

With the right buyer agent on hand after getting pre-approval for a mortgage in Michigan, a first-time buyer can look into homes that offer some piece of the past – like a part of local history.  Older Victorian homes on the edges of Detroit, smaller ranch properties that date back to the early days of Plymouth and Plymouth township.  If you like a more historic setting, finding an older home near the colonial architecture of Plymouth could be just what you’re looking for.

Don’t let talk of increasing home prices startle you into moving too quickly and making the wrong decision about a home.  There’s still a great deal of variety in housing around the Metro-Detroit area and first time buyers have plenty of time to work with a Michigan mortgage banker to secure their pre-approval and find that perfect home.