There was a time when Michigan’s Detroit area was one of the worst cities in the country. The region, home to nearly five million people, was wrought with areas that had succumbed to default as a result of predatory loan practices. Following the housing market crash of 2008, many homeowners who were forced to face the reality that they owed several times the value of their homes chose to simply walk away. The Detroit area became a “no man’s land” of abandoned properties and broken dreams.
However, since then, the state's real estate market has strengthened. While the COVID-19 pandemic put a bit of a pause on the recovery, these effects are wearing off and the trends are pointing towards a rebound. This creates some excellent opportunities for savvy real estate investors and makes now an excellent time to be a Michigan real estate agent.
Fastest Growing Real Estate Markets in Michigan 2022
With a population of 6,310, the city of Rockford experienced a 13.9% year-over-year growth rate. At the same time, in April of 2022, home prices in Rockford were up 15.6% compared to last year with the median home price in Rockford reaching approximately $370,000. According to Redfin, many homes for sale in Rockford receive multiple offers. The average home here sells for about 6% over the listed price and is sold in approximately five days.
2. Auburn Hills
Located 30 miles north of Detroit, the city of Auburn Hills is one of the fastest-growing suburban cities in the state of Michigan. It has seen a 13.3% year-over-year growth rate and currently has a population of 23,984. Home prices are also up 13.5%, with the median price sitting at $244,000.
Novi is a large city in southeast Michigan, located just across the border from Windsor, Ontario, Canada, and about 25 miles northwest of Detroit. In the past year, Novi has experienced a 12.3% growth rate. The median home price here is now $363,000. Homes are on the market an average of seven days, which is a decrease from last year’s average of 11 days. Novi has also been rated the #7 Best Place to Buy a House in Michigan by Niche.com.
A diverse town with many family-friendly activities, Coldwater experienced an 11.1% growth rate this year. This city, which is located in the center of the state’s southern border, has an average median home sale price of $168,000. This represents a 9.8% year-over-year increase.
5. East Grand Rapids
Niche has named the city of East Grand Rapids the #4 Best Place to Buy a House in Michigan. It also received anoverall grade of A+ and an A+ for its public schools. Not surprisingly, the city experienced a 10.4% growth rate over the past year. While home prices were only up 1.9%, the median home price in East Grand Rapids sits at $573,000.
A charming small town located in Washtenaw County, Chelsea is just 16 miles from the popular city of Ann Arbor. This is a popular location for both retirees and families, and the public schools here are highly rated. Home prices here are up 33.1%, with an average median price of $410,000. Over the past year, the city has grown by 10.3%.
Wrapping up our list of the seven fastest-growing cities in Michigan is the city of Frankenmuth. Located in Saginaw County, Frankenmuth is known as “Little Bavaria” in reference to the city’s German heritage. While this quaint and incredibly unique area has experienced a 9.1% growth rate in the past year, home prices were down 29.7%. With a current median home price of $246,000, this drop could create some buying opportunities for the right home buyers.
Statewide Trends for 2022 and Beyond
Strong Rental Market
While Michigan’s economy has certainly faced some significant challenges over the years, there are several indications that the real estate market continues to strengthen. For example, we’re seeing another year of increasing home prices and strong rental opportunities.
Cities like Rockford, Auburn Hills, and Chelsea have all experienced notable increases in year-over-year median home sale prices, which have been fueled, in part, by buyers looking to take advantage of the strong rental housing market. This is particularly true in cities like Detroit, where home prices are still attractively low.
Statewide Affordability Issues
According to the Michigan Association of Realtors, average sales prices across the state increased by 13.37% from February of 2021 to the same time in 2022. In addition, median home sale prices increased from $213,155 to $241,644. While these rising prices are an indication of a strong Michigan real estate market, it also poses a challenge for Michigan home buyers looking to make a purchase in the near future.
First-Time Homebuyer Assistance
In a response to skyrocketing prices, the state has recently launched the MI $10K Downpayment Assistance Program, which provides eligible buyers with up to $7,500 in loans in most locations and up to $10,000 in certain ZIP codes. To be eligible, buyers must meet the county’s household income limit, have a minimum credit score of 640, and purchase a home with a sale price of less than $224,500.
According to Michigan State Housing Development Authority (MSHDA) spokesperson Eric Dusenbury, the purchase price limits may also increase sometime this summer.
The Bottom Line
While median home prices are rising in some areas, in other Michigan cities, there are still plenty of other opportunities to find good deals and purchase properties with the potential to provide solid rental cash flow.
It’s currently still a seller’s market, with buyers competing for a limited number of properties for sale. Bidding wars also remain a common occurrence across the state. While it’s unclear what the future may bring, at the moment, the Michigan real estate market provides excellent opportunities for real estate investors. It's also a great time to begin or expand a Michigan real estate career.