Housing hurdle: Rising average home prices in metro Detroit leave many buyers frustrated

Economist says it’s unlikely prices will crash anytime in the near future like they did during the last recession
Posted at 1:05 PM, Aug 08, 2022
and last updated 2022-08-08 18:31:22-04

CLARKSTON, Mich. (WXYZ) — The housing market has changed dramatically in recent months, but the average home price continues to go up in metro Detroit.

Samantha Mocheri has been trying to buy a home for over a year.

“My husband and I just got married in December,” Mocheri explained. “When we merged houses, we kept my house. So now, we’re just kind of looking to find something for the two of us and make it our own.”

She said she’s not looking for new construction.

“We want an older home or something that’s already existing. Because we want to put money into it and make it our own, like something a little quirkier and a little more cozy,” Mocheri said.

Yet, she still has not won a home.

“It’s so frustrating,” Mocheri said laughing.

She has had her heart set on many properties, only to get outbid in the end.

“Everything’s up. And I think it’s up for some houses higher than it should be,” Mocheri said.

Now she’s trying to figure out what the future holds.

“It can go both ways, right? Like you get doom and gloom that’s like, ‘Oh gosh. Brace yourself, here comes the next housing crash.’ And then you get things that are like, ‘Oh, it’s just going to taper off and this is going to be the new norm,’” Mocheri said.

Realtor Linda Wells was showing a home for sale in Clarkston this week.

“This is a house that just has been totally renovated and went on the market two days ago. We have four bedrooms, two and a half baths — one is the master,” Wells explained.

She reflected on the housing market.

“The last year and a half has been crazy,” Wells said.

Now she admits, there has been a shift.

“We’re just getting back to homes appreciating at the rate they did pre-COVID,” Wells said.

However, that doesn’t mean housing is cheaper. Jeanette Schneider, president of RE/MAX of Southeast Michigan, said they’re actually seeing a record.

“In June, they kind of hit a new benchmark. They went over $300,000 in metro Detroit, which is the first time that that’s happened,” Schneider explained.

She was talking about the average home price. Schneider admits, she’s unsure if that record will stick.

“I think it will be interesting to see. Do we stay above $300,000? Or with some of the market dynamic shifting a bit, do we start to see those prices level off? I think (it) will be the story for July,” Schneider said.

She knows some people are hoping prices will drop precipitously. Yet, she doesn’t see that happening.

“What we start to see is there continues to be strong buyer demand out there, even with rising interests rates,” Schneider said.

Daniil Manaenkov is an economic forecaster at the University of Michigan. He admits, “Prices are arguably rising.”

He said the numbers he is seeing are a bit lower.

“There are many data sources and most data sources I’m looking at are not that high,” Manaenkov explained.

He’s seeing averages closer to $250,000 or $270,000. He’s certain trends have changed.

“Buying a house today is a lot more expensive than it’s been only half a year ago,” Manaenkov said.

Just how much?

“As the mortgage rates increase on top of the still significant price appreciation, you’re probably paying like 50% more per month if you buy a house today compared to December of last year,” Manaenkov said.

He has some insight for those hoping to cash in on a housing market crash.

“I’ll put it this way: It’s possible but not very likely at the moment,” Manaenkov said.