Housing data from July has many market watchers optimistic about the recovery in Detroit. Last month, home sales rose by about 11 percent and the median sale price rose 12.2 percent after months of decline.
As recently as a year ago, many houses in the metro area were selling below the asking price and sellers were only getting one offer at a time. Now, sellers are regularly fielding multiple offers and listing agents are advising buyers to offer at or above the asking price. One local real estate agent told reporters that buying a house has become like a competitive sporting event.
Homes are also selling faster according to recent data. In July, homes sold about nine days faster than the previous month with an average listing time of 75 days.
One reason that the inventory in the metro area is relatively low right now is that many homeowners who have avoided foreclosure are choosing to keep properties that they might otherwise sell because the value has not fully recovered and they may still be underwater on their mortgage. Home prices are still about 30 percent lower than they were in 2000.
Lower demand is spurring some buyers to look into building a new home rather than purchasing an existing home. As a result, some custom builders are able to more aggressively price homes that cater to buyers who are frustrated by lower priced offerings.
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Source: Detroit Free Press, “Metro Detroit home sales, prices rise as supplies decline,” Greta Guest, August 14, 2012.