Home prices have been rising rapidly in Detroit over the last few years. Even so, according to a new report, Detroit is still an affordable place to buy a home.
The report, put out by conservative think tank the American Enterprise Institute, analyzed institutionally-financed purchases by first-time homebuyers between 2012 and 2018 in 60 metro regions. (Yes, AEI does put out bogus reports on topics like climate change, but the methodology on this one looks fine.)
Metro Detroit had the sixth lowest median home price to income ratio at 2.7, meaning people bought homes, on average, worth 2.7 times their income.
That said, home prices have gone up quite a bit in Detroit. Since 2012, they’ve increased 56 percent, compared to 39 percent nationally. Though that number appears to have leveled off, as it went up only 3.8 percent last year. That’s probably an indication of how much the local housing market bottomed out after the foreclosure crisis.
Even though Detroit is still a good place to buy, the area is in short supply of housing and the report labelled Detroit a “seller’s market.” Based on the current rate of sales, Detroit has a 2.3 months supply of homes, compared to 3.4 months nationally. Because of that, expect home prices to continue to rise.
In the least affordable region—San Jose, California—the median cost of a home was five times the buyer’s income. That’s despite these first-time buyers making an average of $126,000. Several other California cities, including San Francisco, Los Angeles, and San Diego, round out the list of America’s least affordable cities.