Why it is Time to Sell Your Home in the Suburbs and Move to Detroit
The Current situation in Detroit
We all know the stories of the Detroit Race Riots of 1943 and the resulting “White Flight” to the suburbs creating the great divide of the City of Detroit and the Detroit suburbs. This became known as the 8 Mile divide. 8 Mile is known as the street that divides the Detroit suburbs and the City of Detroit. The 8 Mile divide is sad, has been present for almost 70 years and almost destroyed the City of Detroit.
A lot has changed since then. Detroit is no longer tied exclusively to the auto industry. The city now has a much more diverse business set driving the growth of the city. We have become a very business friendly city and companies are relocating to Detroit from all over the country. This has caused significant growth in the demand for residential real estate by people who want to live in the city.
For example, the millennials have made a surge of moving back to the city. It’s a fact. People want to live close the the action and growth that Detroit is experiencing. The best part of this all is the younger generation does not see “color”. There is no longer the racial divide that existed in the past. Detroit has truly become a melting pot. I live in one of Detroit’s historic neighborhoods known as Boston Edison. I can tell you first hand, the people that live in our communities are made up of virtually every walk of life and everyone gets along. The diversity reminds me of the 20+ years I lived in New York City.
So what is my point about “Why it is Time to Sell Your Home in the Suburbs and Move to Detroit”?
It’s simply a function of where home values are in the suburbs compared to cost of homes in the city and an eminent Real Estate Bubble. You have a once in a lifetime opportunity to “Cash Out at the Top” and “Buy Low” in one of the fastest recovering markets in the country known as Detroit. So here is what I’m talking about:
The impending Real Estate Bubble – Prices in the suburbs have hit levels never achieved before. For example, in Birmingham MI, the average restored home sells for over $320 per SF. Click > Birmingham CMA to see past sales. Some homes have sold for as high as $550 per SF. This represents almost a 100% increase since 2010 and is at an all time historic high. It’s this kind of a move that typically represents a Bubble. Remember 2007?
The comparison…that same fully renovated home in one of the historic neighborhoods of Detroit sells for an average of just $117 per SF. Click > Boston Edison CMA to see past sales. This is a perfect example:
2464 West Boston Located in Boston Edison
Fully Renovated 3,000 SF, 5 bedroom Sold for Just $375,000 ($125/SF)
Click here to See Photos of the Home!
This same home in Birmingham would sell for over $1,000,000. And this home is just 5 minutes outside of the city. It’s also located in a neighborhood that has nothing but upside potential in value -vs- a neighborhood selling at never seen highs…
When Does a Real Estate Bubble Take Place?
A real estate bubble takes place when home values hit excessive highs and people are allowed to over-leverage by the banks. Well unfortunately that world is back and is taking place in the suburbs at an alarming rate. Individual bankruptcies are rising and homes are under water due to over-leverage and are increasing at a pace similar to the mid 2000’s. Yep, the banks did it again. They are loaning money to whomever wants to borrow it as long as you are located in the suburbs… My point of all of this is a smart decision may be to sell at an all time high in the suburbs and buy at bargain prices in a market that is just starting its move.
Another interest point about real estate value in the City of Detroit
Detroit is one of the only cities in the country that residential real estate gets more expensive the further you get out of the city. It’s a sad fact and no longer logical. People moving here from other parts of the country and the younger generation see it. They know what they can buy in the city -vs- what they can buy in the suburbs and see the Financial Opportunity. Especially the people moving here from the east and west coast of the U.S. where home values are at crazy levels.
The only people that don’t seem to get it?
The older generations that grew up in Metro Detroit and still think they cannot cross 8 mile after dark without being mugged. It’s the perception it’s not safe in Detroit – I can tell you as someone who lives in the city, I have no issues with safety. Now that the city actually has some money coming in for public services due to people actually paying their taxes in the city, the police force has grown significantly and their presence is certainly felt.
Who else is moving to Detroit other than the Young Hipsters?
It’s not just the kids moving back to the city. It’s now the older generations as well. For example, I’m currently in the process of helping a couple in their early 50’s sell their house in Rochester Hills and move to Boston Edison. Why are they moving? Number one, they want to sell at the top and buy at the beginning of growth. Number two, they love historic architecture and want to live in a house that was not mass produced by a large publicly traded home building company. But equally as important, they realized all of their social activities and events they attend are in the city. “Why are we driving an hour to hang out where we like to hang out?”.
This buyer segment may be what tips the scales and causes growth in city values that no one can comprehend. My point is once the same people that think they cannot cross 8 Mile without getting mugged realize that is not the case, a mass migration could take place causing home values in the Detroit Suburbs to plummet and values of real estate in the city to sky rocket!
Oh and one more thing…
Every time I meet with our friends in the suburbs they ask “Where do you buy groceries? There are no grocery stores in the city. Right?”. I find that the biggest misnomer ever! Within three miles of where I live in Boston Edison, we have six grocery stores (that I frequent often), which includes a Whole Foods and Meijer. Oh we also have this little thing called the Eastern Market where all the grocery stores in the suburbs buy there meats and produce… Yes we have places to buy food!
Either way, I do love the suburbs of Detroit. In fact when I moved hear from New York City, I lived in Rochester and Oakland Twp and certainly have hung out in Birmingham and others. All are great places and some of the most beautiful places I’ve been. I’m just highlighting what may be a wise financial decision and Sell What you Have in the Suburbs and Join us in Detroit. Heck you may be able to sell your current home and pay cash for the next one. Might be nice to not have a mortgage….
Click here to learn more about Who is Actually Moving to Detroit!