"I've never seen anything like this": Housing inflation soars in US, Michigan
The federal government reported that the inflation rate for housing spiked to its highest rate since 1982 from September 2021-22. The U.S. Bureau of Labor Statistics says the inflation rate for the broad category of “shelter” is now 6.6%.
Experts say that’s reflected in southeast Michigan’s housing market.
Darralyn Bowers is president of Bowers Realty in Southfield, and a member of the board of governors of Realcomp. She’s been a realtor for over 40 years.
Bowers said rent prices have spiked by around a third since the start of the COVID-19 pandemic. The average rent is now around $2,000/month in the metro area outside the city of Detroit, and $1,200 in the city.
Bowers said that’s driven in part by landlords leaving the market during the pandemic. “There really are more tenant applicants than there are units available, and nothing appears to be abating that. And it has driven the prices up,” she said.
Bowers said Detroit-area home sale prices had been shooting up too, but have shown signs of cooling off more recently. However, she doesn’t expect them to decline much anytime soon, due to continuing strong demand.
“We see a higher number of properties available for sale, but that has not resulted in a decline in value,” Bowers said. “It has resulted in longer days on the market. And the only reason for that would be that the demand is still there.
“It's been so long that the market has been devoid of units, that there's just a backlog of people who are young, people living at home, that are just looking for a better deal.”
These dynamics are even more pronounced in the Grand Rapids area real estate market. According to Zillow.com, median rent prices there are now about $1,500/month. And home prices continue to climb, up to a median of more than $307,000.
Darralyn Bowers said it’s a wild time for all sides of the real estate market. “I keep saying that after being in the market a very, very long time. I keep saying I've never seen anything like this,” she said. “And finally, I'm going to stop saying that, because when I say that, something happens that I've never seen before. These are unusual times.”