Investors who were lured by the shiny price tags and large pool of renters in Detroit are finally seeing some return for their perceived risky business.
January marked the 11th consecutive month that Detroit median homes sales price rose by double-digits, climbing 28 per cent year-over-year to $110,000.
A high number of Canadian buyers entered the Detroit market in recent years, snapping up properties for as little as $40,000 in key neighbourhoods such as Rosedale. Many used Section 8 – the government subsidized housing scheme – to ensure ‘guaranteed’ rental income for their properties.
However, as the stock of low-cost properties slowly evaporates, so are sales, according to Realcomp, the Farmington Hills based MLS service. Home sales in metro Detroit fell 14 per cent to 3,336 units in January.
"Canadian interest in the market is not slowing down but there is a lot of competition in the market now, especially amongst international buyers," says Ian Watts from Pierson & Company in Detroit. "Buyers should not be drawn by the lowest price tags. Many Canadians stay in the middle priced market but there is a lot of potential at the higher end as well."
The Canadian government recently announced that it plans to start buying land in Detroit for the U.S. portion of a new bridge linking the countries. This $2 billion project is also one of the many reasons why Canadian investors are entering the Detroit market with the Michigan city expected to enjoy the long-term fruits of employment, and in particular the construction of the bridge.
Related Articles: Detroit bankruptcy attracts Canuck buyers
Don't believe the Section 8 hype in Detroit, warns expert
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate