LOS ANGELES, Dec. 6, 2012 /PRNewswire-iReach/ -- Detroit's housing market started off 2012 on a rough note, with home prices in the Motor City sitting 31% lower than what they were in 2000. But 11 months later, Detroit has some of the fastest-growing home prices in the country. So, what should you keep your eye on as we move into 2013?
1. Home prices
Detroit's home prices have been going up for the past 15 months, and the only thing that can stop them is the "fiscal cliff". Because of its strong ties to the auto industry, Detroit's economy is particularly vulnerable to the goings-on of the national economy. If America dips into another recession, Detroit's housing market could be in even bigger trouble than prices in other parts of the country. Other than that, though, there's no reason to believe that home prices in Detroit are going to stop rising anytime soon. Just remember, it's going to take awhile for Detroit's home prices to reach their pre-recession levels. Today, a house that was worth $100,000 in 2000 is worth less than $80,000.
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For years, Detroit faced a foreclosure crisis. Fortunately, though, it appears to be over. According to numbers released earlier this month, the number of foreclosure filings in the four counties that make up the Detroit metro have gone down for 24 consecutive months. Only Phoenix is seeing similar declines, and Phoenix has one of the best-performing housing markets in the country right now! Right now, Detroit's foreclosure rate is similar to what we saw back in 2006, before the housing bubble burst. That sets the Motor City ahead of other major cities – many of which are "happy" to see their rates at 2007 levels. As long as Detroit can keep the foreclosure progress going, home prices will be able to keep going up, which means that the local market will be able to continue to recover.
3. Vacant properties
One thing that Detroit doesn't have working in its favor is vacant properties. In fact, it's estimated that there are 79,000 vacant properties sitting in the metro right now! The problem is so bad that 8,000 Wayne County bank-owned properties went unclaimed at an auction – despite the fact that the opening bids were $500. Unfortunately, all of those vacant properties aren't just ugly to look at. They also lead to more crime, which makes the properties around them harder to sell. It's a cycle that drags down the entire local housing market! Local leaders are trying to figure out how to solve the problem (including mulling over one solution that would give the city possession of unclaimed vacant properties). In the meantime, one vacant property is being taken care of. The Brewster-Douglass Housing Projects were officially cleared for demolition a couple weeks ago. Despite their rich history, the Projects had been vacant since 2008. Even though they haven't been razed yet, developers are already talking about how to use the 18.5 downtown acres the Projects currently sit on.
The unemployment rate affects the housing market everywhere, but it's going to be especially interesting to see how things pan out in Detroit in 2013. That's because the latest report from the Labor Department showed that the unemployment rate improved everywhere in Michigan – except in Detroit. Right now, the unemployment rate in Detroit is 10.5% (up from 10% in September). That's considerably higher than the national unemployment rate (7.9%) and Michigan's statewide unemployment rate (9.1%). If Detroit's housing market is going to make significant strides in 2013, more of its residents are going to have to get back to work. After all, you can't expect people to start buying homes if they don't have paychecks and stable jobs!