An exodus of massive proportions is taking place in Michigan, sending home prices to modern day lows. The housing market is in chaos, and may have the worst deflating housing markets in the country.
The exodus has left lots empty in Detroit, where foreclosures rank as some of the highest in the nation. Detroit’s population has dwindled from a high topping 1.9 million in the 1950’s to less than 850,000 residents these days. The fall out is hitting every where from small businesses to Ford, GM and Chrysler, which never caught up with the times to restructure their business models.
Detroit is a city in pain with the highest poverty rate in the nation, and an unemployment rate that could reach 15% in 2009, one of the highest in the country. The 11th largest city in the U.S. is short on vision, and will have to retool itself in order to survive as a vibrant community.
However, amid the financial hardship housing sales are heading upward because of tumbling prices, which have dropped nearly 80% on average over the past decade. The average price of a home in Detroit is now slightly above $18,000, which represents the lowest average any where in the country. Sales volume is projected to remain fairly steady by Housing Predictor analysts through 2009 on average forecast deflation of 24.3% for the year. There are real bargains in Detroit foreclosures.
 |
| City |
Forecast |
| Detroit |
− 24.3% |
| Grand Rapids |
− 15.2% |
| Lansing |
− 16.5% |
| Marquette |
− 9.3% |
Job lay-offs and business closings in Grand Rapids are hurting home sales. After a downtrodden market for nearly three years, Grand Rapids saw a spike in home sales over the summer due to lower prices. But then the credit crunch hit the area with a second slowdown that sent sales into slow motion.
A second wave of foreclosures is expected to hit the market in 2009 as more than 3-million adjustable rate mortgages reset nationally, a large majority of which won’t be able to get refinanced. Grand Rapids is projected to amble along with home sales through the year on forecast deflation of 15.2% in 2009.
Grand Rapids has expanded its economic base into several fields, including energy, biotech and health care, which will aid the market in its eventual recovery from the housing crisis.
On the Upper Peninsula (UP) in Marquette the market is less affected than other places from the high unemployment and manufacturing lay-offs. The UP offers a higher quality of life for many out of big city congestion and traffic. Although home sales have been slowed and are expected to remain that way through 2009, foreclosures aren’t as high as elsewhere. Marquette is forecast to see average home values deflate just 9.3% in 2009.
The massive fall out of job lay-offs and the credit crunch is triggering a deteriorating economy in Lansing to, where home vales have been dropping nearly on a monthly basis. An over supply of homes on the market, including many newly constructed homes that are just sitting vacant haunt the Lansing market.
Foreclosures are expected to rise over the next year as the market picks up more investors looking for bargains. Lansing is forecast to hit overall housing deflation averaging 16.5% in 2009.
