It's cheaper to buy than rent in Detroit right now
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House hunters are confronting an odd reality these days — it's far cheaper to buy a home than rent one in Metro Detroit.
Why it matters: The conditions reflect rising rent costs and stagnant property values relative to other parts of the country.
- But while buying a home may be cheaper here, it's not necessarily easier. Mortgage applications are frequently denied in Detroit, particularly for people of color, and many residents struggle to afford a down payment.
Driving the news: The typical Metro Detroit home is 24% less expensive to buy than it is to rent, according to a recent Redfin analysis.
- That's the highest discount for buying among the 50 most populous metro areas included in the study.
- Homebuyers are paying an estimated monthly mortgage of $1,296 compared with $1,697 for renters.
The big picture: Renting is cheaper in the vast majority of the country's largest 50 metros. Detroit, Philadelphia, Cleveland and Houston are the only cities where the opposite is true.
- Nationally, the share of houses that are cheaper to rent is 81%.
- In Metro Detroit, that figure is just 20%.
What they're saying: Detroit's relatively low cost of homeownership is a relic of its 20th-century industrial boom, Wayne State urban studies and planning professor Jeff Horner tells Axios.
- The auto industry's prosperity sparked an explosion of single-family home construction, but apartments weren't built at the same rate.
- "Detroit has a real surplus of single-family homes," Horner says. "When you have a lot of something, it's going to be cheaper. Basic economics."
🥊 Reality check: Like cities across the country, Detroit has an affordable housing problem.
🔠Zoom in: Rent costs vary widely by neighborhood. Rapidly rising rents are more concentrated around downtown while it's more gradual in Fitzgerald, Bagley and East English Village.
CeCe Thomas, a leasing agent at Prep Realty, gave us some examples of two-bedroom rentals she's showed recently, including:
- $1,650 per month within walking distance of Belle Isle.
- $1,900 for two bedrooms on Trumbull in Woodbridge.
- $2,250 for a Harbortown high-rise condo with a view near the river.
The bottom line: "Detroit is a quilt," Thomas tells Axios. "It really is a neighborhood by neighborhood conversation."