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Axios Detroit Thought Bubble

Axios Detroit

Mortgage rates surpassed 5% — the highest it's been in more than a decade, according to data shared by Freddie Mac. 

Why it matters: Low mortgage rates made buying in a sellers' market more affordable in the pandemic. 

Median home sale values in Detroit have cooled since summer 2022, and they were only up 5.5% year over year as of March 2022, but borrowing money is more expensive now.

Data: Freddie Mac, Redfin; Chart: Simran Parwani/Axios

State of play: A year ago, mortgage rates were at 2.97%. In late April 2022, mortgage rates were at 5.11%.

By the numbers: If you were to take out a $150,000 30-year mortgage loan in April 2021, your monthly principal and interest would be around $630, according to numbers shared by Freddie Mac. 

Your monthly payment on the same loan in April 2022 would be $815. 

That's $185 more per month, $2,220 a year and $66,600 more over the life of your loan.

What's next: Mortgage rates are expected to rise throughout the year, averaging 4.6% for 2022 and 5% for 2023, according to Freddie Mac's trend forecast. 

We're still in a critical supply crunch, so even if home prices remain stead or cool, buyers will likely feel the squeeze of a tight market.

The latest: Metro Detroit's housing market remained robust in April despite rising interest rates, Crain's Detroit Business reports.

Sales prices remain high and inventory is tight.

Surging mortgage rates make home buying more expensive in Detroit

A year ago, mortgage rates were at 2.97%. In late April 2022, mortgage rates were at 5.11%.

Illustration of a house's roof being taken off by a trend line soaring upward through the home

Mortgage rates surpassed 5% — the highest it&#x27;s been in more than a decade, according to data shared by Freddie Mac. Why it matters: Low mortgage rates made buying in a sellers&#x27; market more affordable in the pandemic.

Real Estate

Metro Detroit's real estate market is holding steady for now.

Why it matters: We keep hearing about a market crash, but so far, local data doesn't support that claim. Pending home sales are up 4.6% and median home sale prices are up 6.25% from May 2021 to May 2022, while new listings are up 7.4%.

Zoom in: While data shows the market holding steady, real estate agents on the ground say buyers are negotiating with a little more leverage, per the Free Press. 

Bidding wars still happen, but some buyers are now able to negotiate a sales price slightly under the listing.

"A year ago, you were negotiating up, not down," agent Abe Taleb of RE/MAX Leading Edge in Dearborn Heights told the paper.

Zoom out: Nationally, mortgage applications were down 24% in the same time period. On average, 6.5% of sellers dropped their asking price each week in June, per Redfin’s latest market update.

In June, national pending home sales were down 13% from this time last year,  the largest decline since May 2020, Redfin's report stated.

What we're watching: New listings and pending sales. If more listings flood the market this summer and buyers don't bite, that's when we would start to see more power shift into buyers' hands.

Detroit's real estate market isn't cooling just yet

We keep hearing about a market crash, but so far, local data doesn't support that claim.

Illustration of a white picket fence shaped like arrows trending upwards

Real estate

Metro Detroit&#x27;s real estate market is holding steady for now.Why it matters: We keep hearing about a market crash, but so far, local data doesn&#x27;t support that claim. Pending home sales are up 4.6% and median home sale prices are up 6.25% from May 2021 to May 2022, while new listings are up 7.4%.

Brianna Crane

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Detroit's real estate market isn't cooling just yet

Surging mortgage rates make home buying more expensive in Detroit