The politicians are running all over trying to put band-aids on the Metro Detroit housing market. NAR is screaming to do this, mortgage lenders are yelling to do that, and real estate agents are saying another something else. There is no clear plan. Some Metro Detroit real estate agents are even dumb enough to advocate down payment assistance programs so they can help themselves right now. The lobbyists are getting rich, and the average American are getting mad at big business, banks, and politicians. Some of the fixes are helping but they won’t be able to fix the Detroit housing market.
The only thing that will fix the Metro Detroit housing market is time. At issue is the huge home price devaluation. I don’t believe ever in American history before have homes lost 25 – 90% of their value before. People are stuck in their Metro Detroit homes because they owe more than their house is worth.
Even if they
- lost their job
- have a major medical illness that they can’t work
- get a divorce
- have a death in the family
……they have no way of selling the house. The option is either to short sale the house or let it go into foreclosure. This option is not going to change for many years to come no matter what anybody does.
The house has to go back to the bank as a foreclosure. I had several calls this week from clients who lost a family member but they can’t afford to pay the mortgage to sell the house as a short sale. The house is just isn’t worth it. They are letting it go as a foreclosure.
The second is basic economics. We have too much supply for the amount of demand. That again won’t change for years. Because of bank rules every Detroit foreclosure and short sale seller won’t be able to buy for 3 to 5 years. ( Yes you heard me right…..FHA and VA won’t let you buy a home for 3 years if you have a short sale)
Until these Metro Detroit foreclosures and short sellers are back in the market to buy a homethe Metro Detroit housing market can’t be fixed by anybody, any solution.
We need more Metro Detroit home buyers and the only sources they can come from is:
- New immigrants
- Young people buying their first home
- or the foreclosed people or short sales sellers
So until time passes and all of these 3 categories of home buyers can increase to meet the supply of foreclosures the Detroit suburb housing market will remain the same.
So my advice to Metro Detroit home buyers is to buy for the long term. Plan on living in the home for 5 years +.
Russ Ravary your Metro Detroit real estate agent
helping Oakland and Wayne County real estate buyers and sellers (Michigan)
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