I recently had a reader of another one of my blogs on Active Rain ask whether they should buy a condo in a local downtown area. It does not matter what Metro Detroit city it is in condos have never appreciated as fast as Metro Detroit homes do. In this market Michigan condo prices have fallen further than home prices in many cases.
This was the question from the reader
My wife and I visited downtown Plymouth this morning for the farmers market. It was my first time in Plymouth Michigan and we enjoyed the atmosphere. While strolling the area we saw some nice downtown lofts and were considering purchasing one. If we decided to do so we were thinking that we would live there for maximum two years to build equity before purchasing our first single family home. We have a 7 month old and feel that we will outgrow it by then. Do you think that this would be a wise investment to buy a Plymouth loft?
This was my response
I would not recommend buying a loft in this Metro Detroit real estate market to build equity if you were planning to sell it in two years. Throughout the Metro Detroit Real Estate market home prices are continuing to fall. Nobody knows when the market will turn or level off. There are many Michigan foreclosures that are going to hit the real estate market this winter. That will continue to hold prices down.
I don’t believe that anything you buy right now whether it is a Michigan loft, Michigan condo, or any Michigan home will show much appreciation in the next two years. You may even lose money on your purchase if you factor in real estate commissions, closing costs, state transfer taxes.
I would make your master plan as follows. Either continue to save or start thinking about where you want to live for 5 – 10 years. In this market I would think it should turn around in 5 years where you would get some appreciation on the home or condo you buy. Think longer term, think of your growing family. The days of buying a home and flipping it in a year or two for more money is gone at least for a few years. Think 5 year increments with a little cushion for growth for your family.
Overall condos in Michigan don’t appreciate as fast as homes do. You will usually get a better rate of return on a Michigan home versus a Michigan condo.
If you would like to get emailed lists of homes or condos in the Metro Detroit real estate area send me an email of your wants, price range, cities you like, how many bedrooms etc and I will send you listings that you can open at your leisure. My email is firstname.lastname@example.org
So the bottom line is for anybody buying in this Metro Detroit real estate market and looking for appreciation think longer term. Don’t buy with the intention of selling in two years and making money. Buy with the intention of living in your New Metro Detroit Home for at least 5 years before selling. I don’t believe it matters whether it is Plymouth Michigan , Canton, or Northville the real estate market and the appreciation is not going to change much. Plan for the long term to protect your investment and don’t plan on turning a profit in two years in this Michigan market. To search Michigan homes or condos for sale click on the search for homes button above.
My quote of the day
When planning for a year, plant corn. When planning for a decade, plant trees. When planning for life, train and educate people.
Old Chinese proverb