The housing market soared for two years, then cooled quickly in mid-2022. The price jump was primarily due to low mortgage rates, which dropped to 3%. Americans also became more mobile during the COVID-19 pandemic. This allowed them to relocate to cities they favored, some of which were far from their jobs. Throughout this period, the largest housing market in America remained the cheapest: Detroit. (Click here to see the most expensive place to live in each state.)
The S&P CoreLogic Case-Shiller home price index has been the gold standard of the housing research industry for years. The most recent, December 2022, showed that other research was accurate. The housing market had cooled considerably. Prices rose only 5.8% nationwide. The figure a year ago was closer to 20%. Craig J. Lazzara, managing director at S&P DJI, said, “The cooling in home prices that began in June 2022 continued through year end, as December marked the sixth consecutive month of declines for our National Composite Index.”
Case-Shiller has another measurement for home prices. This allows the growth of the 20 largest markets to be compared to one another, with the first month being January 2000, when all metros were assigned a number of 100. Nationwide, this figure reached 294.68 in December. That means home prices have almost tripled over the period.
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Some metros have had much larger increases. At the top of that list is Miami at 398.56.
At the bottom, measured on this scale, Detroit’s figure is 166.57. It could be argued that it is not only the least expensive market but also the most affordable, if anyone wants to live there.
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The primary reason for the low Detroit figure is that people have fled the city, chopping demand. This is particularly true for middle-class residents, who have fled to nearby cities. Detroit’s population was 1,027,974 in 1990, but by 2021 the figure had fallen to 632,464.
People continue to leave Detroit. It has thousands of abandoned homes. The city will stay at the bottom of the Case-Shiller home price list.
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