Don't count out Detroit, agents are advising investors, as new figures show the city's property market is slowly racing its way to recovery.
The US housing market won't start turning the corner for another year, claimed one report last week, predicting that while American property was "finding its footing", prices would drop another 1 per cent between March 2012 and March 2013.
But a new report out this week tells a different story: US property prices keep on climbing, according to the National Association of Realtors. Indeed, single family homes in America saw prices rise by 7.2 per cent in the second quarter of 2012, their biggest annual increase since the beginning of 2006.
And Detroit is near the front of the pack.
Headlines may paint a negative picture of Motor City, but the housing market is quietly accelerating ahead. Property prices soared by 12.2 per cent last month compared to July 2011, reports the Detroit Free Press. Sales across the city also shifted gear, surging by 11.2 per cent as demand from overseas investors gets stronger.
As a result, homes are selling nine days faster than last year, pushing the city's housing supply down - exactly the conditions needed for recovery.
And buyers are queuing up to join the Motor City race, explains Property Investment House.
"Client enquiries and sales for our Detroit Turnkey properties have increased over 30% in the last 3 months," Director Dean Darby told PrivateProperty.co.za. "Investors have told us they believe the timing is perfect and that they will not get a better opportunity to invest in Detroit."
Indeed, with inventory decreasing, prices are going to rise even further, predicts Darby:
"Right now there is an opportunity to still get homes at a 70% discount to their peak value and high net rental yields of up to 19% pa but this will not last. As demand increases and prices become more expensive the yields will come down so this we see as a limited window of opportunity for the investors who are sitting with cash."
And confidence is starting to return too, he adds, thanks to the quality of properties on the market matching the yields: "Rather than purchase timber frame properties that are more available in other parts of the USA, investors like the fact that they can get a solid, brick, detached three-bedroom home in Detroit. All our homes are fully inspected by the City Council and come with Certificate of Approval. Knowing that their property has been fully inspected from top to bottom has also certainly given investors the peace of mind that the work has been done to an extremely high standard.
"Even though getting the homes to this standard does cost much more our prices still only start from $29,450 for our 3 bedroom properties. Prices also include qualified tenants and 24 month leases."
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