Metro Detroit extended its home price recovery to 15 straight months in September with another above-inflation increase, helping to lead a national housing recovery in a weak economy.
The Detroit area’s 7.6 percent price growth from September 2011 was the third highest in the nation behind Phoenix’s 20.4 percent gain and Minneapolis’ 8.8 percent rise, according to Standard & Poor’s/Case-Shiller index. Prices rose 3 percent overall in 20 metropolitan areas.
The September result marked the sixth consecutive month of a nationwide year-over-year increase in prices, said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.
“I think the housing recovery is reasonably robust,” he said.
In the first nine months of the year, Detroit was the second-hottest housing market in the nation, according to Case-Shiller data that cover about half of the homes in the U.S. The Metro area has seen 13.3-percent price growth through September, behind Phoenix’s 18.4 percent. Since the housing market hit bottom,Detroit has had the best price rebound in the country with a 23.8-percent gain, Blitzer said.
The region hit a low of $64,470 in April 2011, according to Case-Shiller.
Now, a Detroit-area home that sold for $100,000 in January 2000 goes for $79,820, said the Case-Shiller September report.
“It clearly shows huge improvement, and that’s very encouraging,” Blitzer said. “But there is, unfortunately, a long way to go.”
Metro Detroit will take another two years to get back to the $100,000 home price level, he estimated, and five years to reach the region’s December 2005 peak of $127,000.
“It clearly depends on the national economy and the auto industry,” Blitzer said.
Some analysts worry that the economy could dip back into recession if Congress and President Barack Obama fail to negotiate a deal before year’s end that avoids automatic large spending cuts and tax increases in January.
Blitzer isn’t one of them. “I think we will avoid a recession.”
A big factor behind the rebound is the thinning of excess home supply that built up before the housing crisis. The number of previously occupied homes for sale nationwide has fallen to a 10-year low — and is at a record low in Metro Detroit. The inventory of new homes nationwide also is near its lowest level since 1963.
That’s good news for home builders such as Paul Robertson, chairman and CEO of Bloomfield Hills-based Robertson Brothers.
“The distressed nature of our business is over,” he said. “We’re back in business.”
Robertson said at this time last year, he was building about two homes a month. Now he is building between eight to 10 houses a month.
After cutting staff to six a year ago from 68 in 2005, Robertson said a stronger market has allowed him this year to hire about 14 employees.
“Those were five or six years I’d rather not go through again in my life,” he said. “But, boy, the last 12 months have been nice.”
Rising prices usually encourage more potential sellers to come off the sidelines and put their homes on the market as they gain confidence that they can sell at a good price.
That situation hasn’t occurred in Metro Detroit, where there is a record low inventory of homes for sale, according to October data from Realcomp II Ltd., a Farmington Hills-based multiple listing service.
Robertson said he expects the Metro Detroit recovery to continue, but Blitzer cautioned that it will take time before the region’s housing market reaches the level it was at the start of the century. “As time goes on,” Blitzer said, “it is harder to grow at the same rate.”
Michael Martinez, The Detroit News