You don’t have to be a journalist or real estate professional to know that home prices around the country have plummeted. Ever since the mortgage crisis in 2008, a number of state economies like Nevada, Arizona and Michigan have struggled to return home prices back to sustainable levels. But as the housing market begins to turn around, some striking figures have emerged. Financial reporters noted one especially egregious price disparity that showcases this struggle. According to online publication 24/7 Wall Street, there are now 10 US cities where it is cheaper to buy a house than to buy a car.
By comparing median home prices with moderately priced automobiles, the analysts at 24/7 have showed that even though home prices are on their way back up, the housing markets for some states still have a long way to go.
The list showcased the seriousness of housing markets across the state of Michigan. The Great Lakes State has the dubious distinction of five cities where a house is cheaper than a car, including the top two cities on the list, Detroit and Flint. In Detroit, the median home price has plummeted to $21,000, the same price as a base-level Chevy Malibu.
While the 24/7 list outlines the low price of real estate in today’s market, there is more to buying a home than raw price. The reason that many homes across Michigan have dropped in price is because of the departure of many industries and small businesses. Lowered property taxes means less successful schools and, without nearby jobs, a home purchase may not be the best commitment to make. While buying a home at a low price may be hard for many potential buyers to resist, buyers should have reason to believe they will see a strong return on investment. In short, while a car may depreciate from the moment you drive it off the lot, the depreciation is slower and more controlled than a home in a declining part of town.
For home buyers desperate for home ownership, however, the time may be just right. With home prices at record lows in some parts of the country, interest rates have also hit historic lows. The U.S. Commerce Department announced earlier this month that national average interest rates hit their lowest levels since records began in the 1950′s. If your credit is in order and you have a home picked out, affording a home has never been easier. Just be sure your property will continue to be worth the asking price one year, two years or five years from now.