GO
Loading...

Detroit showing pockets of real estate strength: Realtor

As Detroit becomes the largest U.S. city to file for bankruptcy, one of the most prominent players in the city's real estate market said there's strong demand for properties there. As always, it depends on where you look.

"In neighborhoods, we've seen housing values go ... dramatically up from where they were about four years ago," said Daniel Stern, partner at Lormax Stern Development. "The bankruptcy, for us, it's old news. We hit our low four years ago, and we're in a very, very steep incline up now."

"The would-be buyer ... we're already buying," he told "Squawk on the Street" on Monday. "About two years ago institutions began to buy in Detroit, and we think that it's going to continue."

(Related: Detroit can't wait for federal cavalry, city manager says)

Some key aspects of the bankruptcy filing would be to free up more money for public services, revitalization and some "critically important" demolition projects. All that will help draw out-of-state investors, Stern said.

"All of us locals—we're all buying now," he said. "We have been buying."

Stern said that Detroit's suburbs are "tremendously vibrant" and are helping to restart demand in the city proper. He estimates that there are five to six "wonderful" residential pockets where demand and values are rising.

"Any type of rental property downtown has a waiting list," he said.

(Related: Detroit's bankruptcy battle likely to be long and painful)

According to real estate website Zillow.com, the median home price in Detroit hit $12,500 in May, the most recent number available, up 14.7 percent year-over-year, although this is still below 2011 levels. Average sales price hit $25,000 in May, an increase of 18.1 percent, despite being down from $33,000 in December 2012, a four-year high.

Commercial real estate is also "red hot" in the city's downtown and riverfront areas, as well as in the suburbs, he said. "One thing we can't fix and we can't solve is that Detroit is 139 square miles—it's massive."

Security concerns are barely apparent in key high-end locations, Stern said. "Downtown, you're always going to see the policemen in that area," he added. But reports have shown that police response times have increased in many areas as the size of the force has shrunk after years of budget difficulties.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

Disclaimer

Contact Real Estate

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More
  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.