Sales of both single family homes and condominiums in metro Detroit were down 3.1 percent in February from a year ago, according to Realcomp, the area's multiple listing service (that encompasses Oakland, Wayne, Livingston and Macomb counties). The drop was despite a 6 percent increase in the number of homes for sale.
"We are seeing a lot of multiple offers in the suburbs," Estereicher said.
That pushed the median price up a whopping 20 percent; that price, however, is just $129,000, considerably less than the national median home price of $202,600, according to the National Association of Realtors.
Read MoreWorker influx boosts Charlotte housing
Even with considerable price gains, Fitch Ratings listed Detroit as "undervalued" in a report out this week. They, too, cite lack of inventory as the main problem in the market. Home builders were burned badly in Detroit, with the one-two punch of the auto-industry meltdown and then the national recession.
Pulte Homes, which was originally based in Detroit, recently moved its headquarters to Atlanta, but the company is still building north of the city. That is providing much-needed supply, but generally on the higher end. Its homes are largely priced at $300,000 to $600,000.
Read MoreSeattle housing sees spring surge
The city is benefiting from an influx of foreign workers. Estereicher says she is seeing buyers from China, Germany and Mexico, who are coming to work in the auto industry. Millennials are also seeing Detroit as a new frontier, given its strong affordability compared to the rest of the nation.
Distress is also playing less of a role in Detroit. Foreclosure sales in February were about half what they were a year ago, according to RealComp. Total foreclosure activity last year in the Detroit area was down 42 percent from 2013, according to RealtyTrac, and its foreclosure rate is now below the national average.
Home prices, however, have not risen enough to pull thousands of Detroit borrowers up from underwater on their mortgages. That is a big reason why there are so few listings available—that, and potential sellers are afraid they won't find anything else to buy.