America's Cheapest Housing Market

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index showed that home prices nationwide rose 5.4% in June compared to a year ago, reaching a record high. This notable increase prompts an evaluation of whether real estate remains a sound investment. Although, as Brian D. Luke, CFA, points out, prices have significantly appreciated nominally since 1974, they've only slightly more than doubled when inflation is taken into account, complicating the investment narrative.

Analyzing trends in U.S. cities, Case-Shiller's index methodology assigns a baseline index of 100 to each of the 20 large cities as of January 2000. This comparative approach highlights the variations in price growth among markets, with the highest index in June indicating that in that particular city, prices have risen dramatically over the 23-year period, while Detroit's stagnant index of only 190.47 reveals its long-term economic and housing challenges.

Detroit's unfortunate distinction as the city with the least price appreciation over 23 years illustrates broader socioeconomic issues. Having not even doubled in price since 2000, and with an inflation-adjusted decline, its poverty rate at 33.8% exacerbates these challenges. This situation makes it highly unlikely for Detroit's housing market to catch up, undermined further by a significant population decrease from 951,270 in 2000 to 633,248 last year.

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