Is now the best time to buy a home in Detroit?

Detroit – Believe it or not, mortgage rates are dropping. In fact, this is the lowest level they’ve been at in five months and it’s leading some to wonder if now is the right time to buy a house. In today’s market in Michigan, the 30-year mortgage rate is 6.67%.

Before you start packing the boxes, let’s unpack what there is to know when it comes to either renting or buying in Detroit.

The research team at This Old House analyzed homeownership and rental costs in 300 U.S. cities using data from Zillow, Freddie Mac, and the U.S. Census Bureau. They looked at mortgage rates, home prices, rent, property taxes, and maintenance costs, adjusting for annual increases based on historical trends. During their research, they found that renting can be more affordable in many cities, but buying in Detroit is the best option.

Here are the key findings from This Old House:

• Over a 30-year period, owning a home in Detroit will cost $435,528, while long-term renters will spend $860,924—a difference of $425,396 in favor of buying.

• The average mortgage payment in Detroit is $432, while renters pay $1,461 per month.

• Detroit is one of just 24% of major U.S. cities where the “American Dream” of homeownership is still a strong financial investment.

National Trends:

• Across the U.S., the average homeowner will spend $1.8 million over 30 years, while renters will pay $1.42 million—a $380,000 gap.

• In Sunnyvale, California, homeowners pay $5.1 million more than renters across three decades.

• In 43% of major U.S. cities, monthly rent is cheaper than a mortgage payment.

Renting or buying a home is a major financial decision, especially for households with dual incomes or children. If this got you thinking about what to do, This Old House put together some important tips when it comes to making the right choice:

• Assess affordability in high-cost cities: Dual-income, no-kids (DINK) households may find homeownership more feasible in expensive metro areas since their combined earnings can help offset high housing costs.

• Factor in property taxes and schools: Families with children should research property tax rates and school district quality, as both can significantly impact housing costs and long-term stability.

• Think about timing: If you plan to relocate within a few years, renting may be the better financial option even for dual-income households since it avoids the costs and risks of selling a home too soon.

• Plan for hidden expenses: In addition to mortgage payments, consider property taxes, insurance, and ongoing maintenance, which can add up quickly and impact affordability.

• Get to know your new city: Visit the city once or twice and maybe spend a long weekend or week there. This will help you get more experience.

• Keep moving costs in mind: Whether you’re renting or buying, moving can be a major expense. Long-distance moving companies can help streamline the process and reduce stress, especially if you’re transitioning to a new city.

This is the sixth week in a row that mortgage rates have dropped. A survey from the Mortgage Bankers Association shows mortgage applications for new home purchases decreased by 6.9% from a year ago. Compared to Jan., applications increased by 0.3%. Could the housing market be heating up? We’ll have to wait and see.