Dearborn Heights, a city of about 63,000 residents in western Wayne County, borders both Dearborn and Detroit. Buyers choosing between neighborhoods in Dearborn Heights are sorting themselves into two distinct tiers.
One tier is driven by school districts and parks. The other is driven by rental income and affordability. As the market calms, the difference between them has become clearer.
Until about 18 months to two years ago, Dearborn Heights was a seller’s market where properties often drew 20 or 30 offers. That is according to Dave Abdallah, a 38-year veteran of the Metro Detroit market with nearly 7,000 homes sold. Buyers competed for whatever was available, and neighborhood preferences took a back seat to simply securing a home. Since then, more homes have come on the market. Abdallah says conditions have returned to what he calls a more normal, more traditional, calmer market.
That shift has changed how buyers behave. Buyers now have choices, and those choices are concentrating demand in specific neighborhoods rather than spreading it evenly across the city.
“It’s primarily the school districts and the parks,” Abdallah says when asked what draws buyers to one neighborhood over another.
That preference shapes how different parts of Dearborn Heights are performing. The same preference also points investors toward where they should be looking.
Abdallah identifies North Dearborn Heights (ZIP code 48127) and West Dearborn (48128), in neighboring Dearborn, as the areas that tend to outperform the broader market.
“High demand, low inventory,” he says.
Across the area, homes priced between $200,000 and about $400,000 are still selling well, according to Abdallah. That price range covers most first-time buyer homes. Above $500,000, sales slow because there are fewer buyers at that price point. In North Dearborn Heights and West Dearborn, however, high demand and low inventory mean the calmer market has been felt less. Sellers there face a calmer market than they did two years ago, but buyers still compete for well-priced homes.
This neighborhood-level split can mislead buyers who rely on citywide data to time a purchase. Citywide statistics for Dearborn Heights blend these high-demand areas with slower ones. The result is an average that accurately describes neither.
North Dearborn Heights and West Dearborn hold their value because of demand from buyers who plan to live in their homes. South Dearborn Heights, by contrast, is where Abdallah says he would buy as an investor. The numbers work differently there, with lower purchase prices and strong rental demand.
“I would buy in South Dearborn Heights because it’s a great rental area and you’re able to pick up properties for much more affordable prices,” Abdallah says. “They rent out pretty well, and you’re able to pick up a home for $150,000, maybe $200,000.”
At those prices, investors face less competition from buyers willing to pay more for access to top school districts. South Dearborn Heights operates as its own tier. The buyer pool is different, and rental income, rather than neighborhood amenities, drives the investment case.
Asked what surprises buyers from outside the area, Abdallah points to the top end of the market.
“Probably the biggest misconception is they don’t know that there’s a lot of high-end homes here in the million to three, four, five million dollar range,” Abdallah says.
Prices run from $150,000 rental properties in South Dearborn Heights to homes near $2 million at the top of the market. With a range that wide, a single set of assumptions about the market will be wrong in at least one direction. Abdallah’s team recently sold a property for nearly $2 million. He says it may be the highest sale in Dearborn Heights history.
Abdallah says Ford Motor Company is the area’s primary industry. He also expects home values in the area to keep rising, though he did not cite a specific forecast.
A local economy built around one industry has a clear foundation, but it also ties housing demand to how well that industry performs. That sets Dearborn Heights apart from cities with a wider mix of employers. For buyers and investors weighing the market, the two tiers call for different approaches. School districts and parks are a major draw for buyers who plan to live in their homes, and those buyers drive demand in North Dearborn Heights and West Dearborn. In South Dearborn Heights, affordability and rental demand shape the market.
About the Expert: Dave Abdallah is a real estate professional who has worked in the metro Detroit area, including Dearborn Heights, Michigan, for 38 years.
This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.
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