Deep Dive into Metro Detroit Cities: Oak Park
Metro Detroit’s vibrant rental market and affordable housing make it a prime spot for buy-and-hold investments. Yet, with 185 cities and 290 neighborhoods, navigating this expansive area can be challenging, even for experienced investors.
Leveraging over 20 years of local expertise, we’ve created this “Deep Dive” series to guide you through the intricate landscape of Metro Detroit. Our unique scoring system evaluates each city’s and neighborhood’s rental investment potential based on key factors like housing stock, market dynamics, and area livability.
In this installment, we spotlight Oak Park, a city bordering Detroit that offers a mix of affordability, convenience, and growth potential. Close to desirable areas like Ferndale and within 10 minutes of four freeways, Oak Park is increasingly appealing to tenants and investors alike.
Overview
Today, we’re looking at Oak Park, which is a Ring City—the term we use for cities directly bordering Detroit.
In short, this is a strong rental investment neighborhood, but it won’t be affordable for much longer.
We’re going to explore a little more why that is here, but check out our in-depth analysis for a full breakdown of why this area is rapidly becoming a hot spot for real estate investments.
Market Analysis
The average sale price in Oak Park is $225,184, while the average monthly rent is $1,800, according to Zillow.
This results in an average rent-to-price (RTP) ratio of 0.79%, which falls slightly short of the 1% rule. However, there are still properties in this area that do meet the 1% rule.
Sale Trends
In recent years, property values in Oak Park have surged significantly. Since 2023, home prices have risen by 6%. But more impressive is the rapid appreciation over the last ten years:
This means that since 2014, prices have nearly tripled, growing at an average annual rate of 19.1%. As Detroit continues to develop, this trend is expected to persist. High demand is a key factor behind this surge: properties here typically go under contract within just 7 days and often sell for more than the asking price.
Therefore, if you’re considering investing in this market, it’s wise to act quickly and target properties that require some renovation to meet rental standards.
Want more info on specific investment opportunities in Oak Park, Michigan? Contact us for a free consultation.
Rent Trends
As home prices have risen, rents have followed suit. Over the past year, rents have increased by $350, representing a 25% year-over-year rise.
As of July 2024, the average monthly rent in Oak Park has reached $1,800:
While rents across Detroit have been gradually rising at a rate of 1.7% year-over-year, Oak Park is experiencing significantly higher growth compared to most other areas in the Metro.
Rental Properties in Oak Park
The housing market here is dominated by single-family homes (72.8%), with smaller shares for apartment complexes (16.9%) and townhomes (6.2%). This analysis will focus on single-family homes, the most popular choice among renters.
Properties near Ferndale are usually pricier, while those closer to Eight Mile and Detroit are more affordable, as evident from current Zillow listings:
The same pattern applies to rentals: rents decrease as you move south, while properties closer to Ferndale are more desirable and harder to find:
Here are some current properties for sale in Oak Park:
We’re going to take a closer look at one as an investment opportunity.
Example Investment Property
This is a listing for sale in Oak Park as of July 2024.
The asking price is just under $180k, but the Zestimate value is $166,000, which we recommend you target. The $180k price likely reflects the after-repair value (ARV), given that the property needs significant renovations to be rent-ready.
The estimated post-repair rent for this unit is $1,800, aligning perfectly with the 1% rule. It’s also among the most affordable properties in the area, with most others selling in the low $200s.
Given Oak Park’s significant appreciation over the past decade, this investment could yield substantial equity gains. This should provide a glimpse of the potential in investing here.
Now, let’s shift from numbers to a qualitative analysis before finalizing Oak Park’s rating as a rental investment neighborhood.
Area and Tenant Quality
The growing demand from homeowners and tenants highlights Oak Park as a desirable middle-class area in Metropolitan Detroit. It boasts well-kept homes, numerous amenities, and convenient access to Ferndale’s nightlife and shopping.
Here’s why quality tenants are drawn to Oak Park:
Housing Stock
With a home ownership rate of 59%, most houses in Oak Park are well-maintained, making the streets pleasant to walk through.
Age is a good indicator of home quality, so here’s a breakdown of properties by year built:
Nearly half of all homes were built in the 1950s, so you might face age-related issues like outdated plumbing or electrical systems when renovating properties such as our example from 1951. Ensure you conduct a full inspection and get repair quotes before making an offer.
However, because most residences are owner-occupied and well-maintained, exterior renovations like landscaping are often minimal.
Tenant Stock
Oak Park is home to about 29,319 residents, with a population density of 5,681 per square mile, which is average for the Metro area. It attracts a diverse demographic, including families and young professionals, and is the 17th most diverse suburb in Michigan, according to the US Census.
The community enjoys easy access to trendy Ferndale and local amenities like grocery stores, restaurants, coffee shops, and parks, making it desirable for various tenants.
Most tenants either live alone or don’t have children, though it remains popular with families. With average rents at $1,800 monthly and average household incomes at $5,166, finding reliable tenants is relatively easy.
The unemployment rate is 4.7%, below the national average of 6%, and 1% lower than the previous year. Future job growth is projected at 33.7% over the next decade.
Education levels are high, with 92.3% of residents having graduated from high school and many holding higher degrees. In Detroit, Oak Park offers one of the strongest tenant pools outside the more expensive Class A areas like Ferndale and Birmingham.
Economic Development
Economic growth in Oak Park has been robust, driven by the city’s Economic Development Department. Significant commercial and industrial investments have transformed the area. Recent projects include:
- Revamping the once-vacant 11 Mile Corridor with breweries, cafes, restaurants, and a bar to attract young professionals.
- The $15M Lighthouse MI project, adding 64 high-quality townhomes and apartments for lower-income families.
- New bike lanes, pocket parks, and a trailhead along the Nine Mile Road Corridor, with a second phase featuring a larger public park.
- Expansion of MoGo, Detroit’s public bike-sharing service, into Oak Park.
These developments will continue to drive demand and prices upward as Oak Park gentrifies.”
Crime and Safety
Overall, crime statistics in Oak Park are at or below national averages.
According to Niche, most residents describe Oak Park as ‘pretty safe,’ which is echoed by positive reviews from locals. One lifelong resident noted: ‘My neighbors were always friendly, and I felt safe growing up there. There were many shops and things to do without the touristy feel of bigger cities.’
While safety can be a concern in some Detroit areas, crime is not a major issue in Oak Park.
Investment Report Card
Oak Park combines affordability, strong appreciation, and solid cash-flow potential. The city’s ongoing economic growth and development projects further enhance its appeal for rental property investors.
While prices are expected to rise, so will competition from other landlords. This makes Oak Park a hot investment area now, but it may become too expensive for entry-level investors in the future.
Our advice? Buy now, before we update this Deep Dive to reflect higher costs.
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Stay tuned for our upcoming Deep Dives into other Metro Detroit neighborhoods. If you have a specific area in mind, leave a comment, and we’ll be sure to cover it in one of our next installments.
Want to explore Oak Park’s investment properties? Contact us for one-on-one advice.