Detroit native Renise Taylor has been looking to buy a bigger house, having outgrown her current home — and her neighborhood — in the city.
But Taylor, who works in the finance industry, is facing a tight and increasingly expensive market, especially in the neighborhoods she finds attractive. “It’s pricing a lot of people out,” Taylor told MarketWatch. “People who would normally be able to afford a home in Detroit under normal circumstances are not going to be able to afford to live in Detroit.”
And “it’s already happening, with the downtown [area],” she added. “It’s just going to spread out.”
The Detroit Lions will play the San Francisco 49ers in the NFC championship game Sunday, with a trip to the Super Bowl on the line. For decades, the football team has symbolized the struggles of the city. But this month, the Lions won their first playoff game in 32 years, and, if they win in San Francisco, it will be their first road playoff win since 1957.
Last Sunday’s game in Detroit was a hot ticket, the most expensive divisional-round ticket ever. Could Detroit itself become a hot place to be again — and, if it does, what does that mean for the people, like Taylor, who live there? More than a decade since the Motor City declared bankruptcy, in 2013, the city has had a patchy recovery.
From Rocket Cos.
RKT,
a lending company that moved its headquarters to Detroit, to the Ilitch family, which owns the Little Caesars Pizza empire, spending billions to develop downtown, parts of the city have had a new lease on life after enduring a steady population decline spanning 70 years.
To Chris Ilitch, the CEO of Ilitch Holdings, the comeback of the Detroit Lions aligns with the city’s recovery. “They were not performing, but they were built back up into an exceptionally exciting and winning team,” said Ilitch. “I think that story of reinvention is very much in parallel with the story of our city.”
The great Detroit revival has been predicted many times.
According to a survey of business leaders released last week, Michigan is still not quite an attractive place for young professionals to make their marks. A local survey gave Michigan, which counts Detroit as its only major city (the second-biggest city, Grand Rapids, is home to fewer than 200,000) a score of 64 on whether it was a “great state for young professionals.” And that score is on a downward trend — it was 67 in 2022. Good numbers for states are in the high 70s and 80s.
Detroit remains one of the poorest cities in the U.S. The median annual household income in Detroit was just $37,761 in 2022 dollars, half the national median of $75,149, according to the most recent Census Bureau data.
Efforts to revitalize the city through a downtown entertainment district, including a new stadium for the Lions, have been mixed, while development efforts around Wayne State University have been successful, observers say. Both Michigan State and the University of Michigan are in the process of building new facilities in downtown Detroit. There are thriving communities around Wayne State, and the University of Detroit Mercy is a few miles away.
“The city has not done as well as other older Midwestern cities that have tried to recover from our prior life,” such as Cleveland, Pittsburgh or St. Louis, said Ronald Fisher, an economics professor at Michigan State University.
Fall from a peak in the 1950s
Once hailed as a great American city as it dominated automobile manufacturing, as the home of General Motors
GM,
Chrysler
STLA,
and Ford
F,
Detroit has experienced significant decline over the last few decades and a profound population loss. From a peak of 2 million residents in the 1950s, the city only has around 600,000 people living in it, based on the Census Bureau’s latest count.
Over the years, the city has been beset by a number of issues, including poverty, crime and unemployment, that precipitated much of the residential flight. While several efforts have been made to boost the city’s standing, including rehabilitating parts of the city and offsetting population declines through immigration, some doubt its ability to fully recover without strong employment opportunities.
“‘I think that story of reinvention is very much in parallel with the story of our city.’”
There are glimmers of fresh development in Detroit, but it’s hard to see it spreading into neighborhoods, Fisher said. Much of the economic growth in the region remains in the suburbs. The problems can be traced back to so-called white flight in the 1970s, Fisher said: Between 1970 and 1980 alone, more than 310,000 white Detroit residents fled to the suburbs, one researcher noted. Eventually, the Black middle class also moved out.
In 2012, there were more adults living in Detroit who hadn’t graduated from high school than had earned a college degree, Fisher said. “The city was an enclave of poor people.”
Lack of cooperation between the city and surrounding suburbs has been another problem.
“So there has been some residential activity in downtown, and in this so-called new center area near Wayne State University, and that’s encouraging,” Fisher said. “But, you know, it is going to take a long time for that to spread out around the whole [urban area].”
‘They all want a piece of Detroit’
Lured by cheap home prices, investor activity has been heating up the Detroit housing market in recent years, as some buy up homes as well as blighted and abandoned property with an eye toward turning profits.
Michael Taylor, a 45-year-old real-estate investor, bought his first property in Detroit in 2018. The lifelong Michigander said he considered investing in real estate to be a better bet than playing the stock market.
In 2018, Taylor, no relation to Renise Taylor, and a college friend bought a distressed property from the city, which had repossessed the home as part of a tax foreclosure. The duo paid $1,000 for the home, and ended up putting in $170,000 to get it up to code. The property has two long-term tenants.
He has since, with co-investors, purchased two other properties, using his savings.
Despite a median sale price in Detroit of just $85,000, far more affordable than the national median of nearly $400,000, prices are up 21.4% from a year ago. Some condominium units in downtown Detroit are asking eye-watering prices upwards of $500,000.
Gino Tozzi, a real-estate agent with Real Estate One, told MarketWatch that foreign investors have been active in the city, looking for property to buy. “They all want a piece of Detroit because they look at it, and it’s so cheap,” Tozzi said. Mom-and-pop investors and home flippers have also been active, he added.
Locals stress that Detroit is so big in terms of land mass that it could fit the cities of Boston and San Francisco within city limits and still have excess land — part of the reason it’s such a challenge to turn around.
Referring to abandoned buildings and vacant lots that exist in the city, Tozzi said, “There’s just so much of it.”
“We’re talking about thousands of homes that are abandoned; they have major damage on the inside and cannot be rehabbed. And it is very heartbreaking.”
That effort to revitalize the downtown area, at least, has succeeded to the extent that luxury retailers have begun leasing space. “Twenty years ago, you would never have considered putting a higher-end storefront like Gucci in downtown Detroit,” Tozzi said.
That has some real-estate developers angling for higher-earning tenants or home buyers. Some real-estate listings in downtown Detroit have been well over $500,000, in stark contrast to the median price of homes in the city overall.
Dan Gilbert, founder and chairman of Rocket Companies, relocated his enterprise to the city in 2010, bringing over 15,000 employees to downtown Detroit.
“The vast majority of the buildings we moved into were not only vacant but were, prior to our renovations, decaying from decades of neglect,” Gilbert said. “We then began purchasing and rehabilitating historic spaces and constructing brand new buildings in the city center.” The company today owns over 130 properties.
“Blight is a cancer,” Gilbert added. “Blight had also been a symbol of all that went wrong for too many decades in the once thriving world-class city of Detroit.”
‘We want to do everything we can to bring our city back’
Ilitch’s Olympia Development of Michigan is the co-developer of an estimated $1.5 billion planned redevelopment in downtown Detroit where a 10-building residential, hotel, office, retail and mixed-use space are in the works. Ilitch is partnering on the project with fellow Detroit native Stephen Ross and his Related Companies, based in New York.
Related played a central role in the $25 billion overhaul of a former rail yard in Manhattan into the new Hudson Yards area. Similarly, Ilitch wants Detroit’s urban core to be a place where people want to work, learn, live and have fun.
A cornerstone of the planned district is the new University of Michigan Center for Innovation, a project that’s already attracted roughly $200 million in funding and broke ground in December on the site of an old parking lot, with the goal of turning out talent for the new economy.
The Ilitch family has a long history in Detroit, starting out as pizza-shop owners. Their Little Caesars brand, of course, went global. They have owned the Detroit Red Wings hockey team since the 1980s, and bought the Detroit Tigers a decade later.
“We are Detrioters for generations,” Ilitch told MarketWatch. “We want to do everything we can to bring our city back to what it was.”
For that to happen, educated young people need to want to stay local, lured by opportunities, jobs and affordable housing, he said.
“The kids of Michigan were leaving Detroit in droves for decades,” Ilitch said. “What we are looking to do, now that the youth want to stay here, is now they need the growth in jobs.”
Ilitch hopes the University of Michigan’s innovation center, which is expected to be completed in 2027, will help the city take a leap forward. He also argues that the city’s urban core has been in recovery mode for longer than it gets credit for, including since the early 2000s, when the Detroit Lions, Red Wings, Pistons and Tigers began relocating to downtown.
From the Wall Street Journal (December 2018): Shinola-branded hotel anchors new Detroit development
The focus has indeed been on getting newly minted University of Michigan and Michigan State University graduates to stop moving to Chicago and New York and instead put down roots in Detroit, according to Matt Lassiter, a history professor at the University of Michigan. It is working, he said, but on a very small scale.
“The thing about Detroit is you get a little bit of something happening, and the city’s reputation is so terrible, there’s a whole new round of stories in the national media about how Detroit’s finally coming back,” Lassiter said. “But the city is enormous geographically and it’s all single-family housing, and just a huge part of the city is not being touched by any of this.”
Read the full article here
