Detroit native Renee Taylor was looking to buy a larger home, after her current home — and her neighborhood — in the city outgrew.
But Taylor, who works in the finance sector, faces an increasingly tight and expensive market, especially in neighborhoods she finds attractive. “It's pricing a lot of people out,” Taylor told MarketWatch. “People who would normally be able to buy a home in Detroit under normal circumstances will not be able to afford to live in Detroit.”
“This is already happening downtown [area]“It will just spread,” she added.
The Detroit Lions will play the San Francisco 49ers in the NFC Championship game on Sunday, with a trip to the Super Bowl on the line. For decades, the football team has symbolized the city's struggle. 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 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 live again, and if it does, what would that mean for people, like Taylor, who live there? More than a decade since the Motor City declared bankruptcy in 2013, the city has seen an incomplete recovery.
From Rocket Cos.RKT,
A lending company has moved its headquarters to Detroit, to the Ilitch family, which owns the Little Caesars Pizza empire, and has spent billions developing downtown. Parts of the city have gotten a new lease of life after suffering a steady decline in population over 70 years.
For Chris Ilitch, CEO of Ilitch Holdings, the return of the Detroit Lions aligns with the city's recovery. “They did not perform well, but they have built back into an exceptionally exciting and winning team,” Ilicic said. “I think this story of renewal very much parallels the story of our city.”
Detroit's great renaissance has been predicted many times.
According to a survey of business leaders released last week, Michigan is still not an attractive place for young professionals to make their mark. A local poll gave Michigan, which counts Detroit as its only major city (the second-largest city, Grand Rapids, is home to less than 200,000 people), a score of 64 on whether it is a “great state for young professionals.” This score is on a downward trend – it stands at 67 in 2022. Good numbers for states are in the high 70s and low 80s.
Detroit remains one of the poorest cities in the United States. Detroit's median annual household income was just $37,761 in 2022 dollars, half the national average of $75,149, according to the latest Census Bureau data.
Observers say efforts to revitalize the city with a downtown entertainment district, including a new stadium for the Lions, have been mixed, while development efforts around Wayne State University have been successful. Both Michigan State and the University of Michigan are working to build new facilities in downtown Detroit. There are thriving communities around Wayne State, and the University of Detroit Mercy is just a few miles away.
“The city has not performed as well as other older Midwestern cities that have tried to recover from our previous lives,” such as Cleveland, Pittsburgh or St. Louis, said Ronald Fisher, an economics professor at Michigan State University.
The area surrounding Wayne State University has boomed with new developments.
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Falling from a peak in the 1950s
It was once a great American city because it dominated the automobile industry, as the home of General Motors.
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And Ford F.
Detroit has seen significant decline over the past few decades and significant population loss. From a peak of 2 million in the 1950s, only about 600,000 people live in the city, based on the Census Bureau's most recent count.
Over the years, the city has struggled with a number of issues, including poverty, crime, and unemployment, which precipitated much of the flight of residents. While many efforts have been made to boost the city's standing, including rehabilitating parts of the city and offsetting population decline through migration, some question its ability to fully recover without strong job opportunities.
““I think this story of renewal very much parallels the story of our city.”“
There are glimmers of new development in Detroit, but it's hard to see it spreading to the neighborhoods, Fisher said. Most of the region's economic growth remains in the suburbs. Fisher said the problems can be traced back to the so-called white flight of the 1970s: Between 1970 and 1980 alone, more than 310,000 white Detroiters fled to the suburbs, one researcher noted. Eventually, the black middle class moved in as well.
In 2012, there were more adults living in Detroit who had not graduated high school than had a college degree, Fisher said. “The city was an enclave for poor people.”
Lack of cooperation between the city and surrounding suburbs was another problem.
“There has been some residential activity downtown and in the so-called New Center area near Wayne State University, which is encouraging,” Fisher said. “But, you know, it's going to take a long time for this to spread around the world [urban area]”.
“They all want a piece of Detroit.”
At sunset, the city of Detroit attracted some foreign investors who were buying residential properties.
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The lure of cheap home prices has led to increased investor activity in Detroit's housing market in recent years, with some purchasing homes as well as abandoned and abandoned properties with the goal of turning a profit.
Michael Taylor, a 45-year-old real estate investor, bought his first property in Detroit in 2018. The lifelong Michigander said he considers investing in real estate a better bet than playing in the stock market.
In 2018, Taylor, no relation to Reness Taylor, and a college friend, bought a distressed property from the city, which repossessed the home as part of a tax foreclosure. The duo paid $1,000 for the house, and ended up paying $170,000 to update it. The property has two long term tenants.
Since then, he and co-investors have purchased two more properties using his savings.
Although the median sales price in Detroit is only $85,000, well below the national average of about $400,000, prices are up 21.4% from last year. Some condominiums in downtown Detroit are asking prices as high as $500,000.
Gino Tozzi, a real estate agent at Real Estate One, told MarketWatch that foreign investors are active in the city, looking for properties to buy. “They all want a piece of Detroit because they look at it, and it's very cheap,” Tozzi said. Mom-and-pop investors and house flippers are also active, he added.
Locals contend that Detroit is so large in terms of land area that it could fit Boston and San Francisco within the city limits and still have excess land — part of the reason the situation is so difficult to turn around.
Referring to the abandoned buildings and vacant lots in the city, Tozzi said: “There are a lot of them.”
“We are talking about thousands of abandoned homes. They have severe damage on the inside and cannot be rehabilitated. This is very heartbreaking.
These efforts to revitalize the downtown area have been successful, at least to the extent that luxury retailers have begun leasing space. “Twenty years ago, you would never have thought of creating a high-end storefront like Gucci in downtown Detroit,” Tozzi said.
This has prompted some real estate developers to look for higher-income renters or homebuyers. Some downtown Detroit real estate listings have exceeded $500,000, in stark contrast to average home prices in the city overall.
Dan Gilbert, founder and president of Rocket Companies, moved his company to the city in 2010, bringing more than 15,000 employees to downtown Detroit.
“The vast majority of the buildings we moved into were not only vacant but, prior to our renovations, were dilapidated from decades of neglect,” Gilbert said. “Then we started buying and rehabilitating historic spaces and building new buildings downtown.” Today the company owns more than 130 properties.
“The lesion is cancer,” Gilbert added. “Blight has also been a symbol of everything that has gone wrong for many decades in the once thriving, world-class city of Detroit.”
“We want to do everything we can to bring our city back.”
Detroit fans had something to cheer about.
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Ilitch's Olympia Development of Michigan is the co-developer of a planned $1.5 billion redevelopment of downtown Detroit where 10 residential, hotel, office, retail and mixed-use buildings are in the works. Ilitch is participating in the project with his colleague, Detroit native Stephen Ross, and his related companies, based in New York.
Related has played a central role in the $25 billion overhaul of the former Manhattan rail yard and its transformation into the new Hudson Yards district. Likewise, Ilitch wants Detroit's urban center to be a place where people want to work, learn, live and play.
The cornerstone of the planned district is the new University of Michigan Innovation Center, a project that has already attracted nearly $200 million in funding and broke ground in December on the site of an old parking lot, with the goal of bringing new talent to the economy.
The Ilitch family has a long history in Detroit, where they got their start as pizza parlor owners. Naturally, their Little Caesars brand has gone global. They have owned the Detroit Red Wings hockey team since the 1980s, and purchased the Detroit Tigers a decade later.
“We are devastated for generations,” Illich told MarketWatch. “We want to do everything we can to get our city back to what it was.”
For that to happen, educated youth need to want to stay local, lured by opportunities, jobs and affordable housing, he added.
“Michigan kids have been leaving Detroit in droves for decades,” Ilitch said. “What we're looking to do, now that young people want to stay here, is that now they need to grow 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 longer than it's given credit for, including since the early 2000s, when the Detroit Lions, Red Wings, Pistons and Tigers began moving downtown.
From The Wall Street Journal (December 2018): A Shinola-branded hotel anchors a new development in Detroit
The focus was really on convincing recent U-M and MSU graduates to stop moving to Chicago and New York and instead put down roots in Detroit, according to Matt Lassiter, a U-M history professor. He said it works, but on a very small scale.
“The thing about Detroit is you get something going on, and the city's reputation is so bad, there's a whole new round of stories in the national media about how Detroit is finally coming back,” Lassiter said. “But the city is geographically massive and it's all single-family housing, and only so much of the city is untouched by any of this.”
