Detroit native Renise Taylor has been looking to buy a bigger house, having outgrown her current home and neighborhood in the city.
But Taylor, who works in the finance industry, is facing a tough 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.”
On Sunday, the Detroit Lions will play the San Francisco 49ers in the NFC Championship game with a trip to the Super Bowl at stake. 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 Companies
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 experiencing a steady population decline over 70 years.
Chris Ilitch, CEO of Ilitch Holdings, says the 30-year comeback of the Detroit Lions aligns with the city’s own 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 a go of it yet. The local survey gave Michigan, which counts Detroit as its only major city, a score of 64 on whether it was a “great state for young professionals.” The score is on a downward trend – it was 67 in 2022. Good numbers 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, far below the national median of $75,149, according to the most recent data from the Census Bureau.
The efforts to revitalize the city through a downtown entertainment district, including a new stadium for the Lions, has been mixed and 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 University.
“The city has not done as well as other older Midwestern cities that have tried to recover from our prior life,” like Cleveland or Pittsburgh or St. Louis, said Ronald Fisher, an economics professor at Michigan State University.
The area around Wayne State University has thrived with new development.
Getty Images/iStockphoto
Fall from a peak in the 1950s
Once hailed as a great American city that dominated automobile manufacturing, and the home of General Motors
GM,
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 latest count by the Census Bureau.
Over the years, the city was also beset by a number of issues, including poverty, crime and unemployment, which also pushed some residents out. While several efforts have been made to boost the city’s standing, including rehabilitating parts of the city and offsetting population declines through immigration, without strong employment opportunities, some doubt its ability to fully recover.
“‘I think that story of reinvention is very much in parallel with the story of our city.”’”
There are glimmers of development in Detroit, but it’s hard to see it spreading into neighborhoods, said Fisher. Much of the economic growth in the region remains in the suburbs. The problems can be traced back to 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 high school than those with a college degree, said Fisher. “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. But, you know, it is going to take a long time for that to spread out around the whole neighborhood of the city,” Fisher said.
‘They all want a piece of Detroit’
Detroit, seen here during a golden sunset, has attracted some foreign investors, who have been buyers of residential real estate.
Getty Images/iStockphoto
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 making money.
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 to play the stock market.
In 2018, Taylor, no relation to Renise, 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’s since gone on to invest in two other properties with other investors, using his savings.
Despite the median sale price in Detroit being $85,000, far more affordable than the national median of nearly $400,000, prices are up 21.4% from a year ago. Some condos in downtown Detroit are also asking for an eye-watering price 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 in Detroit, he added.
Locals stress that Detroit is so big in terms of land mass, it could fit the cities of Boston and San Francisco and still have excess, which is part of the reason why it’s such a challenge to turn it around.
Referring to abandoned buildings and vacant lots that exist in the city, “there’s just so much of it,” Tozzi said. “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 based on the fact 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 were well over $500,000, in stark contrast to the median price of homes in the city overall.
‘We want to do everything we can to bring our city back’
Detroit fans have had something to cheer about.
Getty Images
Chris Ilitch’s Olympia Development of Michigan is the co-developer of an estimated $1.5 billion planned redevelopment in downtown Detroit, a 10-building residential, hotel, office, retail and mixed-use space in the works. Illitch is partnering on the project with fellow Detroit native Stephen Roth and his Related Companies of New York.
Like the Related Companies’ role in the $25 billion overhaul of a former rail yard in Manhattan into a new neighborhood, 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 that broke ground in December in 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 in what is now the global Little Caesars brand. They also 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, newly 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,” Ilitich 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 UofM innovation center, which is expected to be complete in 2027, will help the city take the next leap forward. He also argues that its city’s urban core has been in recovery mode for longer than it often gets credit for, including since the early 2000s, when the Detroit Lions, Red Wings, Pistons and Tigers began relocating to downtown.
According to Matt Lassiter, a history professor at University of Michigan, the focus has indeed been on getting University of Michigan and Michigan State graduates to stop always moving to Chicago and New York and actually come live in Detroit. 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. 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,” Lassiter said.
This story originally appeared on Marketwatch
