After years of struggle, Detroit’s housing market is on the rebound — and young professionals may be the cause.
Following a three-year-long fall of Detroit’s housing market, neighborhoods such as Midtown and Downtown are now seeing growth in property values.
According to the Detroit Free Press, Detroit homes sold for the cheapest they ever have in 2009 — the median listed price of a home was $7,000 with many houses going for as low as $1 because of liability of ownership. However, the median price just hit an eight-year high of $165,000 in May of this year.
Several factors could be contributing to this growth. Some experts say this new trend can be attributed to a low supply of habitable houses, not neccessarily a resurgence of the city. Kim Page, a Detroit real estate expert, said the number of inhabitable houses in Detroit has dropped, increasing the value of houses that are still inhabitable.
“There are a lot more buyers moving into the city of Detroit, especially within the Downtown and Midtown area, causing prices to increase maybe 50 percent in comparison to what they were last year,” she said.
Young people’s interest in living in Detroit is also often cited as a reason for market growth and rising prices, particularly in Detroit’s Historic District and trendy neighborhoods. This includes areas like Palmer Woods, Lafayette Park and Grandmont Rosedale, where property values never dipped below $50,000, the point at which lenders generally stop issuing mortgages.
Houses in these areas can now go for as much as a few hundred thousand dollars. Ryan Cooley, owner of O’Connor Real Estate, said young people are the main reason this area stayed fairly stable and now has begun to grow.
“We are starting to see people want to move here just because of the interest in Detroit right now, where before it was always ‘I grew up in the area’ or that kind of thing,” Cooley said.
Though Detroit’s reputation includes negatives — there remains a high unemployment rate and lack of basic services — some young people are still attracted to the city for their first homes, a logic that Mike Seger, a music producer living in Detroit’s east side, says comes down to simple math.
“A young person can move here with $10,000 and start up a small flex space for artists or artists’ studios,” he said. “It’s the uprising of the youth being able to have the opportunities to make a future for themselves.”
Robert Fishman, interim dean of the University of Michigan’s Taubman College of Architecture and Urban Planning, noted that while these spikes in housing prices represent a wave of improvement for the city to come, as of now they are contained to these wealthier neighborhoods like Midtown and Palmer Woods. He added that Detroit cannot be viewed as one singular market — there is the housing market in this small bubble of higher income downtown, and then there is everywhere else in Detroit.
“There are at least two housing markets in Detroit, one of which is the famous 7.2 square mile Downtown and Midtown, which is starting to show some life after many years of being as stagnant as the rest of the city,” he said. “Many other parts of the city are sadly still under the influence of the foreclosure crisis and, if anything, have not yet recovered from it.”
Urban Planning Prof. Margaret Dewar attributed the dual market in Detroit to the large number of residents who have left poorer areas, leaving behind few residents and many abandoned homes.
“In some neighborhoods prices are increasing, but in other neighborhoods they are not because population has continued to decline,” Dewar said. “I’m worried that those will be neighborhoods that do not realize price and demand increases because there are just not as many households.”
Interest in Detroit isn’t just growing among young people — many academic fields now use Detroit’s trajectory as a sort of case study upon which theories and examples can be applied. In 2012, a lecture series called “The Detroit School: Conversations in Urban Studies” was started in the Taubman College that created a concentration within the college specifically on Detroit. This establishment makes Detroit the third American city, behind Chicago and Los Angeles, to serve as the concentration for a field of study.
“Detroit is neither a dense, industrial Chicago nor a sprawling, fast-growing, immigrant-rich Los Angeles,” reads the program’s website. “Yet Detroit is representative of a host of cities that have experienced sustained and substantial deindustrialization, depopulation, and disinvestment since World War II”
Dewar, who serves as faculty advisor to the program, said the purpose of this program is to help students not only understand the city, but also to help improve it through collaboration with organizations and groups invested in Detroit.
Fishman said he thinks the recovery of Detroit has been a long and strenuous process, but now that it is underway, the city will be back soon with more to offer than ever before.
“It is my belief that the recovery of Detroit has been slower than the recovery of any other major American city but it’s definitely underway and I think it will be one of the most striking recoveries of any city in recent years,” he said.
He said University students can benefit from seeing Detroit both as an example for understanding urban planning and economics concepts, but also as a hands-on learning experience if students engage with the city and get involved.
“There certainly are a great many opportunities for University of Michigan students that simply did not exist 10 or 20 years ago, such as being a part of this growth and transformation, and I think that’s a good thing,” he said. “Healthy cities thrive in part by people who have a choice choosing to come there and stay there.”