Detroit Market Analysis
Detroit: The Comeback City
For many years Detroit was long recognized as the “Motor City” of the US because of its historic roots in the automotive industry. It was during this booming era that Detroit built its charm as well as its rich architectural and cultural heritage that it is still known for today.
Since then, the city has witnessed some dramatic changes, most notably in 2008 when the financial crises took full effect. What was once a flourishing city became a ghost-town as many of its residents abandoned their homes to seek better opportunities in neighbouring cities and states.
Detroit’s Rebirth
Back in 2013, Detroit filed for bankruptcy protection, carrying more than $18 billion in debt. Today, Detroit is out of bankruptcy and issuing bonds backed by its own credit. It's something few experts predicted could happen so quickly.
Detroit and the state of Michigan declared the city open for immediate investment. Capital injection into the city has allowed for a fast-paced revitalization of its downtown area, improved public services such as parks and transportation routes, increased neighbourhood reinvestment, and support for small business owners (Mayor’s Office, City of Detroit).
Large-scale projects have been announced such as Fiat Chrysler Automobiles’ new plant which will result in a $2.5Bn investment in Detroit and will employ an estimated 3,850 residents.
Detroit is on the rise to become America’s next hot metropolis
The city of Detroit is coming back with a vengeance and it is slowly transforming into an attractive metropolis for millennials seeking new opportunities as well as experienced workers in the areas of technology, finance, electric cars, construction and engineering.
With this new influx of educated and career-driven individuals into the city, Detroit’s residential neighbourhoods are improving rapidly in order to keep up with the demand for housing.
Benefits of Detroit’s Real Estate Market
Growing Economy and Investor Confidence
✔ High-end retailers like Whole Foods, Hermes and Greyson Clothiers have opened or will open stores this year in Detroit.
✔ High tech stalwarts like Microsoft, Google, Pinterest and LinkedIn have opened offices in Detroit.
✔ General Motors will invest $2.2 billion in a Detroit plant where it will produce all-electric trucks and sport utility vehicles.
Unique Appreciation Potential
✔ Home values are expected to increase by 6% to 12% annually over the next few of years, creating unprecedented gains for real estate investors.
✔ Abundance of homes that haven’t been repaired or rehabbed leaving plenty of opportunity to grow value and rents quickly.
✔ As entire neighbourhoods benefit from new infrastructure and new employment centers, you’ll also see new restaurants, stores and other amenities springing up. That means more money in the community and increased home prices.
Leading Growth in Population and Jobs
✔ Along with Grand Rapids, Detroit is leading Michigan in population growth.
✔ A Reuters analysis of federal data for 378 metropolitan areas found that Detroit ranked tenth for employment expansion, representing 1.73 percent of total US job growth.
✔ From June 2018 to June 2019, growth in the leisure and hospitality sector was up by 2.9% in the Detroit metro, against 2.0% nationwide.
✔ A new Jeep plant on the Eastside -- a conversion of the Mack Avenue Engine Plant -- is projected to add 4,950 new jobs to the city.
Engaged Civic Leadership
✔ Detroit’s leadership has taken an aggressive stance on improving the residential market -- demolishing blighted areas, adding transit improvements and stepping up the city’s amenities. These steps have significantly improved the overall quality of life in the city and added value to home prices.
✔ Detroit in its need to increase revenues and attract reputable investors has created a strict residential rental registration program. Landlords and investors who have been operating with poorly repaired and inadequately maintained homes are being forced to bring their properties up to code or face fines. Although not an ideal program for investors and landlords, the program is impacting neighbourhoods positively while giving additional rights to landlords when dealing with tenants in the courts.
✔ Detroit has a number of highly engaged and action-oriented non-for-profits operating within the city to help improve education and financial services to the community. This is bringing more stability to the area both in the near- and long-term. This stability translates into a more reliable and financially capable tenant pool.
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