With the current media blitz of Good news swirling around Detroit’s comeback and the recent Superbowl ad featuring the Chrysler 200 and Eminem are you starting to believe that Detroit may actually become a thriving Metropolis?
Every once in awhile I try to come on this forum and sell Detroit…basically because it is shaping up to be the comeback story of our generation.
You may be missing the boat…Think about it the U.S. Automotive industry is staging it’s comeback here…
Hi,
Absolutely Not!!!!!!!
Let’s see the City of Detroit lost another 40,000 roughly odd people in 2010 and real estate values fell by 9.4%!
When you show me 5 years of Detroit growing by 40,000 people or the population exceeds 1m and property is appreciating 2 or 3 percent per year it will be time!
By the way do you realize how many parts plants and production plants Chrysler had back in the 1950’s and 1960’s? If you were announcing that every parts plant and every production plant Chrysler ever had in Detroit are re-opening that would be news!
But in order for that to happen every import car company in the US would have to stop production, marketing and production altogether and pull out of the US market!
GR
I love the commercial, but the commercial is misleading. The Chrysler 200 is made in Sterling Heights, Michigan, not the City of Detroit. Chrysler’s headquarters are in Auburn Hills, Michigan, not the office district of downtown Detroit. Those Chrysler jobs are in the suburbs of the metro region of Detroit, not the city itself. It can’t become a thriving metropolis unless those auto companies move back into the city itself or the governor forces an amalgamation of the region into a Super City like Jacksonville, Florida, which is not gonna happen because it would mean that blacks no longer have a voting majority in a metro Detroit region of 5 million people like they do in a city of 800,000.
And, real estate in those predominately white auto cities are not cheap like a city that is overwhelmingly black like Detroit. So, it’s faulty logic that a comeback of the US Auto Industry will have much of an effect on the City of Detroit, which you’re selling.
I mean come on, let’s get back to reality here.
Gold River,
Okay…Gauging from standard real estate investment metrics Detroit may not look very attractive. But that is an exterior view…
When you are looking at this from a strictly data driven perspective you may miss the point and the opportunity. There is an unprecedented, and Herculean coalition formed to bring Detroit from the brink. As Mayor Bing stated in His State of the City address yesterday, never before have you seen such an aggresive collaboration between Federal, State, and local Government, combined with the vigorous particpation of Business and philanthropic organizations for one sole purpose…bringing a city back. The stars have lined up.
Now, you should also take into consideration that while the City as a whole may be continuing in the opposite direction there are very strong, new areas which are emerging and thriving. These areas are hot and growing. Jobs and new industries are expanding rapidly in these sectors. Downtown, Midtown and other such places are experiencing a boom as it relates to apartment leasing and condo sales. The trends are directly opposite as it relates to population shift, and jobs…
This building downtown is over 90% occupied by Young professionals moving back into the city.
[http://www.youtube.com/watch?v=pBC28NSVvuM
Another great emerging neighborhood…
http://www.youtube.com/watch?v=327-c5knE3M&feature=related
You can buy a 10 unit in this neighborhood for a fraction of what it would in other places…and the tenant demand is there…
Just sayin…Five years from now will probably be too late…
The Kales building rehab from an empty office building to condos required a lot of gov’t loans, grants and tax credits to get off the ground. Banks are not going to refinance those rehabs.
http://www.detinvfund.com/representative-projects/kales-building/
“Kales Building LLC utilized Real Estate financing from both the Lower Woodward Housing Fund and the Detroit Investment Fund to complete the Kales Building project. Additional financing was provided by the Detroit Economic Growth Corp., MuniMae Midland, Federal and State Historic Tax credits, Michigan Business Credits and developer equity.”
The vacancy rate in 2010 in the Detroit CBD (where the Kales is located) remains unchanged at 31.3%
http://www.grubb-ellis.com/SitePages/GetFileFromDB.ashx?type=9&id=889
And there’s still several dozen vacant high rises in downtown. Some that remain vacant since the riots of 1967. And that’s after over 130 vacant buildings in downtown have been demolished since the riots.
Corktown video is misleading. Corktown still has a lot of fire bombed and boarded up buildings that are missing from the video.
Speaking of apartment buildings, here’s two really nice vacant old vacant beautiful apartment buildings that sold on e-bay recently.
One was a 44 unit at 100 Clairmont, in the former wealthy Boston-Edison District.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&hash=item4154b38178&item=280593924472&nma=true&pt=Residential&rt=nc&si=OyvrrOiZZvuEfhri%252FxUFTKnCcTQ%253D
The other was a 20 unit at 13,100 LaSalle Blvd., another former wealthy neighbourhood. A structurally sound building. Sold for $9,088.00. If you drive through that area, you have several apartment buildings that went bankrupt and are boarded up. Amazing moorish brick detail.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&_trkparms=algo%3DLVI%26itu%3DUCI%26otn%3D3%26po%3DLVI%26ps%3D63%26clkid%3D5907251995801545375&_trksid=p3286.m7&category=12605&item=280606226268&nma=true&rt=nc&si=OyvrrOiZZvuEfhri%252FxUFTKnCcTQ%253D
Both buildings went bankrupt and were boarded up in the past decade because they couldn’t get tenants in there to pay the operated expenses. Yes, you can buy cheap apartment buildings in downtown, but you can’t make money off of them. No bank or credit union would finance it in a million years.
Hi,
I owned property in Detroit Michigan up until 2005 when I sold the last property!
But when the city loses 40,000 people, that is roughly 8,000 families which are probable 7,000 renters and 1,000 potential home owners, so it means the vacancy factor increases every year, someones property sit’s vacant or has one less tenant and that much less rental income.
It is a shame but as an investor I will not go back into Detroit unless there is clear increases of citizens, increases of appreciation and sustainable employment to ensure the population does not continue to fall, but so far the population has been falling every year since 1960!
GR
I watched some sort of documentary about Detroit recently … and that city is definitely not worth investing in right now, at least when it comes to single family homes. The city is sitting at something at like a ~50% vacancy rate on single family housing and has (recently had) massive amounts of foreclosures, tons of abandoned houses, etc. That documentary made it look almost as bad as those neighborhoods that were flooded out & abandoned in New Orleans after that the hurricane … but not quite that bad.
Combined with high taxes (personal, corporate, etc) and the above factor — I wouldn’t touch Detroit with a 2 foot pole. Or I guess it would be a thousand mile or so long pole from Dallas. LOL!
But in reality, there is money to be made everywhere and in every market. If you can do it … go for it. It’s just not for me.
Dave,
Okay lets visit the fundamentals here…
When Harlem made the transition from being considered a irreparable slum, to a haven for young talented professionals and eventually the hip spot for even wealthier buyers…When prices for properties shot upward sometimes 10 to 20 times previous values, how did it happen?
If an investor looked at how things were in Harlem prior to the boom they would have missed the opportunity…You couldn’t see it like that. You have to have a forward looking approach. If you had a time machine I am sure you wouldn’t mind picking up a few properties in Harlem in 2006 and selling them in 2007-8. Detroit is the new Harlem on steroids.
As an investor you want to see these things before they happen…You want to get in at the beginning of the trend…But how do you know when there is about to be an explosion? Well one major indicator is when Jobs arrive, and you see things like this:
The “Live Midtown” plan:
Detroit Free Press, Feb 19, 2001 article excerpt
“Eric Johnson, 28, a Wayne State University student and employee, became one of the first people to apply last week for financial incentives to live in Midtown Detroit. The engineering student made the move on Monday from Farmington Hills into his new studio apartment that’s within walking distance of campus and dozens of restaurants, bars, entertainment venues and Detroit’s pro sports stadiums.
Midtown’s three largest employers, along with some matching funds from the state and various foundations, will put $1.2 million on the table for employees who decide to rent or own in Detroit’s Midtown area. The program is called Live Midtown. Johnson found his apartment last month, but hadn’t signed the lease when he heard about the incentives that would give him $2,500 the first year and $1,000 the second year if he moved. The money for the rent will be paid to the property manager.”-Detroit Free Press
This incentive program worked liked a dream and is being followed up by other very aggressive campaigns. This same program is offering buyers $25,000 to buy properties. There is also an initiative called Project 14 which is designed to bring Police officers into high value Neighborhoods close to Downtown and Midtown.
These things aren’t happening on their own, they are being spurred intentionally by a very impressive and unprecedented collaboration of Business, Foundations, Universities, and Government agencies all working together across partisan lines. The New Governor Rick Snyder a Republican, stated very plainly that the survival and revitalization of the State depends on a renewed and thriving City of Detroit. The Regional leaders are all saying the same thing. And the Federal Government is chiming in indicating that the recovery of the City of Detroit would be symbolic of the recovery of the U.S. automotive industry and the return to prominence of the American brand-Which the Chrysler commercial attempts to convey…
If this up from the ashes idea is to work it will require help from everywhere and it is happening. Detroit’s rebirth is intentional.
I wish Detroit well…I really hope they don’t pin their long-term hopes on Chrysler-Dodge-Jeep.
Keith
That’s a terrible analogy. The only reason Harlem took off is because it’s a neighbourhood of a powerhouse like Manhattan. When you have condos selling for $8 million in Manhattan, young professionals are going to look for cheaper accommodations in neighbouring areas that they can commute to work from like Harlem. Detroit doesn’t have a financial powerhouse like Manhattan next door and no one is going to go from Detroit to cities like Troy in Oakland County when there’s plenty of cheap real estate in dying cities like Pontiac in Oakland County. You’re way better off buying cheap real estate in Pontiac than Detroit using that line of reasoning.
Dave, we should have a cup of coffee…
I am planning on meeting a few of the folks entrenched in the revitalization of Detroit effort sometime next week. I am actually going to print this exchange and give it to them for review. I think it would make for great reading.
You are right in that Detroit doesn’t have a neighboring Manhattan, however we do have a neighboring Birmingham, Grosse Pointe, Troy, Farmington Hills, Bloomfield Hills, etc which is home to High net income people who may wish to live a little closer to where the action is projected to be.
Take a look at this article from Today’s Free Press.
http://www.freep.com/article/20110227/NEWS01/102270473/1001/rss01
This is the method to the madness…
Notice that according to the same people who pioneered the resurgence of this section of philadelphia, the demand and interest in Midtown is Greater…
My understanding of the Live Midtown program announced last month is that Wayne State University and the Kresge Foundation set up a $1.2m fund to provide up to $25,000 in forgiveable loans to buy a home in Midtown or a $2,500 1st year and $1,000 second year renter’s allowance so that workers at the University or Medical Center can live in midtown instead of commuting from outside Detroit. What is that going to translate to? 100 junior employees that will now reside in midtown in a city that was built for 2 million people that now has a population of 800,000? Those kinds of numbers sound like a drop in the bucket in terms of changing the direction of Detroit’s huge exodus.
http://thesouthend.wayne.edu/index.php/article/2011/01/new_incentives_to_draw_residents_to_midtown
Population of Detroit drops to 713,000, which also reduces state and federal funding to the city.
Detroit’s Population Crashes
Census Finds 25% Plunge as Blacks Flee to Suburbs; Shocked Mayor Seeks Recount
DETROIT—The population of Detroit has fallen back 100 years.
The flight of middle-class African-Americans to the suburbs fueled an exodus that cut Detroit’s population 25% in the past decade to 713,777, according to Census Bureau data released Tuesday. That’s the city’s lowest population level since the 1910 census, when automobile mass production was making Detroit Detroit.
The decline, the fastest in city history, shocked local officials, who had expected a number closer to 800,000. Mayor Dave Bing said the city would seek a recount.
“If we could go out and identify another 40,000 people that were missed, and it brings us over the threshold of 750,000, that would make a difference from what we can get from the federal and state government,” Mr. Bing said at a news conference Tuesday.
In all, the city lost more than 237,000 residents, including 185,000 blacks and about 41,000 whites. The Hispanic population ticked up by 1,500. Meanwhile, the black population in neighboring Macomb County more than tripled to 72,723, constituting 8.6% of the county’s population in 2010, compared with 2.7% a decade earlier. Oakland County’s African-American population rose 36% to 164,078.