With the positive gains made by the American automotive and engineering industries, many midwestern cities have begun to rebound as well. Lots of young, educated people are moving to the region and the availability of good jobs is on the upswing. With respect to one of the hardest-hit cities, many thought Detroit was finally ready to overcome its past, forget about its bankruptcy and put to bed the corruption that has plagued its government. Well, not so fast. Detroit may not be doing as well as people thought.
Some parts of the city are doing well and the quality of life is improving. Other parts of the city, however, are not faring so well.
Here is the good news: one year after Detroit exited its historic bankruptcy, things are looking up to some degree. According to a new report released by the Pew Charitable Trusts, municipal utility crews are actually ahead of schedule in placing and installing thousands of LED streetlights across the city. Also, under Mayor Mike Duggan, Detroit has brought various complaints against 2,000 property owners whose real estate is devalued, damaged, or abandoned and basically has seen better days. The report states that, “By the end of the year, the city will have torn down about 8,000 vacant homes.”
In other parts of the report, the study found that a number of Detroit’s positive developments and attributes only benefit some parts of the city, like the $650 million entertainment district and the new Red Wings arena.
So, while a number of changes in the city are definitely positive, it may not be accurate to claim that Detroit has “rebounded.” For some residents, given enough time and the current conditions, things will likely keep heading in the right direction. For many of its citizens, including the most poor and needy, there is no real indication that their situation is improving.
Unfortunately, there are some areas of the city that are doing worse than a few years ago, and it does not look like things will reverse course. The sheer number of dilapidated and/or vacant properties in Detroit is going to make forward progress extremely difficult, if not impossible.
Timothy Thorland, executive director for Southwest Housing Solutions observes that, “The specific challenges in Detroit’s housing market are certainly not uncommon circumstances in cities all across the country. Whether it be vacancy, abandonment, low valuations, aged housing stock, constrained resources, lack of mortgage product, lack of access to capital, high property tax, high insurance premiums or the like, what makes it nearly catastrophic is the unique combination of scale and acuteness. The Detroit market is dealing with all of these issues simultaneously.”
And, while some point out that the decreasing number of underwater mortgages and the rising share of household equity is good news, other property issues offset that positive news.
Erika C. Poethig, director of urban policy initiatives, states that, “[Despite the positive indicators,] Detroit is grappling with some serious challenges – more than 80,000 vacant homes drag down surrounding property values and create the conditions for crime; distressed sales complicate the appraisal of properties, which makes getting a mortgage difficult for many potential homeowners; and, many of the available properties require significant rehab that goes well above the loan-to-value ratios most mortgage products offer. Other cities face these challenges, but no other city in the U.S. has to tackle these issues at this scale.” (Emphasis in original).
So, while people want to focus on the positive, the negative forces working against Detroit cannot be ignored if the city hopes to make a full recovery.
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