Will Detroit Ever Recover?

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Once the United States’ fifth largest city, Detroit has seen a massive shift in residence. Enough people have moved to the suburbs that the city now ranks eleventh most populous in US. We’ve all seen the Super Bowl commercial about the gritty city with a heart of gold. So why are so many people moving out of Detroit, once the throbbing heart of the nation’s manufacturing industry?

Any number of factors could affect this mass exodus, but most folks who discuss residents leaving Detroit cite crime and corruption

Crime in Detroit has decreased steadily since the 1970′s, but it still has some of the worst crime in the nation. One Detroit area reports a property crime rate of 32.18 incidents per 1,000 residents, compared to a national average of 32 per 1,000. The violent crime rate is 16.73 per 1,000, compared to just 5 per 1,000 nationwide.

To help cope with this problem, Detroit Mayor Dave Bing announced a program to bring police officers, 53% of whom currently live in the suburbs, back into the city. As part of the program, called “Project 14,” police officers and fire fighters who move from the suburbs can purchase homes for as little as $1,000.

As Bing puts it, the program is focused on solving two of downtown Detroit’s major problems: public safety and home vacancy. Project 14 is a new initiative, but the concept of attracting police officers to the communities they serve is nothing new. Under HUD’s Good Neighbor Next Door program, public servants can buy FHA owned homes in revitalization areas for half price.

Under this program, fire fighters, police officers, schoolteachers and paramedics could buy a home on the cheap. The idea is that people in this line of work are community role models, and it places them in great position to respond quickly in times of emergency. And, the program applies a common sense approach: who wants to break the law in a police officer’s neighborhood?

Besides the crime rates, another big cause of Detroit’s declining residency is the US automobile industry’s decline. Many of the area’s other businesses supported the auto industry in some way. When manufacturers faced bankruptcy and had to cut costs, other businesses suffered. Fewer auto jobs and fewer auto dollars spent means less demand on the local economy. All that adds up to fewer jobs in the surrounding area, and the effects can be seen throughout Michigan. 5% of the state’s population has left.

Whatever the reason for fleeing citizens, all these vacant homes have one major effect on home prices: prices plummet.

This might not mean much for people looking to stay in Detroit. If you’d like to sell your home and move to another in the area, chances are that other home values are similarly depressed. On the other hand, you want to move out of Detroit—or any similarly downtrodden city—you might be selling low and buying high. Worse, you may find yourself with negative equity, when your outstanding mortgage debt exceeds the value of your home.

The good news is that many cities have been able to bounce back from economic slumps. Revitalization projects such as Project 14 can attract new neighborhood residents, who will create demands for local businesses. If many police officers and fire fighters move back to Detroit, they’ll need places to buy groceries, get their cars repaired, buy clothes for their children, etc. If the US auto industry can ramp up its competition with foreign manufacturers, Detroit could easily become a boom town again.

Published or Updated: March 22, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Money Beagle says:

    As someone who’s lived in Metro Detroit my entire life, there are a couple things worth noting. First, great post! Detroit is getting some positive buzz and it seems things are moving in the right direction. Second, one of the reasons that Detroit has suffered is a complete divide between the city itself and the surrounding suburbs. This still exists in many cases, but the new governor of Michigan, the mayor of Detroit, and some (but not all) suburban leaders are finally getting the clue that city vs. suburbs = nobody wins. Third, corruption has been a big downfall. The last mayor is currently in jail as well as many people that he allowed to do business with in Detroit. Unfortunately, this was nothing new. Mayor Bing seems to have gotten on the path to a clean city. Third, and finally, Detroit will need more than the automotive industry to truly succeed. Detroit and Michigan as a whole grew and fell as did the auto industry. Leaders were too slow to evolve and attract other types of business, so as auto market share eroded over the decades, so did the entire city (and state). Over the last few years, technology and the film industry have really started to take off. If leaders can continue to diversify the economy, this will lead to growth as well as the ability to better weather future economic downturns.

  2. Mary says:

    I believe Detroit is on its way to success again especially with the great media attention its getting but they need to get other companies to move to Detroit.

  3. Green Line says:

    It’s hard to believe Michigan was the only one of the 50 states to lose population from 2000-2010. Michigan has and advantage to turn around; it’s pretty much surrounded by those beautiful freshwater lakes. The state should push the medium and small quaint towns to lure more people to move there. I believe they then can see a rise in population for the 2020 census. As far as Detroit goes, the city really should not have put all its eggs in the automotive industry basket. It should have begun diversifying decades ago, and it should never have let the auto industry prevent it from building a subway/elevated network in the 50s and 60s when its population was nearing 2 million. There’s no reason a city that had that type of density rate should not have built a rapid transit network. But looking at how things are NOW, the city should invest in some large parks around the downtown area and the outlying areas. The vacant land is basically there. Large parks (like Central Park NY or Golden Gate Park SF) overtime will increase desirability in neighborhoods and the city. Then build some squares like those found in European cities or in DC. This would make Detroit (like DC) unique among American cities like DC, or how SF still has streetcars and trolleys. And then diversify. Yes the car industry may come back, sure it will, but this time around don’t just depend on it. Overtime Detroit can make a comeback.

  4. Steviee says:

    Well I don’t have the answer, it was a great article and I can only say that all the politicians in Detroit should be whipped out and start over. All we ever hear is how corrupt the city is and how unorganized it is. Fire all of them that are even a bit questionable. Old Detroit is dead they cant do things like they used to. It needs to be redifined reopened for new people. Even the people that moved away can stay away. We need new people to come in and reinvent the city as a whole. No attituted new businesses new concepts. Work hard to make money and play hard to support the economy. They keep buiding north in farm lands and open fields. Why not build new houses in the fields in downtown. That already have streets, history and then the business will follow. Stop building on farm lands build in the city. Just my thoughts Im not a economic gueiness. im just some guy that love Detroit and its history and would love to see it tell the rest of the US we are a strong city we can do anything we want. My dad remembers that city he grew up in that city. And he watched it fall and it brings a tear to my eye when he would tell me how great it was and how bad it has become. Thats all for now….

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