Will Detroit Ever Recover?

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 the 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 cite crime and corruption when discussing why residents leave Detroit.

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 firefighters 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, firefighters, 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 a 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 mean 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, if 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 firefighters 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 boomtown again.