How the Job Market Impacts the Housing Market in Detroit
There is no question about the fact that Detroit’s bankruptcy filing caused a huge stir. With a staggering $18 billion in debt, Detroit became the largest municipality in U.S. history to file for bankruptcy—an action that has had a negative impact on virtually all of the citizens of Detroit. With the city completely out of money, the citizens of Detroit felt the impact of the bankruptcy hard. Garbage pickup was unreliable, buses either ran late or not at all, streetlights did not work, and many retirees lived in fear of their benefits being cut. But those were just a few immediate effects. What about the long-term effects?
Bankruptcy and the Housing Market
The problem is that while the bankruptcy certainly caused a sharp decline in the city’s public services and a decline in the auto industry, the economy also took a major hit as a result. One of those areas was the Detroit housing market. Even before the bailout, the housing market in the Motor City was not strong. With Detroit holding a top spot on America’s Most Dangerous Cities list and a metro area unemployment rate of 16%, it was not surprising that people were not eager to move into the city. Yet regardless, the housing market showed some signs of hope. Housing recovery grew due to a number of high-risk investors from both inside and outside the U.S. who wanted to see improvement in Detroit’s metropolitan areas. The renewed investments prompted some real estate agencies to move back to Detroit and take advantage of the improvement in the urban and suburban housing areas. But this was all before the bankruptcy. Surely without money and jobs the housing market would take a huge hit, right?
It comes as no surprise that an economic standstill and a lack of jobs would negatively impact any housing market. It is definitely true that if Detroit wants to see its property values increase, it needs to restart its economy and start paying back its debt. However, it does not seem that bankruptcy hit the Detroit housing market as hard as expected. Instead, Detroit’s shattered image opened the city up to more investment, especially foreign investment. Sandy Baruah, the CEO of the Detroit Regional Chamber, said, “One investor described it as an emerging market that happens to take dollars.”
The investment is something that is helping the city. The bankruptcy put Detroit on the world stage as an area in need of help. Now with the investment, new properties are beginning to emerge. Restaurants, hotels, and renovated homes are slowly cropping up in all areas of the city. The bankruptcy ended up simultaneously being a blessing and a curse. While there is no question that the housing market took a hit, the bankruptcy could potentially help the city get back on its feet.
What does the Future Look Like?
Regardless of the how the city progresses, it looks like the housing market still has a long way to go. The value of Detroit homes is growing at a rate of 2.6% each year. At this current rate, it will take Detroit about 14 years for homes to fully recover. Although the housing market seems to have a long way to go, the citizens of Detroit are optimistic that their city will recover. See more stats at www.usajobs.gov.