Detroit Michigan has been featured as the topic of both economic speculation as well as social commentary. The slow evolution of automotive manufacturing jobs which have dwindled over the last ten to fifteen years have resulted in a loss of population for the struggling city (which now numbers less than 700,000 citizens).
The city of Detroit is not the first municipal center to declare bankruptcy in the United States but one of nine that have done so in the past ten years. In July 2013 the legality of the bankruptcy was questioned and over turned and the negotiation for repayment or relief from its creditors is giving speculation that Detroit may actually enter a period of renaissance after its post bankruptcy restructure. It is this optimistic prospect that has domestic and international investors interested in what the future might hold for Detroit.
Current Home Prices in Detroit Michigan
The mass exodus of general laborers from Michigan has left the market saturated with more home inventory than interested buyers. Whenever supply exceeds demand there is always opportunity, and the same holds true for home investment in Detroit.
- The average home in Detroit is listed for $49, 535
- The number of homes for sale from September to December 11, 2013 was 1,969 units
- There are currently 3,566 foreclosure properties on the market in Detroit
In 2009 the median price of homes in Detroit, Michigan fell dramatically from over $80,000 to less than $40,000 by 2011 (or a price drop of more than 50% in value). The trend shows that house prices are starting to climb back up (albeit slowly) due to a number of factors including robust foreign property investment. That is the strongest indicator that North American investors should be taking a closer look at the real estate opportunities available in Detroit.
About the Detroit River Front
While the outskirts of Detroit and specific areas of the city feature rampant abandoned and empty buildings the downtown core of Detroit remains vibrant, new and well maintained. The River Front property value is being inflated by the constant improvement of it by the City of Detroit, and a non-profit Detroit River Front Conservancy was created to evaluate the needs and opportunities of developing the land beside the historic Detroit River.
"The Conservancy was launched in 2003 to not only develop public access to the riverfront, but to also serve as a catalyst for economic development," said Matt Cullen, Chairman of the Detroit River Front Conservancy Board. "As we mark our tenth anniversary, we think it is the right time to take a deeper look at how the new riverfront is contributing to an improved quality of life for Detroiters and our region, and at the same time driving significant economic development for our community."
The view from downtown Detroit is spectacular as it overlooks the Detroit River and features many new high rise structures, housing and condos as well as cultural and entertainment venues. Anna Scripps Whitcomb Conservatory on Belle Isle is a world class exposition designed by the world famous architect Albert Khan. The Charles H. Wright Museum of African American History is deemed to be the world’s largest institution educating on the culture of African-Americans and their origins.
Various theaters including the restored 1922 Detroit Opera House / Michigan Opera feature cultural engagements. The five story Detroit Princess Riverboat adds charm and ambiance and is used as an eclectic event venue for private charter. The city is host to the Detroit Red Wings franchise and the Detroit Lions, historical sites and a host of fine dining and entertainment venues.
In other words, despite its economic woes, Detroit remains a world class city downtown with facilities and amenities that appeal to residents of all ages. And given the decline of the outskirts of the city, the municipality appears to be taking the maintenance and preservation of the downtown seriously by investing in its projected growth and potential. Savvy investors around the world are taking note and eagerly buying up properties to speculate on the rebound effect or recovery of Detroit Michigan.
"The Detroit riverfront is perhaps the most valuable waterfront property in the United States that still has significant opportunities for development," said George W. Jackson, Jr., president and CEO of Detroit Economic Growth Corporation. "The Detroit River Front Conservancy and its public, philanthropic and private partners have literally paved the way for economic revitalization by building the Detroit River Walk and making other infrastructure improvements. The economic impact reported today is only the first wave of results we expect to see as we all contribute to the accelerating momentum here."
Opportunities for Rental Income Investment
The large David Stott building transferred hands to the Dongdu International (DDI) Group of Shanghai for $4.2 million dollars. This is just the tip of the iceberg when it comes to foreign purchases of land and properties in the United States. The commercial real estate purchase for American properties totaled more than $3 billion in 2012. So why is investment in Detroit so appealing right now for international investors?
- Annual spending in the downtown river front area is estimated as $43.7 million by visitors, residents and employees.
- The tax revenue generated by river front activity is estimates to be $4.5 million dollars.
- Properties are affordable in the current economic downturn.
As the Chinese production market begins to slow and become more uncertain there is an increased demand to invest in foreign land properties. Chinese investors are speculating that the current state of Detroit is temporary, and the public and community drive to help Detroit recover are excellent signs that it will make a recovery. The opinion is that any prospected investments in land or dwelling for rental or resale are due to increase in value according to an article by Dustin Walsh of Crain’s Detroit Business titled “Good Deals in Real Estate Draw Chinese Investors; more expected” (October 20, 2013). Walsh also cites the Chinese familiarity with the automotive manufacturing sector and the attention that the municipal bankruptcy garnered around the world as key factors for attracting investors.
While the City of Detroit is down, it is definitely not out, nor is it beyond economic recovery if you follow the examples set by the robust foreign real estate investment. The lucrative purchases are on the Detroit waterfront and river in land and condominiums and other residential properties.