What once was a booming city known as the Motor City and recognized as the heart of America’s automotive industry, Detroit struggled greatly after depopulation, deindustrialization, and bankruptcy. It was a city in poor condition, a place that had seen better days. For a long time, this was the predicament of the city. Detroit was a sad area with many abandoned and foreclosed buildings. But, things are heating up. Detroit is booming.
Although this city still has a long way to rebound from the long decline it suffered, years’ of effort have helped the city’s real estate market recover. In 2018, for the first time in at least seventeen years, the city of Detroit experienced a rise in residential property values. City officials report that the increase reached nearly 60 percent. Detroit mayor Mike Duggan expressed that this development is a sign of the city’s progress.
Residential properties are rising in value and the commercial real estate market of Detroit is also booming. This commercial market boom is not showing signs of stopping soon. This news is exciting people all over the world. Things are surely changing in Detroit, and they are changing for the better. The rich and powerful are taking advantage of such opportunities and growth.
How is Detroit’s real estate industry flourishing?
In 2018, Detroit appeared in several rankings relating to the real estate industry. At the beginning of the year, Detroit was in nineteenth place as one of the hottest real estate markets in the United States, according to Realtor.com. In November 2018, the area of Detroit-Warren-Dearborn (Detroit and two bordering suburban cities) ranked ninth place on the real estate market hotness index, also by Realtor.com. The city of Detroit also ranked first among cities with the largest rent increases in 2018, claimed SmartAsset. The downtown area of Detroit has also been garnering increased real estate prices and experiencing high occupancy rates.
Who is buying this real estate?
Millennials in part are driving this real estate boom. Many are flocking to Detroit like a gaggle of geese brought by migration and looking for a place to rest in downtown. Baby boomers are also turning the tide and purchasing real estate properties. Companies across the United States and around the world have also set their sights on the city’s real estate. A number of companies are investing and buying properties for their businesses.
Why is Detroit’s commercial real estate market booming?
Just how did the Motor City create such great change, going from bleak despair to a place on the real estate market hotness index? How did it emerge to earn the nickname America’s Comeback City? What are the reasons for its growth? There are many questions that require answers.
People are interested in Detroit real estate. In one sign of the city’s hot real estate market, the median listing time was just thirty-nine days, compared to the national average of sixty-six days. This means that once a Detroit property is listed on the market, it only takes about a month for someone to buy it. These quick sales mean that Detroit is a good sellers’ market. People can receive fast, quick profits from real estate.
In a booming market with more demand than supply, prices are also increasing. The real estate market in Detroit has been garnering higher prices. Properties are even listed and sold for millions of dollars. Before, other Detroit properties were sold for pennies on the dollar. Prices in Detroit’s real estate market increased by about 10 percent in 2017.
Since the supply of real estate properties is limited, competition for city real estate is fierce. People and companies are buying real estate as investments in hopes they will produce a nice payoff in the coming years. There are no signs of this practice ending any time soon, as long as people receive solid returns on their city investments. New properties are also on the rise in Detroit and investors are seeking to acquire these income-generating properties.
Major investors are coming to Detroit to participate in new and exciting opportunities. In 2018, a number of large companies each contributed $5 million for Mayor Duggan’s Strategic Neighborhood Fund, an effort intended to improve commercial corridors that aim to attract even more investors to Detroit. This $35 million contributed by these companies joined $15 million donated by the Kresge Foundation and is part of a goal to raise $100 million from private donors.
With increases in commercial real estate, businesses are opening and job growth is on the rise in Detroit. As businesses bring new job opportunities to Detroit, residents are moving back to the city and more people are becoming attracted to what Detroit has to offer. Population and business growth has been creating greater demand for commercial and residential properties alike.
The rebirth and revitalization of Detroit and its growing economy have helped transform Detroit. As someone who used to live in California and then moved to Michigan, the real estate market has been a major engine for growth in the Motor City.