Rebound?

http://www.citylab.com/housing/2015/10/is-detroit-really-rebounding/409147

Detroit, Michigan
Kevin Chang/Flickr
citylab.com

Hello Everyone:

Today we are returning to a subject we have not talked about in a long time, the City of Detroit, Michigan.  After nearly one year, the city emergedout if an unprecedented bankruptcy.  In a recent report published by the Pew Charitable Trusts, "Things are looking up."  Are they?  This is the question that Kriston Capps addresses in his recent article for CityLab titled "Is Detroit Really Rebounding?"  It can be said that things are, indeed, looking up but this positive trend is uneven, affecting some parts of the city.  For example, the report notes, "utility crews are ahead of schedule in installing some 65,000 LED streetlights throughout the city.  And under Mayor Mike Duggan, the city has brought complaints against 2,000 blighted property owners."  Specifically, the report states, By the end of the year, the city will have torn down about 8,000 vacant homes. (http://www.pewtrusts.org)

Red Wings Arena
detroityes.com

While this may sound like good news, Mr. Capps writes, "Some of the indicators are mixed,Mir beneficial to only some parts of the city, like the new Red Wings arena and th attendant $650 million entertainment district, or the streetcar going up along Woodward Avenue."  Even the massive success of Shinola-the company dedicated to producing American-made bicycles watches and leather goods-seems like an unparalleled success.  Yet, the word "rebound" does not seem like an entirely fair description of the changes taking place in the city. "Rebound" suggests, "with enough time,mgiven the present conditions, things will actually  turn around."  For some Detroit residents this is true but for the city's poorest and most vulnerable, it is not completely clear that their situation is getting better.

Abandoned Detroit home
reuters.com

However, there are some aspects of this optimism that could be better described as worsening.  The sheer scale and severity of the city's vacancy crisis make forward progress a difficult road to travel.  In fact it may seem like an impossible journey.  The Pew Charitable Trust is not the only one with Detroit on its mind.  Recently, the Urban Institute (http://www.urban.org) launched an ongoing online symposium on the subject of Detroit's housing recovery featuring speakers and experts in the field.  One of the speakers was Timothy Thorland, executive director of Southwest Housing Solutions, who delivered this stinging assessment:

The specific challenges in Detroit's housing market are certainly not uncommon circumstances in cities all across the country.  Whether it be vacancy, abandonment, low valuations, aged housing stock, constrained resources, lack of mortgage product,Mack of access to capital, high property tax, high insurance premiums or the like, what makes it nearly catastrophic is the unique combination of the scale and acuteness.  The Detroit market is dealing with all of these issues simultaneously.  (Ibid)

Household Equity and Share of Loans (L)
Number of Loans Underwater (R)
Urban Institute
city lab.com

There are individuals who mostly agree with the Pew study.  One of these people is Erika C. Poethig, director of urban policy initiatives, cites the organization's Detroit Housing Tracker, indicating  the declining number of underwater while the share of household equity is on the upswing.  That is the good news.  Ms. Poethig writes:

And yet, Detroit is grappling with some serious challenges-more than 80,000 vacant homes drag down surrounding property values and create the conditions for crime; distressed sales complicate the appraisal of properties, which make getting a mortgage difficult for many potential homeowners; and, many of the available properties require significant rehab that goes well above the loan-to-value ratios most mortgage products offer.

There other American cities facing the same challenges, but no other city has to deal with these issues at this scale.

Blighted Southwest Detroit-area home
archive.free.com

Now, yours truly is not one to throw cold water on Detroit's happy moment, especially when they been so few and far between.  None these experts needs another reminder about the dire vacancy crisis.  Mr. Capps cites Laurie Goodman, director of the Housing Finance Policy Center for the Urban Institute, 

Other cities that have lost population and industry-Rochester and Syracuse in New York; Chicago; Cleveland-have created programs to retain equity for homeowners (and therefore retain homeowners). 

This something that Detroit can definitely learn from and adopt elements of these programs.  Now this is good news.

Bright moor neighborhood, Detroit
teamowens313.wordpress.com

Be that as it may, there is also very bad news.  Kriston Capps reports, "Wayne County's tax-foreclosed property auction, for starters, is a serious stress on thousands of owners and occupants living in Detroit."  The county auction is grim reflection of the city's auction.  On one side, the Detroit Land Bank Authority strives to place new owners in vacant homes and ensure they stay there by mandating renovations and tenure (the owners must live in the house for a period of time), give or take.  The Wayne County auction makes no such requirements.  The result is, "anonymous corporations buy up hundreds of properties at fire-sale prices (as little as $500); extort whatever rents they're able to from the occupants; and then skip out on property taxes for three years-only to buy back the property when it come up again in another auction."

To say that this vicious cycle is a disgrace, is an understatement.  Emerging from bankruptcy has not alleviated the situation for Detroit's poorest of the poor.  Thus, the answer to whether or not Detroit is rebounding depends on what part of the city you are looking at.  Kristin Capps concludes, "I'm expecting that former Detroit Land Bank Authority Deputy Director Dekonti Mends-Cole's contribution to the Urban Institute symposium will shed some light on the experience among the poorest Detroit's."  One solution for increasing Detroit's tax base and revenues without burdening the residents cannot afford to pay it: immigration.  Specifically, when the Syrian immigrants arrive.