Quote:
Originally Posted by jd3189
Exactly, which is why I don't understand people here being apprehensive about investing in Detroit. I would invest there myself if I had enough money.
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Okay, gather around kiddies from some quick pointers about macro trends in Detroit.
Surprise, surprise on this one, but Detroit is uniquely exposed to boom/bust cycles because of the singular focus on the auto industry. There has been a bit of industry diversifying over the past decade, but it is still a region susceptible to the whims of the auto industry. The next recession might give us some clues on how well Detroit has done in diversifying.
Another major risk - IMO the most major risk - is that lack of regional controls on sprawl has worked against existing land and property owners, mostly for the benefit of greenfield developers in the suburbs and exurbs. One such example is a policy in Michigan that allows rural townships to borrow money for infrastructure expansion based on projected property tax revenue on not yet built developments. In other words, a rural township can borrow to expand sewage and roads for a new Walmart and housing development based on the
theoretical revenue that may come from the Walmart and property taxes on the new houses. It is an insanely stupid policy to have in a slow growth region like Detroit, and during the housing collapse that speculation caused severe financial distress for some of those townships. Ironically, on the other end of that spectrum, the same recession ultimately pushed Detroit into bankruptcy.
The recent uptick in preference for an urban lifestyle has pushed a lot of energy back into the core Detroit real estate market, but the Detroit area's propensity for sprawl will always be a major risk factor for real estate investment in Detroit.