December 18, 2001

Henry Teutsch

    Over the past 5 years housing prices have risen in Detroit like they have in almost every other part of the country. The economy that was enjoyed by many under the Clinton Administration seemed to touch everyone with prosperity when it came to the standards of investments, land or property, stocks, bonds and mutual funds, and other staples which produce wealth over time. There is a problem though with Detroit and how the economy has affected this city.

    First the good economy produced many jobs, the lowest unemployment rate in the past thirty years. This was during a time when it seems that almost every type of job in America was considered a good job. Even the lower paying jobs were competing for employees. Companies were paying premiums just to talk to people. Detroit officially recorded its lowest unemployment rate in years.

    At the same time housing prices rose. Just as in the suburbs Detroit homeowners enjoyed the benefits attributed to owning property. The value of their land increased approaching prices that were before only seen in the suburbs. The housing market everywhere was experiencing boom times. Also new housing was proposed for the city in various places. Harbortown expanded its units on the riverfront. Other riverfront development owners also planned expansions or added additional units. The mayor announced new subdivisions in the city. Graimark is probably the most famous followed by the Crosswinds community that is being built on Woodward near downtown Detroit. Both of these housing projects are advertising prices from $200 thousand dollars to unofficially $500 thousand dollars. While these prices match those housing projects in some suburban areas it conflicts with the other economic indicators for this city.

    First the average income did rise in the 1990's in the city but arguably not as fast as it did for the suburbs and statistics show that black Americans still lag white Americans in pay scales. Also the taxes in the city are on average higher than they are in the suburbs. So a house would cost more in the city. Also insurance rates are higher in the city. City residents pay an income tax of three percent. So there are more costs associated with living inside the city of Detroit. But nonetheless many people still do and have not moved.

    There are people who live in the city who earn the income that can afford these homes but are they enough to meet the demand? And where are they living now. The approximate monthly payment on a $250,000 home is $1300 per month. That does not include any of the other expenses other than the loan payment. If there are many Detroiter's who can pay this amount, or higher, for a home than why is the city claiming that is hurting for money? These are the prices of homes on average for cities like Troy or Farmington Hills, cities where the average income is almost twice that of Detroit. So is there a demand for this type of housing from current Detroit residents?

    Or is it, as some have said, that the current administration is trying to attract white Americans from the suburbs back into the city. Will these types of houses be enough to lure people into Detroit who have shunned the city in the past? And what will happen with the current residents. The Crosswinds project has already begun in Brush Park where property battles are being waged over who owns and who must sell the historic homes in the area. Old residents are being forced out to allow the new residents to move in. Those town homes in Brush Park were once advertised for $89,000. Now the price nears twice that amount. What happened to cause those prices to double in the past 3 years? And if the property in this city is that valuable why are some areas in and around downtown Detroit still struggling for tenants and struggling period?

    The latest census figures show that people are still leaving the city. Is this part of a national trend or is it as others have said in the past that other areas around Detroit offer a better lifestyle and more bang for the buck. If the people who can afford to move out are moving than where does that leave the people who cannot afford to move? Will the new residents who move into Detroit and pay $200,000 for a home be living down the street from someone on general assistance? But mainly the question is how can the city be losing people if the developers are at the same time telling people it's a good time to move to Detroit?

    Which brings us more closely to the topic at hand, are the developers and the city administration practicing gentrification and using the housing prices to move the low income out of certain areas to take property and then give it to people of middle income? It's doubtful that those town homes on Woodward will sell for more than $100,000 if for that much. Looking at them shows that they were not designed with the affluent in mind. The exterior is drab and lacks the uniqueness or art inspired design of other cities and their downtown housing. Woodward is not yet a nice street to live on in that area and the buildings adjacent to the freeway still stand empty. There are mostly abandoned properties around Grand Circus Park. The city council seems ready to give property away in hopes that someone will make the eyesores go away. But real development comes from current residents not carpetbaggers.

    The city administration favors the outside development companies over the Detroit based and black owned businesses when many development projects are proposed or discussed. Those people who live in the area have the most to gain and lose should a development project fail. A faceless corporation from 1000 miles away may have money and a big idea but they will do what is in their best financial interests rather than lose money in lean economic times. If the city is trying to move low income people from areas in the city will they also move local business from downtown areas as well?

    Many of the proposed Campus Martius project is unfinanced and has no plans to begin. The Building slated for what is now Kennedy Square is contingent that the developers get tenants first. So in this now bear market and a shrinking economy how many companies will be formed who wish to pay the prices of a newly constructed building? Also the downtown office market is relatively cheap and new buildings will have to charge almost double to meet their costs.

    Since many times business can drive a market and boost a cities financial outlook where will the new business emerge. Will the casinos be the catalyst for the new housing dilemma? Will the thousand of high paying jobs promised to the citizens of Detroit be realized? And will housing in the city remain affordable to the lower income wage earner for a foreseeable time in the future? If the current administration continues to push forward they will be guilty of forcing the many people who sustained the city during the bad economic times out while rewarding those who fled the city for another life elsewhere.