Detroit’s housing market has undergone a dramatic transformation in the last five years. America’s Motor City suffered after the global financial crisis, going on to file for bankruptcy in 2013. Since then, though, the city has been gradually revitalised, fuelled by investments from people such as billionaire Quicken Loans founder Dan Gilbert.
In 2015, UNESCO named Detroit the USA’s first City of Design. In 2016, Michigan’s workforce expanded by 1.9 per cent, the third year of labour force growth in a row. The car industry, too, has stepped up several gears, with US auto sales setting a record in 2016, with 17.55 million vehicles sold.
Motor City is facing fresh scrutiny from US President Donald Trump, who has said that he wants to clamp down on American automotive companies producing cars in Mexico, as part of his drive to rebuild America’s manufacturing jobs. The industry, though, remains upbeat, as it shifts focus from car sales, which are sliding, to trucks and SUVs, which are booming.
Trump met with General Motors, Ford Motor Co. and Fiat Chrysler Automobiles in January, and the Big Three have all reiterated their existing investment in domestic labour.
General Motors has invested over $11 billion in the last two years to create or preserve jobs, the company said in a recent statement. GM has pledged a further $1 billion in US investment in 2017 to create a further 1,500 new jobs. In total, the company expects to create more than 5,000 new US jobs in the next few years.
Last month, meanwhile, Ford announced that it would stop construction of a $1.6 billion plan in Mexico, instead injecting $700 million of that into Michigan’s Flat Rock Assembly plant, which will make new electric and autonomous vehicles.
The impact the motor industry has upon Detroit and Michigan’s economy is significant. Recent data from the Detroit Regional Chamber’s State of the Region show that since 2010, employment in the car sector has risen 31 per cent, with the number of jobs in Southeast Michigan motor vehicle manufacturing up from 87,655 jobs in 2010 to 114,591 in 2016. The start of the year, meanwhile, saw the Detroit Auto Show draw over 806,000 visitors, with David Sowerby for Loomis Sayles & Co. estimating the regional economic impact from the 2017 event to be $450 million, up $20 million from 2016.
The economy’s recovery has also helped the housing market. Fuelled by Gilbert’s investment, old buildings in downtown Detroit are being turned into apartments, while more development work is on the cards for 2017. The new QLine streetcar is expected to open in April, connecting the woodward avenue corridor some 3.3 miles between downtown and the revived new centre area. It passes through midtown, home to the Institute of Arts and the entertainment-focused district, where a stadium opening this autumn will be shared by the Detroit Red Wings and Pistons.
There is still a way to go for the market to return to normal, but demand is on the up, not just from investors but increasingly from some local buyers. In 2016, property sales jumped 14.55 per cent compared to 2015, according to the Detroit Board of Realtors.
Investment company Global Investments Incorporated, which has been selling turn key opportunities in Detroit with hands-on management for the last five years, predicts that 2017 will be the year of the Motor city.
More crucially, though, 2017 will also be one of the last years when investors can really benefit from the city’s rebound.
“We have more enquiries coming in from all over the world, so I think that investors are seeing that the window of opportunity in Detroit could be closing,” says CEO Mike Moodie.
The firm’s sales have risen by almost 20 per cent in the last six months, he says. While demand for Michigan real estate on TheMoveChannel.com dipped in the immediate aftermath of November’s US election, enquiries accelerated at the start of 2017. The state now makes up one in eight of all US property enquiries on the property portal, behind only Florida and New York.
The clock is ticking, though. According to Realtors, Detroit’s average property value jumped 11.09 per cent in 2016 compared to 2015, leaving investors racing to beat rising prices.
“A year ago our average price was approx $25,000 with a net return of maybe 24 per cent. Today, the average sale would be approx $35,000 with a return of 18-20 per cent,” adds Mr. Moodie. “Don’t get me wrong: these numbers are still very attractive for the overseas buyer, but soon the price could reach a point where investors start looking elsewhere. Personally, I think we have another 12 to 18 months.”Google+