The Motor City was once arguably the industrial capital of America. As the center of the automotive industry, Detroit was an economic powerhouse. But as factories moved and the balance of power shifted, Detroit’s fallen on some bad years. With crime up and job opportunities low, the real estate market became one where your money would take you much further than most other big American cities. But like just about every other major city in America, 2020 was a year of real estate resurgence. Prices in Detroit have surged to new heights, and it could perhaps be the start of a return to form for the city.
The numbers for the median cost of a home in Detroit are well below the national average. Because Detroit experienced a mass exodus, there are abandoned houses scattered throughout the city. Urban decay is a very real problem in Detroit, and it’s clouded the viability of their real estate market for many years. Wikipedia has the statistics to back this up. Detroit has 70,000 abandoned buildings and 31,000 empty houses. Property owners list these properties, which are drains on their wallets, for sale often at a few hundred dollars.
“…by 2023, Detroit will experience its first year without population decline since 2000.”
Because of the deeply flawed nature of the market, prices are shockingly low. In March of 2018, Realtor.com has the median listing price of a home in Detroit at $33,500, with the median sales price not being much higher, at $38,000. This was the low point of the past few years, however, and in 2020 real estate prices began to climb.
By January 2020, the median list price had risen to $50,000, however, the median sales price had remained mostly static at $38,500. 2020 was then a year of growth, with January 2021 showing the positive changes in the market.
In December of 2020, the median list price $69,900, and the median sales price was $67,750. That is a massive growth year over year, reflecting the whirlwind 2020 that the markets have had. With prices finally starting to see sustained growth in Detroit, does this mean Detroit could be having their long-awaited rally?
One of the reasons for Detroit’s real estate market’s perilous situation is the exodus the city has seen. According to Macro Trends’ summary of a United Nations report, Detroit Metro Area has seen its population decline every year since 2001. In 2019, it had its worst population decline on record. This comes while just about all other American cities seem to be growing.
In 2020, their population declined, but less so than the year before, and projections have their population declining less still in 2021. In fact, according to the aforementioned report, by 2023, Detroit will experience its first year without population decline since 2000.
Detroit is a city that has suffered through the 21st century in every way imaginable. The collapse of the automotive industry in 2008 was just one of many bad hands the city has been dealt. Although it has been dubbed “Comeback City” by hopeful residents, the city has struggled to truly rally.
This is why it is great to see the real estate market have a year of sustained growth. Detroit is an American city that is an example of the essentialness of population growth and job opportunities. While the city has a long way to go towards reclaiming its former status as a powerhouse, perhaps 2020 will someday be looked at as a turning point for the Motor City.