A Tight Housing Market, in Detroit?
In a city that has come to symbolize industrial collapse and suburban flight, a housing shortage is just about the last thing you'd expect to see. But a housing shortage is precisely what young professionals are finding as they flock into downtown and Midtown Detroit.
More precisely, it's apartments that are being snapped up left and right, leading to occupancy rates as high as 96 percent. "So it doesn't matter much that the median housing price in Detroit is parked at around $10,000," Johnson explains, "or that, as the Detroit Free Press recently reported, most sales of good houses in stable areas are for less than $75,000. Young people moving to Detroit want to rent."
As businesses – particularly those in knowledge-based industries – have begun to move back downtown, demand for rentals has skyrocketed. Johnson points out that "sustainable demand for good rentals is not that hard to imagine. In recent years employers such as Quicken Loans, Blue Cross, and Compuware have moved close to 9000 workers from outside the city to downtown. Cultural and arts institutions such as the Detroit Institute of Arts and the College for Creative Studies line the shoulders of Midtown's Woodward Avenue. A thriving and large urban university, Wayne State, anchors the heart of the corridor. Vanguard Health System is pouring a billion dollars into the Detroit Medical Center."
Supply, on the other hand, has failed to keep up with demand on account of banks' exceeding hesitance to finance construction for new housing. In the wake of the collapse of the housing market, new loan requirements have left developers in what Olga Stella of the Detroit Economic Growth Corporation calls "a slump of low confidence." According to Stella, even in spite of strong indicators of recovery, building the rental capacity that Detroit needs is "slow, hard work, one project at a time."