It’s hard to conceive that two of America’s shining jewels were practically destroyed in the past decade: New Orleans by a monster storm and Detroit by an economic disaster that was nearly as monstrous. But happily there are signs of green shoots in Detroit on the housing front.
According to Clear Capital, Detroit was No. 2 in all U.S. metro areas in September, its home prices up 4.3% for the quarter and 23.3% for the year. Of course, that 23% is up from quite a low number, but still, it is the right direction.
Detroit joins other First In-First Out cities like Miami, Phoenix and Las Vegas, according to Clear Capital. But it has taken a long time for the green shoots to appear. It continues to have the highest REO saturation in the top gaining metros, at 31.7%. Still, that is down by half from its worst and down 11.5% in the past year.
Despite the bump, Detroit isn’t quite ready to join the ranks of high-cost real estate. Its average home price is just $107,500. San Francisco, by comparison, No. 1 in price gains for September, averages about $600,000, according to the report. Detroit prices are still down two-thirds from its market high.
Detroit can lay claim to being the industrial center of the country (the days of Big Steel being long gone) through its storied automotive industry, one that received federal support in a canny move that prevented that industry from collapsing. Its bankruptcy is ongoing and presents hefty challenges to the kind of investing that will be needed to bring it back to the American jewel it was.
What can the mortgage business do to reaffirm its faith in Detroit? Mortgage Builder, a software company based in the Detroit suburbs, this year held its users conference at the RenCen in downtown Detroit. More of these types of votes of confidence would be welcome. How about the Mortgage Bankers Association holding one of its bigger shows, whether the annual, the secondary, technology or servicing, in the Motor City? Or the National Association of Home Builders, or the National Association of Realtors?
Detroit’s real estate recovery is bound to be a fascinating story as the years go by, with successes and setbacks certain. Let’s hope some of the hundreds of thousands of people who abandoned the city during the downturn can be persuaded to make it home again.
