I split my time between Houston and Detroit metro
by backroads (2024-04-23 09:38:28)

In reply to: Nice article on Detroit's real estate boom in the WSJ (link)  posted by Raoul


I find the recent transformation of cities very interesting. Detroit and Houston are fascinating examples, Austin perhaps even more so. The article you posted is paywalled so I don't have the benefit of reading it. While I find the subject interesting, I've not properly looked into the data behind what is happening in these cities. So my thoughts are more impressions than analysis. I may spend the time to look into the Detroit situation more carefully just because it interests me.

For what its worth, I don't see the growth engine that will repopulate Detroit. I agree with johnnysalami that downtown is cannibalizing outlying neighborhoods in the city. My understanding is that the Detroit population is still shrinking, albeit not by a lot now, while the suburbs are stable to slightly growing. So I think the answer to your question is cannibalization. I believe the economic forecast for the area is stable to very slight growth. There does seem to be a healthy mix of sectors in the area to support this, not just automotive, but mortgage services, cross border trade, and services fueling most big cities it seems (eg health care, tech/innovation, financial, etc).

Downtown Detroit development is impressive, but it is nothing like Austin or Houston. We drove through Austin recently and I have not seen so many high rises being built at the same time in many years. There are several Detroit Hudson developments being built it seems. Houston also is seeing much more development than Detroit, albeit not concentrated in one area of the city. Of course these Texas cities are seeing strong population growth where Detroit is not.

Concentrating the Detroit development downtown has been quite smart in my opinion. All three major sports facilities are concentrated downtown, which is fabulous. The riverfront development is coming along nicely. Detroit downtown has a nice future I believe. We considered buying a condo or townhome there in 2021 when we started "reverse snowbirding". But unlike where we live "inside the loop" in Houston, Detroit downtown/midtown areas are still underdeveloped and quite variable block to block. We concluded we would do it if younger but wanted a more established area at our age.

One should not discount the value even today of the automotive industry to the Detroit economy. Yes it is not bringing in the large number of manufacturing jobs that it used to, but it still is brings in high paying administrative and technical positions. The automotive industry is changing but it will remain with us and its center in the US seems solid in Detroit. We live in Birmingham when in the area and there are well paid automotive people all over the place, some of whom are expats from Europe or Asia leading the US affiliate for their home based company.