Detroit Property Values: Where do we stand?

A visual rendering of a study of the history of U.S. housing prices by Case-Shiller.
A visual rendering of a study of the history of U.S. housing prices by Case-Shiller.

The El Moore is an historic apartment building originally erected in 1898, and now being restored as a model of urban sustainable living. As a project that is part of the renewed interest and investment in the Midtown District of Detroit (formerly known as the “Cass Corridor”), the El Moore project is helping to raise property values in an area that was financially “underwater” for decades. The first residents of the El Moore will begin moving into the El Moore Residences in late Spring 2015, and all five components–the Residences, the Lodge, the Gardens, Seasons retail, and the Green Alley–are scheduled for completion in mid-2016.

It has been about seven years since the American housing bubble burst. Property values throughout the United States plummeted, and we are currently still experiencing lingering effects from that housing crisis. We have all heard about Detroit real estate — you know, how cheap it is. Compared to New York City, it is. A small one bedroom apartment can sell for over $1 million in Manhattan’s Harlem neighborhood, but we never talk about that you can buy a nice three bedroom house in Atlanta, Georgia for $35,000. Houston, Texas, renowned for for its booming economy, has charming one bedroom condos for $22,000. And if the property is not on the water, you can find similar prices in state of Florida. For example, a condo in sun-drenched, middle-class, suburban Fort Lauderdale for $18,000.

Yes, all across various parts of America, you can still purchase a home for less than a medium-priced automobile, not just in Detroit. However, you cannot just look at the home prices for accurate comparisons. Detroit becomes less competitive when you factor in the total cost of living. Taxes and insurance in the state of Georgia are a fraction of what you pay in Detroit. And those prices I just quoted are for “move in ready” homes. A house selling for $10,000 in Cleveland, Ohio or Buffalo, N.Y. will require thousands of dollars in renovations before you even legally live in it (just like in Detroit…). A dilapidated house was purchased in a Detroit historic neighborhood about two miles from the El Moore for $15,000. However, the owners spent approximately $200,000 on renovations, so, actually, it’s a $215,000 house. By the way, you will not find any “cheap” prices around the El Moore, in walking distance from numerous art galleries, theaters, and institutions of higher learning. The location of the El Moore, in close proximity to so many institutions of culture and higher learning, often demands higher prices for surrounding properties.

I stated earlier that high property taxes and insurance rates make Detroit less competitive. But its arts, history, and people are uniquely appealing, which in turn redefines the competition. I’m fortunate, I have a lifestyle that allows me to reside anywhere. I purposely choose to live in Detroit (which dispels another myth, that people are stuck here because they have no choice); it is actually a much more affordable option than American coastal cities such as Boston and San Francisco. But if all I was looking for was a more reasonable “cost of living,” I would simply relocate to Atlanta.