Detroit is a diverse economic and cultural hub. Known colloquially as the “Motor City,” the automobile industry found its home in Detroit in the early 20th century. Today, a number of Fortune 500 companies reside in the area and the city is known for giving rise to Motown. This video explores the possibilities available for real estate investors. Read more.
Detroit is one of the largest cities in the Midwest. It's Michigan's biggest city, as well as the county seat for Wayne County. Detroit is also located on the Canadian border, making it a key city for trade since its inception in 1701. A number of Fortune 500 companies are headquartered in the area and Detroit is famous for the creation of Motown music.
The Detroit housing market has long been a subject of debate among investors. While the area is still working to stave off some of the effects of the pandemic, other metrics are showing that the city is well on its way to recovery. Even though prices are up over 14 percent on a year-over-year basis, the median home price of $160,000 is well below the national average. Those who are thinking of following a buy and hold strategy may want to consider that rental vacancies are up to 8.7 percent as of March 2021. However, rent prices in Detroit are also rising up 7.8 percent on a year-over-year basis. Mortgage delinquencies are up, along with unemployment, which suggests that many individuals in the area are still struggling financially. Detroit foreclosures are actually down since the start of the pandemic, sitting at just 0.1 percent.
One potential criticism of Detroit from an investing standpoint is that its economy may not be as diverse as it could be. As you might expect, since Detroit's nickname is Motor City, its largest employer is an automobile manufacturer. In total, Ford Motor employs approximately 46,000 of the city's residents. With over 35,000 employees, the University of Michigan is the city's second largest employer. The number of employees is split between the university itself and the affiliated healthcare system. The United States arm of Fiat Chrysler Automotive has hired over 34,000 employees in the metro area.
While there are only three colleges and universities in Detroit Proper, there are quite a few other options in neighboring towns like Ann Arbor and Rochester. We've included them for consideration of investors who want to specialize in student housing. Although it's about a 45-minute drive from downtown Detroit, the University of Michigan's Ann Arbor campus is by far the largest high learning institution in the region. Located in midtown, Wayne State University is the only large university within city limits. Oakland University sits about 30 miles northwest of Detroit in the suburb of Rochester.
Detroit is a city where conditions may vary on a street-by-street basis. If you're thinking about investing there, you're definitely going to want to spend some time with boots on the ground. Here are some of the choices among the 17 recognized neighborhoods to help you get started with your search. Situated close to both downtown Detroit and the Rivertown Warehouse District, the West Village is a walkable area that has gotten increasingly popular among working professionals and young families. East English Village is an up-and-coming neighborhood filled with affordable homes from the 1930s to 1950s. Fix-and-flip investors should look into Fitzgerald. Massive revitalization efforts have taken place over the past few years to try to breathe new life into this neighborhood. However, it's still dotted with abandoned homes and empty lots, which means there is likely room for negotiation on price. [MUSIC] Although the city of Detroit has had its ups and downs over the years, from a real estate investing perspective, this metro area has a lot to offer. With well below average housing prices and rising rates, the typical investor could make out well here. Still, as with any city, it's crucial to do your research before getting involved with any particular investment.