Rebirth of the Motor City
Detroit has consistently ranked as a top city for investors and renters in recent yielding reports. We thought it would be a great blog topic to take a deeper look into what has been fueling the city’s growth and overall economic resurgence.
In the most recent RentRange® Top 25 Markets with Highest Average Gross Yields report, Detroit took the number one spot, with gross yields in the metro area reaching 17.0%. Investors have begun swallowing up a large amount of inventory too, having picked up on the indicators of Detroit’s current upswing. From the first quarter of 2016 to the first quarter of 2017, there were over 45,000 investor purchases in single-family residential real estate.
The main driver behind Detroit’s boom is job creation. Between the 1950’s and the 2010’s, the city lost a large majority of its population due to the automotive industry crash. A significant indicator pointing toward Detroit’s comeback is the addition of jobs once again. The metro area added over 80,000 new jobs in 2015* and has attracted more businesses to relocate to Detroit, likely attributable in part to the low cost of doing business. Ally Financial, Blue Cross, Chrysler, GM and HP are among the pack of companies moving their operations to the Detroit area. Nine companies in the Fortune 500 are headquartered in Detroit. While the media sheds a dim light, we talked to a local business owner, Al Beahn, CEO of Pioneer Homes, a thriving turnkey investment firm, to get his take on the positive shift happening in Detroit’s housing market.
Regardless of an often bleak perception, Al says that many investors are pleasantly surprised when they see the caliber of available inventory Detroit has to offer. The city is broken down by neighborhood. Eastern Market, Midtown, The Villages and Jefferson East are just a few of the neighborhoods that make up Detroit. While some areas are better than others, Detroit has undergone an meaningful revitalization in the past five years.
The downtown has become much more lively, partially because of the beloved Detroit Tigers baseball team. The games are well attended and the stadium is a spectacle. Big-time investors entering the space have also helped put Detroit back on the map. Quicken Loans and Cleveland Cavaliers owner, Dan Gilbert, has pumped over $19 billion into the economy through the purchase and renovation of real estate. Mayor Duggan has been another catalyst for Detroit’s new success. Unlike past politicians, when Duggan took office he made significant improvements to the city instead of just talking about them.
Al predicts that as Detroit continues to flourish, it could become a smaller scale rival to New York or Chicago. Regardless, the city continues to offer investors and residents new opportunity. Michigan ranked #1 on Thrillist’s 2015 U.S. Travel List, and for good reason. The craft beer and distillery scenes are on the rise, it has more coastline than any other state (with the exception of Alaska) and offers beautiful outdoor fun for residents with its sand dunes and beautiful Upper Peninsula.
If you’re interested in Detroit rental property, check out Investability for inventory, or visit pioneerhomesus.com for turnkey solutions.
*Bureau of Labor Statistics