Detroit used to be one of the fastest-growing cities in America – a long time ago. Now, the population has dropped by as much as 25% just in the past year, and is down almost 50% from its peak. The reasons vary – from industrial collapse to demographic changes to people fleeing in mass to the suburbs – but one thing is for sure: the city is shrinking and will continue to do so until something is done.
This is a common tale across the country in several cities, and not all of them are as bad off as Detroit. In fact, some of them are quite nice and are good family communities. But, the fact remains that some areas are falling victim to decreasing populations.
And as this trend continues, the real estate industry will continue to be affected for better or for worse.
Take Detroit. The mayor, Dave Bing, has announced a plan to demolish approximately 3,000 homes in the Detroit area in an effort to remove excess supply, clean up the city, and get rid of sub-standard housing so property values have a reason to rise. He is planning to discuss this and other methods to revitalize the city in a forum with other top city planners and theorists announced today.
The practice could potentially be a good one for real estate investment. Real estate investments, after all, are like other investments: You buy low and sell high. Efforts to halt population shrinkage and raise property values, like bulldozing sub-par housing, could provide good opportunities for investment because property values tend to increase once a city starts taking proactive measures.
Detroit is a fascinating example because there is a lot of surplus real estate – and a lot of upward potential. Finding real estate investment opportunities in cities like Detroit could be well worth your effort.
