Times have been really tough for many of you during the last few years, but think how much worse it might be if you were based in Detroit. Few would argue that the once powerful Motor City has fallen on the hardest times of all. Called “the Paris of the West” at the turn of the 20th century for its Gilded Age architecture, Detroit now has as many as 60,000 vacant homes within its boundaries and many more that are steadily deteriorating. How did this once-thriving and prosperous city reach what seems like a point of no return? The failure or migration of many of its industries—automobile and others—which caused a mass exodus of its population, as well. According to most estimates, Detroit has lost a million residents, or as much as 60 percent of its population, since 1950.
To compound the problem, the residents that remain are spread all over the city. A neighborhood that once was home to several thousand citizens now may have only 50 residents. Large swaths of city blocks have degenerated into what are euphemistically called “urban prairies.” In a metropolis as large as Detroit, comprising more than 143 square miles, providing services for a scattered populace is nearly impossible. Finding a fix for a problem this large is daunting, at best. But Detroit Mayor Dave Bing is going to give it a try.
Former basketball great Bing proposes to start knocking down vacant homes in sparsely populated parts of the city, at the rate of about 3,000 per year. Vacant homes in more densely inhabited areas will be rehabbed. He then plans to ask residents who live in the less populated areas to give up their homes and move to rehabbed homes nearer to the center of the city. He admits it will be difficult to entreat people—who may have lived in their communities for a long time, some in homes that have belonged to their families for several generations—to pick up and move. But it will be even more difficult for those who actually have to move. Bing, however, refuses to consider that his plan might fail, saying only that there are different degrees of success, “but it’s going to work.” We all hope so.
Large as they are, Detroit’s housing problems are but a microcosm of the housing industry in general. And even after four or five years, there is no plan in place to fix the problems housing still faces: too much inventory, increasing foreclosures, scarcity of financing, falling prices. Coupled with the overall economy’s unemployment numbers, decreases in equity, market losses, and lack of confidence, the obstacles appear insurmountable.
Not that people haven’t taken a shot at it. Over the past few years, I have seen many suggested solutions, ranging from allowing the federal government to condemn houses in default and auction them off to people who could turn them into rentals; to the creation of a national bank that would make all mortgage loans; to adopting the Canadian model of larger down payments, no government involvement in lending, and no mortgage interest deduction; to just ripping the band-aid off and letting the system fix itself.
But none of these suggestions seem to hold much promise of success, at least not in the foreseeable future.
So we set out to ask the opinions of those we hadn’t heard from before, but whose viewpoints we value, how they would put housing back on track and what, exactly, that end result would look like. You can find our resulting story, “Housing Fix,” on page 64 in this issue. As you might imagine, the second part of the question was easier to answer than the first, but there’s plenty of food for thought from our respondents as to how to get there.
Still, there is no single silver bullet among the answers, and it’s probably fair to say that one does not exist. But there’s plenty that can be done and there’s certainly plenty of changes that should be made. As always, it’s more likely to be hard work and incremental gains, in one city and by one builder at a time, that will get us back to normal.