Threat to Detroit’s Rebound Is the Mortgage Industry

"Should someone take an interest in buying one of these homes, it might be priced as low as $500 or $1,000.... And the cost of rehabbing these cheap houses and making them livable can range from $50,000 to $90,000 for a small bungalow. Renovation will cost more than these homes will sell for."

Emphasis mine.

You simply can't mortgage a house like that, if the owner intends to renovate for living in it. There's no collateral. Of course it's a cash-only deal... what else could it be? What mortgage terms are we condemning the banks for not writing, exactly?

Should the city continue reviving, these property values will go up. Once the property values go up, the banks will be able to have collateral, and mortgages will resume flowing. But it will do all sorts of harm to try to push the banks to short circuit that process. Are we really demanding that banks write mortgages to poor minorities that they will basically have no ability to service if they experience the slightest economic disruption? Is that really helpful to anybody? Aren't we basically still in the recession we created by writing mortgages far in excess of any underlying value?

I'm all for helping the poor, but chaining them with unserviceable debt or forcing the banks to get screwed isn't "helping the poor".

Detroit's recovery is hindered by government regulation at city, county, state, and federal levels. At the end they mention Detroit cannot get it MSAs redrawn until 2023!!! Really?

Throw in your concern, change is only happening because private corporations, individuals, and even the union, are losing money trying to jump start an area and having to do so because the regulatory structure is working against recovery.

Note to government, if you want to end blight you are going to have to vacate government debts against the property with regards to the new owner. Rules would have to be put in place to prevent obvious gaming of the system, but to saddle buyers with costs they didn't not incur only sabotages your stated goal.

tl;dr the regulatory structure is sabotaging Detroit's recovery, not the mortgage industry.

There's been an uptick of post-college types moving in the midtown area, and professionals in the downtown area -- but it's pretty much limited to those two areas, a tiny portion of the city as a whole.

It'll be interesting to see how the midtown-downtown area might (or might not) become more a populated semi-region of it's own, compared to the rest of the city (sans a couple of nice remaining neighborhoods) which still looks very empty.

If you dig a bit on Google you'll find some press on it, mostly local. I think the some bigger papers did a bit or two about it after the bankruptcy.

It's interesting to watch what will happen given the state of the city.

What you described is a big part of it. And being mostly a one-industry town was another part, in an age of rapid globalization, and with strong unions making Detroit the more expensive place to produce.

Moreover, the core of Detroit was sliced up by an extremely extensive network of freeways, and in patterns where you get a fairly intense breakup of neighborhoods when you compare to other northern cities of the time who were building expressways through theirs. Detroit's postwar suburbs came calling for all of those automobile-owning middle-classers back in the D.

Also, most Detroit housing was quickly-built wooden construction, which are a lot more vulnerable to breaks in maintenance. While brick buildings can wait "on inventory" much longer, much of Detroit's wooden stock was expensive to maintain, and didn't last long waiting "on inventory" to be put into re-use. Michigan suffers dramatic freeze-thaw cycles, rain/snow/ice, and loose ground that can bust-up under-maintained buildings in no time.

Another, a perhaps seminal event, at least for people living in city, were the 1967 riots (which you could connect to all that redlining that went on). All through the central city. That was the "last straw" for most everyone who could leave and wanted to leave. Many people I know personally remember as a kid moving out not long after '67. And the race riots seemed to have made race relations worse in the region, in my unsubstantiated opinion.