I have to think that there are many US cities equal to or superior to Detroit in just about any balance of livability metrics one could produce, including cost.
Very abstractly speaking, I can't even see it being a local maxima for any particular basket of criteria...help?
People like stories of rise, fall and rise again. A city that is merely "better than Detroit" is not particularly interesting.
The anchoring bias is certainly at play here. I imagine others contribute as well.
http://en.wikipedia.org/wiki/Anchoring
People also are interesting in the potential of Detroit. Detroit was founded where it was because it is on a river and the Great Lakes. It has good farmland (I'm guessing on that point). It is amidst other major cities. It has history.
So if Detroit recovers, there is a natural support structure around it that will make it an interesting city.
There's a real potential for Detroit to develop major bohemian settlements now that every major urban center in the US is squeezing that demographic out rapidly (SF, Brooklyn, Seattle, Portland, etc). There can be a spectacular cultural resurgence for the city.
Speculators are probably hoping they can turn this into a Brooklyn-type situation. Get an influx of artists and creatives attracted by cheap, plentiful space, and then flip said property to wealthy professionals who are more bohemian in their own heads than in reality.
The problem is that Detroit doesn't really have that strong of a white collar job base. You can get the broke artists in, but there isn't really a ready pool of professionals to flip to. In that sense it might be ideal - it's possibly an ungentrifiable fortress for creatives.
A cheap place for startups to set up shop at?
Also, I see many more negative articles about Detroit than positive. The city water fiasco that is currently ongoing comes to mind.
The water issue is much greater than just a few people experiencing water cut offs because of bills. Nearly 70,000 residential accounts are going to have their water cut off through the end of September. Why should such a huge portion of a cities population have their water cut off because of financial hardship? Water is essential to survival and removing access to water for these people is extremely cruel.
No they won't. Detroit faced an endemic issue where people simply felt that they didn't have to pay their water bills because there was no consequence. Now that they've instituted this plan, lots of people have found the ability to pay their bill, or to make arrangements to pay it eventually, or to credibly make a case for why they can't.
Pretty much every city charges for water, and pretty much every city cuts you off if you don't pay your bill.