Detroit’s Going Out of Business Sale - Rent Week


By Brian Fencil

Photo courtesy of Stan Wiechers.

After the car industry started pulling out of the Motor City 60 years ago, Detroit has been struggling to find itself. In 2009, Detroit’s unemployment rate was estimated to have exploded to 30 percent by the Bureau of Labor Statistics and the city itself was estimating the rise was closer to 50 percent.

Last year, Detroit filed for bankruptcy. The city owed $18.5 billion to creditors, the largest municipal bankruptcy filing in US history. Also, the city cut funding across the board and limited vital services.

The Huffington Post predicted that schools, hospitals, police, sanitation services, and the fire department would reach “unsafe levels” as funding was cut and they continued to close.

The myriad of problems in Detroit has caused an exodus that has shrunk the city back down to about 700,000 people, a population low not seen since before 1910. At its height, nearly two million people worked and lived in Detroit, but with less than half that number left in the city, many empty houses and businesses remain. Estimates show that Detroit has nearly 70,000 abandoned homes, which are uncared for, deteriorating, and catalysts for crime.

The city is planning to spend $20 million on demolishing many of these buildings. However, they can’t do it fast enough. Frustrated with the city’s lack of action, residents are resorting to taking down the buildings themselves.

There is even a map of all of the houses that have been or will be demolished.

Many of the houses Detroit now owns need massive repairs but are historic and beautiful. One of them, a two-story Victorian, dating back to 1881, with 2,350 square feet, four bedrooms, and two full bathrooms was recently sold in an auction with a starting bid of one grand.

Many similar houses owned by Detroit have a similar starting price and are sold at auction for an average $30,000. The winner of one of these houses, according to the auction rules, must then fix it and live in the house. The idea is that if you sell the house for cheap, people will flood the neighborhood and Detroit will recover.

While the practice of selling houses for next to nothing looks like the city government is throwing up “going out of business” signs, the sale might actually help turn Detroit around.

If Detroit sells off the houses, even for very little, owners will be able to do vital repairs and keep the buildings from decaying. With houses occupied, the buildings become less of a fire risk, deter crime, and bring life to empty neighborhoods. Also, the property is no longer the city’s responsibility.

Most importantly, Detroit needs to change the dilemma currently facing businesses and residents. For business, it is hard to open in an abandoned neighborhood, a fact that keeps investors from opening stores in the neighborhoods where Detroit is auctioning off homes, but it is also difficult to move to a neighborhood with no business. By selling homes cheaply, Detroit is drawing people to areas, and with them, business will follow.

The housing auction is a small change, but as long as investors stay confident in the local government, Detroit might turn around. The city recently decided to build a new $650 million entertainment venue–including a $450 million hockey arena–in an empty part downtown Detroit and JPMorgan has also committed a $100 million investment. These signs that investors and residents are creating a future for Detroit make it look more like a Phoenix than a Zeppelin.