Why Detroit's Home Prices Are So Low

Detroit's home prices are significantly lower than those in most other U.S. cities due to a combination of historical, economic, and demographic factors.

1. Economic Decline and Deindustrialization

• Auto Industry Collapse: Detroit was once the heart of America’s auto industry. When the Big Three automakers downsized, automated, or outsourced jobs, the city's economy took a major hit.
• Job Losses: Massive job losses led to a declining tax base, reduced public services, and ultimately made the city less attractive to new residents or investors.

2. Population Decline

• Peak Population vs. Now: Detroit’s population peaked at 1.85 million in 1950. Today, it's under 630,000—a loss of more than 65%.
• Vacant Properties: A shrinking population means there’s far more housing supply than demand. This surplus keeps prices low.

3. High Crime and Perception Issues

• Crime Rates: Detroit has historically had high crime rates, especially violent crime. This has impacted its reputation and housing desirability.
• Perception Problem: Even though some areas are improving, national perceptions of Detroit as unsafe or economically depressed persist, suppressing demand and prices.

4. Urban Blight and Abandonment

• Abandoned Homes: Entire blocks have vacant or abandoned homes, which drag down surrounding property values.
• Neglected Infrastructure: Limited city resources mean roads, utilities, and public services may be under-maintained, further lowering desirability.

5. Bankruptcy and Financial Instability

• City Bankruptcy in 2013: Detroit became the largest U.S. city to file for bankruptcy. This further eroded confidence in the city's long-term stability.

6. Racial Segregation and Suburban Flight

• White Flight: During the 1960s–1980s, many middle-class white (and later Black) residents moved to suburbs, further draining Detroit’s economic base.
• Segregation and Inequality: Long-standing racial and economic inequalities continue to affect investment and redevelopment in many neighborhoods.

7. Slow Recovery, Uneven Development

• Revitalization is Localized: While downtown and Midtown Detroit have seen significant investment and gentrification, most of the city’s neighborhoods have not. This creates a split where some homes are gaining value, but the citywide average remains low.

Average Home Prices in U.S. Cities (2024)