From a population of 1,422 in 1820, Detroit grows to 285,704 by 1900 and then powered by the automobile industry Detroit peaks in 1950 at 1,849,568. It then goes into decline and now sits at about 700,000 people – about where it was during the First World War. Michigan as a whole has continued to grow in population but its major urban center is now a shadow of its former self. Viewing Detroit from the vantage point of a cable connection in remote Thunder Bay during the 1990s, the juxtaposition of boosterish musical ads extolling people to “Tell Them You’re From Detroit!” with the fires, crime and mayhem of Gate Night (called Devil's Night in Detroit) were definitely a surreal experience. However, these were the days before the spread of the Internet and YouTube when at least for me, video images still seemed to have the power to shock.
Detroit is bankrupt. Municipal governments rely on property taxation and growing property taxation revenues require an expanding tax base. Expanding property tax bases are usually a function of new investment and to that effect I offer the following graph presenting data on the value of investment in new housing in Detroit from the mid 1990s to the present (data from the US Census Bureau). Note that the spike in growth after 2002 is really due to a change in the area of coverage but even with that expansion the “recovery” is short-lived and investment in new housing declined after 2004 after years of flat performance – predating the US housing bust by a few years.
Can Detroit come back? Well, interestingly enough, since the trough in 2009, there actually has been a little bit of growth in housing units. The value of new privately owned housing units grew 42 percent in 2012 after 19 percent growth in 2011.There are apparently some parts of Detroit’s downtown area that have seen some new business investment. If the bankruptcy does indeed provide a means of shaking off the current financial burden, and allow for spending on better services, then I suppose anything is possible. Detroit itself is still pretty boosterish – it was apparently on the verge of a new campaign to market itself as a conference destination. News of the bankruptcy will probably not help conference bookings but who knows. Detroit is not dead yet.