Community development in Detroit: challenges and opportunities

1. Community development in Detroit: challenges and opportunities Alan Mallach Senior Fellow National Housing Institute

2. The program for today’s conference says that Community development in Detroit is at a crossroads. • What does that mean?

3. 1970-1980 2000-2010 Detroit has lost population steadily since 1950. The two greatest periods of population decline were/are 1970-1980 and 2000-2010.

4. Housing vacancies have increased significantly since 2000

5. During the same period, Detroit saw dramatic increases in home purchases and new housing production: • The number of home purchase loans per year more than doubled from 6,200 in 1997-1999 to 14,300 in 2004-2006 • Between 2002 and 2005, nearly 2,500 permits for new housing units were issued.

7. The growth in purchases of 1 to 4 family houses was fueled by two unsustainable features: • Growth in purchases by investors and speculators – 1/3 or more of all purchases in 2005-2006 • Growth in subprime lending – over 50% of all purchase loans in 2005-2006.

9. This could not last • The median house selling price increased from $40,000 to $75,000 between 2000 and 2006. • From 2006 to 2008 it declined from $75,000 to $18,000. • Foreclosures have skyrocketed – nearly 10,000 REO properties currently listed. • The median listing price at realtor.com on October 26 2008 is $19,999.

11. July 2007 $157,250 September 2008 $36,000

12. Detroit has become a smaller, thinner city.

13. 2000 1950

14. Detroit is a smaller city. How can it become a stronger smaller city?

15. Build on assets, special features and market opportunities

16. Sustain viable neighborhoods

17. Build a new economy

18. Build human capital

19. Focus on greening and sustainability

20. The Neighborhood Stabilization Program offers an immediate opportunity: • $47 million in new funds for neighborhood stabilization • Money can be used for acquisition, rehab, demolition, redevelopment or land banking. • How to make sure that NSP funds will have a meaningful impact?

21. Target NSP resources – identify areas where available resources can have a significant effect. • Use in ways that are sensitive to market conditions – direct resources toward restoring well-functioning housing markets. • Foster sustainable, not short-term stabilization.

22. Link NSP funds to other activities that further neighborhood stability – foreclosure prevention, code enforcement, other neighborhood strategies • Leverage public and private resources • Build on existing capacity to deliver effective action.

23. Time is short: • City must submit action plan by December 1 2008. • Funds likely to arrive in February or March 2009. • All funds must be obligated within 18 months of receipt. • Time constraints are no excuse for failing to use funds strategically for greatest effect.

24. Some closing thoughts….. • Detroit can become a stronger, more sustainable city. • It will not be easy, and will not happen quickly • It will take tough decisions about where to put limited resources and what to use them for. • The time to begin is now.

25. Thank you Alan Mallach PO Box 623 Roosevelt NJ 08555 609.448.5614 amallach@comcast.net