[The North One]

Originally Posted by ardecila

From a real estate perspective - not sure this development will work. If I'm in the market for a home, why would I pay a new-construction premium to get a townhouse or mews house with literally no yard when I could buy an actual detached house with a decent sized backyard for the same price, and maybe even the opportunity to buy vacant lots next door?

You're thinking about this from the wrong perspective, obviously this development is not targeting people who want yards and open spaces, it targets the desire for those who want to live in a dense and walkable urban fabric (with a few limited transportation options) that midtown is increasingly providing. If they started building detached homes with yards that would defeat the whole purpose since you can get that anywhere in the suburbs and within the city proper. The urban housing inventory in Midtown is low and this is meant to increase the supply. Not everyone is willing to buy and build on their own vacant lot or invest in a remodel even if it's cheap, that's what developers are for.

Of course, urban Detroit is a strange and uncharted real estate market. Maybe the market doesn't place a premium on breathing room in a city with so much open space, and yawning wide open streets. Maybe the contemporary design and location will lure wealthier buyers that would have bought in the suburbs otherwise. University/hospital employees, downtown workers, hell, even younger buyers with suburban jobs that don't want to live on a cul-de-sac.

It's not nearly as "uncharted" as you think, the residential demand in the city's urban core is surging, entire apartment buildings sell out within weeks and even with new developments the market currently shows no signs of waning. It's due to the new trend for urban living and the momentum that new inner city investment brings (cities are returning to normalcy). Detroit has incredible historical bones and Gilbert knows exactly what he's doing building off of it, preserving what he can and increasing the value of the whole area.

So far, that formula has worked for rental developments in Detroit where people expect to live for a certain phase of life. But a for-sale development, which I assume the townhouses will be, requires a whole different strategy. You have to sell buyers on the long-term value, and those buyers have to somehow get financing for the purchase from banks that are probably reluctant to lend in a highly distressed area such as this.

There is plenty of real estate within the city that sells for over $300,000 (lofts, detached homes, townhomes etc.) so it's not only rentals, although that's a big portion of sales. Almost everyone in the metro (except maybe racist baby boomer conservatives) recognizes the resurgence of the city and they have plenty of examples of real estate appreciation to back it up, Midtown is absolutely seen as a safe investment that is likely to appreciate. Banks can't discriminate loans based on location, that is illegal, they can only decide what they're willing to lend based on appraisal; there are banks like Chase that are already investing over one hundred million into Downtown and Midtown, the issue is more for major developments that rely on state loans for now but that is predicted to change very soon.

Anyway, the problem is more in the outer neighborhoods that receive the bulk of the crime and retain most of the blight that isn't really seeing investment and appreciation but the blight removal project which is funded by the federal government is helping. The truth is a lot of the surrounding neighborhoods may have to return to rural land, there are projects in motion for Apple Orchards, Greenhouses, etc. for those areas that are too far gone and were only filled with generic detached homes in the first place.