This is an opinion piece by Kyle Ofori, a summer fellow with the non-profit arm of real estate development company Century Partners. The fellowship is funded by the Joint Center for Housing Studies at Harvard University, where Kyle studies public policy and urban planning.
The word "renaissance" is used often in Detroit. It fits nicely with the city's motto: "We hope for better things; it will rise from the ashes." Judging by the good things in the past few years, the renaissance is real. Those who doubt it should look again: at the new businesses, the events, the crowds around the city, and most importantly, at the activity trickling back into the city's residential neighborhoods, block by block. Change is afoot, and this time everybody can benefit.
Less than a century ago, Detroit epitomized the American Dream. Hundreds of thousands of workers enjoyed the middle-class life, including home ownership, enabled by the success of the automobile industry. But Detroit forced a heavy cost on some residents in its pursuit of prosperity. The tens of thousands of migrants making their way to Detroit in those days included black Americans from the Jim Crow south, Mexicans, Italians, and Syrians. By and large, they were denied access to the wealth-building opportunities that come with homeownership in the United States.
Detroit's demographics changed significantly around the middle of the 20th century due to disinvestment from the automobile industry, suburbanization, and the events of 1967 (a rebellion or a riot, depending on who you talk to). During this era, more black and foreign-born Detroiters could access the wealth-building opportunities of homeownership that they had been barred from previously. However, that access prompted many white Detroiters to leave the city. They followed newly-built highways, some of which tore through land that had once contained poor neighborhoods, to suburban towns. As the decades wore on, tax revenues decreased, the quality of city services dropped, crime rates rose, and people of all backgrounds started to leave the city. Detroit was caught in a downward spiral. All of the issues it faced contributed to declining property values, loss of personal wealth, and devastation of neighborhoods.
A new breed of developers is taking a broad look at how economic development can happen in Detroit.
Today, though, the tide is turning in Detroit. The number of home purchases financed with mortgages, though still low, grew by nearly 45 percent from 2014 to 2016. In some parts of Detroit, stories of blight and abandonment have been replaced by reports of new businesses, new residents, infrastructure investment, and economic growth. Mortgage lending company Quicken Loans moved the company headquarters to downtown Detroit in August of 2010 and began to rehabilitate the district's commercial buildings. Now, people and organizations from all sectors—private, public, and nonprofit—are backing Detroit's revival by relocating, lending, and investing.
There is potential here, even for the people of Detroit who are disenfranchised. It points to new job opportunities, lower crime rates, better public services, and a way out of the downward spiral. If policymakers, investors, and developers were to focus on the needs of people in all economic strata at a time like this, they could create wealth-building opportunities for all in this region and start to close the wealth gap.
A new breed of developers is taking a broad look at how economic development can happen in Detroit, and they know that the strength of the city is in its neighborhoods. Century Partners is one such group. They focus on revitalizing residential neighborhoods because they believe in the value of the wealth-building opportunities that homeownership brings. Homeowners in the city were severely impacted by Detroit's population decline and the mortgage crisis. Century Partners' approach in those neighborhoods rewards them for staying by increasing the value of the investment that they held on to. It will allow them to refinance their homes by raising the value of comparable homes on their blocks back to reasonable levels. It will bring new people to the streets, and it will give new life to the American Dream for those homeowners. In other words, this work is stabilizing the neighborhood from both a physical and a financial standpoint. This means of consciously promoting wealth creation in a community could serve as a model, or at least a starting point, for more inclusive and sustainable neighborhood development in post-industrial US cities.
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Century Partners is now collaborating with a crowd investment platform called Rabble to open up another avenue for wealth-building. Thanks to new regulations passed by Congress called the JOBS Act, non-accredited investors -- those with net worth under $1 million and annual income below $200,000 -- are now able to invest in private companies for as little as $100. Now, the average person can back Detroit's comeback.
There is potential here, even for the people of Detroit who are disenfranchised.
They can help fund the rehabilitation of Detroit's real estate, also receiving part of the value that it will generate. This is a tangible way for anyone to help the city prosper and to prosper alongside it. It is also a way to give more people the chance at homeownership and everything it brings. This includes a sense of security, a greater ability to borrow, and even the financial stability to rise out of poverty. Century Partners' and Rabble's efforts are helping make this a more prosperous city, But the same can be done in communities around the country and the world. Poverty and wealth inequality can grow wherever people are unwilling to invest, especially when investing is impossible for those below a certain amount of wealth without the right platform. Our approach is an attempt to solve those problems and to invest in building a more just and equitable society.