Detroit housing rebounds, but don't pop the champagne

September 24, 2013: 4:15 PM ET
detroit housing prices
Housing prices for metro Detroit were up nearly 17% in July, but don't call it a comeback - yet.
NEW YORK (CNNMoney)

A new survey shows home prices rising in metro Detroit, but the good news doesn't signal an impending renaissance for the bankrupt city. In fact, it highlights the disparity between the suburbs and the downtown.

The S&P/Case-Shiller home price index out Tuesday showed home prices there were up nearly 17% in July compared to the same time last year. The area has posted increases nearly every month since January 2012.

But home prices are still nearly 30% below where they peaked in late 2005.

And the topline numbers do not show the whole picture.

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"[Greater] Detroit is a split personality, because where there's activity, it's in the suburbs," said David Blitzer, one of the study's authors. "It's not in the center city."

In the city itself, Blitzer said, the picture is very different, although the survey did not break out those numbers.

The bankrupt former auto capital has taken a beating in recent years. Its population has dropped by over a quarter in the past decade and the most recent government data showed unemployment remains over 10%.

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"The center city population is down over the last several years," Blitzer said, and with it demand for housing has declined, too. While the region's numbers are up, "Not much of the comeback has been in Detroit."

The region posted the lowest home prices of the 20 major markets included in the survey.

Sandy Baruah, CEO of the Detroit Regional Chamber, said that the city is "really not that different from the rest of the country," which also saw tough times in the past decade.

Baruah pointed to the recent monthly home price increases.

"We're not surprised to see the continuing growth," he said.

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And even though rows of empty houses stretch through some neighborhoods, some parts of downtown, like the university area, are bursting at the seams with 98% occupancy, Baruah said.

He suspected other places -- all just off of the city's downtown -- like the Boston-Edison, Corktown and Lafyette Park neighborhoods are primed for growth.


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