Smokey Robinson Disses Detroit

Smokey was interviewed on the Breakfast Club today, someone in the studio had a Gratiot street sign, they talked about that for a minute, Angela Yee made a statement about owning homes in Detroit, and Smokey responded "good luck with that", and a few other negative comments. I was surprised because Smokey Robinson has always been a promoter of Detroit. Other than the few negative comments about his native city, it was a really interesting interview. The Detroit comments begin a little after the 10:00 minute mark.

https://www.youtube.com/watch?v=9WdZ3rQCiwk

He's being honest. I'm a Detroit resident and even I wouldn't pour my money into property in this city. Besides having to deal with city's ridiculous amount of red tape and redlining by the insurance companies, you also have to constantly worry about someone breaking into or destroying your property given the sheer amount of impoverished people and the bare bones police force.

Besides, most folks who grew up and lived the prime of their lives in 1940s - 1970s Detroit have absolutely no connection what so ever with the Detroit of today. It's a completely different town from what they remember. They all tend to be fairly negative [[or indifferent at best) about Detroit.

Detroits resurgence is a little over 5 years running. Memories of bad detroit will linger for many more years but I don't think that's the issue. Most folks I know of that put detroits latest resurgence down have an underlying regret that they didn't act earlier. We're not there yet but there will be a time where prices go into a "frenzy" phase where those that doubted and held out for some correction, will finally capitulate and pay what ever it takes in fear of missing out.

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Originally Posted by SammyS

Detroits resurgence is a little over 5 years running. Memories of bad detroit will linger for many more years but I don't think that's the issue. Most folks I know of that put detroits latest resurgence down have an underlying regret that they didn't act earlier. We're not there yet but there will be a time where prices go into a "frenzy" phase where those that doubted and held out for some correction, will finally capitulate and pay what ever it takes in fear of missing out.

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Missing out might be a factor, but there is still a lot of caution by people who have seen upticks in the city; they always seemed to end with things worse than before. There may be enough momentum now, but there's always the fear that it will get crushed again by a bad economy, nosedive in auto sales, bad governance, or Dan Gilbert getting struck by lightning.

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Originally Posted by SammyS

Detroits resurgence is a little over 5 years running. Memories of bad detroit will linger for many more years but I don't think that's the issue. Most folks I know of that put detroits latest resurgence down have an underlying regret that they didn't act earlier. We're not there yet but there will be a time where prices go into a "frenzy" phase where those that doubted and held out for some correction, will finally capitulate and pay what ever it takes in fear of missing out.

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I'm sure Smokey is sitting by a pool in LA filled with regret that he didn't act earlier on real estate in Detroit and good luck with that "frenzy." Even if Detroit experiences a comeback I'm sure plenty of people will be just fine watching from a distance.

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Originally Posted by archfan

Missing out might be a factor, but there is still a lot of caution by people who have seen upticks in the city; they always seemed to end with things worse than before. There may be enough momentum now, but there's always the fear that it will get crushed again by a bad economy, nosedive in auto sales, bad governance, or Dan Gilbert getting struck by lightning.

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A very good point.

Is he the guy with the funny hat that says don't start forest fires?

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Originally Posted by archfan

Missing out might be a factor, but there is still a lot of caution by people who have seen upticks in the city; they always seemed to end with things worse than before. There may be enough momentum now, but there's always the fear that it will get crushed again by a bad economy, nosedive in auto sales, bad governance, or Dan Gilbert getting struck by lightning.

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Fair enough but if I may drop another overused saying, this time is different.

-Detroit is still well below price levels of most if not all cities of similar size
-Unprecedented capital inflow and investment
-Population drop bottoming out
-Security expanded
-Low inventory compared to only a few years ago
-Occupancy rates in the 90%'s
-5 years @ ~30% pa appreciation in downtown and immediate surrounding areas
-Hotel and hospitality explosion
-Education and medical facilities increasing
-Public transportation expansion
-Historically low interest rates

If this is all just a fluke or happenstance, then a correction would have to unwind progress the city has not seen in over 50 years. I don't think so. IMO, the high water mark has yet to be set. This is why I say for many of those doubting the sustainability of this latest resurgence and prefer to sit on the sideline waiting for the correction, will either be waiting a long time or finally snap and pay whatever it takes for a piece of the new Detroit. This is the frenzy wave that catapult prices into the stratosphere. They then will revert from trash talkers to cheerleaders whilst the smart money slowly exits.

On that note, think about this. As long as the majority is on the wrong side of the bet, which I believe they still are regarding the sustainability of Detroit's turnaround, then you know there's plenty of upside remaining. It sends a clear signal that we are far from overpriced RE and good deals can still be found.

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Originally Posted by SammyS

Fair enough but if I may drop another overused saying, this time is different.

-Detroit is still well below price levels of most if not all cities of similar size
-Unprecedented capital inflow and investment
-Population drop bottoming out
-Security expanded
-Low inventory compared to only a few years ago
-Occupancy rates in the 90%'s
-5 years @ ~30% pa appreciation in downtown and immediate surrounding areas
-Hotel and hospitality explosion
-Education and medical facilities increasing
-Public transportation expansion
-Historically low interest rates

If this is all just a fluke or happenstance, then a correction would have to unwind progress the city has not seen in over 50 years. I don't think so. IMO, the high water mark has yet to be set. This is why I say for many of those doubting the sustainability of this latest resurgence and prefer to sit on the sideline waiting for the correction, will either be waiting a long time or finally snap and pay whatever it takes for a piece of the new Detroit. This is the frenzy wave that catapult prices into the stratosphere. They then will revert from trash talkers to cheerleaders whilst the smart money slowly exits.

On that note, think about this. As long as the majority is on the wrong side of the bet, which I believe they still are regarding the sustainability of Detroit's turnaround, then you know there's plenty of upside remaining. It sends a clear signal that we are far from overpriced RE and good deals can still be found.

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You mention that Detroit is still well below price levels of other cities of comparable size. Why would people pay similar prices to other cities to live in Detroit when Detroit is not as desirable and doesn't offer nearly the same lifestyle as many other cities? Also what happens to the Detroit real estate market when subsidies and incentives are taken away? You make a lot of grand assumptions and it seems that you have already bought in so if you're so confident that your investment is going to pay off then why worry about trying to sell the rest of us on how great of an opportunity Detroit is?

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Originally Posted by TTime

You mention that Detroit is still well below price levels of other cities of comparable size. Why would people pay similar prices to other cities to live in Detroit when Detroit is not as desirable and doesn't offer nearly the same lifestyle as many other cities? Also what happens to the Detroit real estate market when subsidies and incentives are taken away? You make a lot of grand assumptions and it seems that you have already bought in so if you're so confident that your investment is going to pay off then why worry about trying to sell the rest of us on how great of an opportunity Detroit is?

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Demand for more condo's and especially micro-apartments suggests supply is being absorbed quite rapidly. Based on occupancy rates alone, many new comers obviously believe Detroit presents good value, whatever it is that Detroit offers or lacks to offer. More importantly however is its potential which I do believe has many many more good years to come. So you can either heed to the "good luck on that" advice or you can credit those for taking the risk and acknowledge their success thus far.

As for your other comments, it's not my game to promote Detroit as an investment but I felt it was appropriate to counter the argument that it still poses risk not worth considering which I believe was Smokey's message. I have also tried to comment on why some people think this way and why I think they may be wrong this time.

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Originally Posted by SammyS

Demand for more condo's and especially micro-apartments suggests supply is being absorbed quite rapidly. Based on occupancy rates alone, many new comers obviously believe Detroit presents good value, whatever it is that Detroit offers or lacks to offer. More importantly however is its potential which I do believe has many many more good years to come. So you can either heed to the "good luck on that" advice or you can credit those for taking the risk and acknowledge their success thus far.

As for your other comments, it's not my game to promote Detroit as an investment but I felt it was appropriate to counter the argument that it still poses risk not worth considering which I believe was Smokey's message. I have also tried to comment on why some people think this way and why I think they may be wrong this time.

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Fair enough, time will tell.

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Originally Posted by SammyS

Detroits resurgence is a little over 5 years running. Memories of bad detroit will linger for many more years but I don't think that's the issue. Most folks I know of that put detroits latest resurgence down have an underlying regret that they didn't act earlier. We're not there yet but there will be a time where prices go into a "frenzy" phase where those that doubted and held out for some correction, will finally capitulate and pay what ever it takes in fear of missing out.

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Boosters have been predicting a real estate "frenzy" in Detroit for 50 years now, yet the city has never been emptier/more depopulated.

If it happens, great, and I'm sure people will be happy for those benefiting. But I seriously doubt Smokey has any regrets in LA.

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Originally Posted by Bham1982

Boosters have been predicting a real estate "frenzy" in Detroit for 50 years now, yet the city has never been emptier/more depopulated.

If it happens, great, and I'm sure people will be happy for those benefiting. But I seriously doubt Smokey has any regrets in LA.

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Not a booster but when I see prices like in the article attached, it makes me wonder.

http://detroit.curbed.com/2016/10/12...condos-detroit

PS. I don't know how long some of these properties are sitting on the market at these prices. Are owners/agents pricing according to market demand or taking a risk holding out especially knowing the inventory that's about to come on line over the next 2 years? IDK but I'm leaning towards a sellers market in select communities adjacent to downtown. When exactly has that happened over the past 50 years?

Most neighborhoods are a mess. Unless you are downtown, I don't see prices going up anywhere else.

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Originally Posted by daddeeo

Most neighborhoods are a mess. Unless you are downtown, I don't see prices going up anywhere else.

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But daddeo, it's Smokey... Prices are going up a bit, but outside the Greenzone the neighborhoods are still a crapshoot.