Quote Originally Posted by gthomas View Post
The banks need to lend and trust the city to do good business, which I believe it will.
I agree that it will. When you said "trust the city", it had me wondering if you believed that bankers lending is skinny because of city distrust.

The city's economic history and current state are a big part of what lenders will consider when trying to approve a loan. But the reality is that right now commercial banks are almost completely dry right now for any real estate in development anywhere in Metro Detroit. What is happening is that FDIC regulators, who are overly cautious given the number of banks [[both statewide and nationwide) that have folded, are requiring banks to lower their exposure to construction lending altogether.

Consequently, a $1MM project that might've required a $300,000 down payment now requires $500,000-600,000 on the same loan...and that's if they're lucky enough to have room in their lending portfolio for any more loans.

On the other hand, cash balances are at all time highs. So although the banks won't lend, there are plenty of investors who have cash. As long as they don't need liquidity, they're looking for attractive places to place that cash. Unfortunately, demographically speaking, most of those investors are of an age and demographic that were around during a time where stepping into the city risked life and limb. So it's going to take some time before they're willing to invest money.

The tides are turning, though, demographic shifts are inevitably working in Detroit's favor...and banking/lending will only get better, not worse.

As a City of Detroit resident, I'm just begging that we as a city learn to welcome and embrace outsiders when they're willing to inject their capital into the city. And that might require an attitude shift. It would help, at least, if we could move from the historical default of "hostile distrust" to "healthy skepticism"...

...or better yet, to "pragmatic cooperation".