by Mariah Allen

April 2019

Detroit has many associations with its name, such as the most dangerous city in early 2016 or the second most dangerous city in 2017. This reputation is due to high numbers of reported crime, or an infamous number of vacant homes (Kiertzner 2018). Currently, it is reported that about 9,500 demolitions have taken place in Detroit since 2014, and 700 more demolitions are scheduled (Metcalfe 2016). Many find the state of Detroit disheartening, but rarely is the question asked: what caused the city of Detroit to decline? This paper is aimed at looking at how federal policies impacted the rapid decline of Detroit area. Furthermore, this paper will examine the success of the revitalization process that is currently taking place in the Detroit area.

In this paper, I will explain how zoning laws contributed to the creation of two separate life styles: suburban and city life. Next, I will recount the origins of public housing specifically commenting on the racial segregation in public housing. Furthermore, I will show the impact of deindustrialization on the housing market and specifically Detroit, which leads into an explanation of how the housing market was further segregated. Lastly, I will discuss gentrification and how it has impacted long-time residents of Detroit. 

Laws changing the city 

Skyscrapers, subway stations, apartments, condos, and businesses simply come into existence without question. Families drive by new buildings undergoing renovations and quietly think “Huh, I wonder what that is going to be.” The thought is fleeting until construction is finished and citizens flock to the structure and it is labeled as a “hotspot.” These projects come into being with approval from the city and must be in compliance with the city’s zoning laws. Zoning laws allow for specific types of building to be created within city limits. These laws, along with national policy contributed to the racial divide seen across the United States, and more specifically in Detroit. 

In the 1910s, zoning laws were changed to keep black Americans from purchasing housing in areas with white Americans. In order to do this, homes were classified into different categories: single-family residential, multi-family residential, commercial, or industrial. These categorizations allowed for planning officials to prevent specific structures from being built depending on the area. The area where black Americans lived was categorized to allow industry to be built, which further degraded black neighborhoods (Rothstein 2017). The effect of these zoning policies are still evident today. More factories were built within inner cities. For example, the auto industry is considered to be the heart of Detroit. Zoning laws from the 1900s allowed for the automotive industry to be built in the city, which drew a great number of black Americans to the area for work. Unknowingly, black Americans found themselves being confined to the inner city due to racist housing policies (Rothstein 2017). Black Americans were not allowed to move into the suburbs because of racial covenants that specifically stated neighborhoods were white-only spaces.

The Origins of Public Housing 

Beginning in 1941, many black Americans moved from the south to northern cities like Detroit to obtain industrial jobs (Mohl 2001). White Americans were also involved in this migration, which led to many conflicts between these two groups in relation to jobs and space. This is the moment in Detroit’s history (and major industrialized cities) where public housing was key to the continuation of growth.  

In its early stages, public housing was not meant for individuals who needed affordable housing assistance. Public housing was meant to be temporary until the market caught up to the demand for homes.  The prices for housing were not subsidized, so tenants paid full cost. When public housing was built, there were significant differences between public housing for black and white Americans, such as the location. An emphasis was placed on keeping the same racial composition of the city in which public housing was built. Therefore, public housing for black Americans was placed within inner cities and was created to be temporary. Meanwhile, housing for white Americans was built in the suburbs, with the intention of being stable and permanent. Further differences were in the demand for public housing. 

While public housing for white Americans had multiple vacancies, public housing for black Americans was overcrowded with long waitlists because of high prices in other neighborhoods and a lower supply of housing within the designated area for black Americans (Rothstein 2017). The decision to build segregated public housing set the tone for further segregation in the newly built suburban developments after World War II.

The Result: Deindustrialization 

In 1945, after World War II, there was a major wave of deindustrialization. Deindustrialization led to job loss, deteriorating neighborhoods, and intense segregation (Mohl 2001). These changes significantly impacted the auto industry in Detroit when shifting from industrialization to globalization. As a result, factories began to close and the middle class was left to crumble (Moskowitz 2017). After the war many white Americans left the city to go to the newly built suburban developments. This rapid emigration from the city is referred to as the “Suburban Sprawl” or “White Flight.” In 1940, 15.3% of individuals lived in the suburbs; by 1960, 30.6% of individuals lived in the suburbs. Detroit lost around 1 million people from its population, but the black population increased by about 223% (Mohl 2001). White Flight changed the demographics of the area and further reinforced housing segregation. 

Segregation in the Housing Market 

In 1933, after the Great Depression, the government bought mortgages on foreclosed homes and set up a 15-year payment plan so families were able to get back on their feet. One of the criteria for the government to buy mortgages was an assessment of the risk of the property, by gauging that assessment based on the demographics of the area. One year later, when mortgages were being insured up to 80% of the purchase price by the Federal Housing Administration (FHA), there was a whites-only requirement for getting approved for a loan. The whites-only requirement was a way to ensure that the loan had a low risk of defaulting (Rothstein 2017).
Segregation continued after World War II when the Federal Housing Administration was financing the creation of subdivisions, and the whites-only requirement was still enforced (Rothstein 2017). This became a major concern as the FHA began financing the creation of neighborhoods nationwide (Rothstein 2017).  While white Americans had housing, black Americans did not have the same access. Although the population was rising in black residential areas more housing was not being built, therefore black families were beginning to “double-up” and “triple-up” in houses and apartments, causing overcrowded conditions (Mohl 2001). 

In the book, Evicted, Matthew Desmond recounts the doubling-up of families in one of his chapters when one tenant did not have enough money to pay rent and therefore the landlord planned on evicting the woman (2016). The family who planned to move into the apartment allowed the woman, who was a complete stranger, to continue to live in the apartment with them. This type of overcrowding contributed to the deterioration of inner cities. The population grew large enough and housing units were so dense that, eventually, there was enough pressure for housing to be built for black Americans in 1949 (Mohl 2001). Unfortunately, separation between black and white neighborhoods existed. 

Different Funding in Different Markets 

During the time of housing segregation there was a belief in a dual market, which meant that black and white Americans functioned in completely different housing markets, with two different types of supply, demand, costs, and quality (Boston et al. 1972). This creation of suburban space for white Americans and not black Americans developed this type of dual market. White Americans were able to leave for the suburbs because single family homes were being built specifically for them. As the population was increasing, these two separate housing markets did not grow at the same pace, which had repercussions for the Black community (Mohl 2001). White Americans were about to move from the city to the suburbs because housing development were being created for them, but housing was not being created for black Americans.  

The major explanation for separating the markets was that when a black American family moved into an all-white suburban neighborhood, it was believed that the value of houses in that specific neighborhood decreased significantly. The belief of decreasing housing prices may have been enforced by real estate brokers, who were buying houses from whites at a lower price than the purchase price because white Americans were so “panic-stricken” by the presence of black Americans, and the broker would then sell the house to black Americans at a price that suited the housing market in the area (Boston et al. 1972).  

Another difference between the black and white housing market is the amount of investment in the neighborhood.  In general, continuously strong credit supports housing investment, while disinvestment is a result of lack of credit. In the 1970s, disinvestment was presented as a large problem. Lending institutions were only providing loans to specific areas of a city. Race was usually the determining factor of whether a loan was given or not. This phenomenon is called redlining.  

By not providing loans to specific neighbors, it creates a differentiation in housing markets because without loans individuals are not able to invest. Accounts of redlining in the 1990’s showed differences in the availability of credit was heavily influenced by race. A study in 1988 found that financial institutions provided more loans to white middle-income neighborhoods at a higher rate compared to black middle-class neighborhoods, and in addition it was found that the lending rate gap continued to increase from 1982 to 1986. Detroit faced a lot of backlash when this evidence of racial bias was released. The 1994 study conducted by Eugene D. Perle found that there was no connection between racial bias in mortgage lending and that models are easily manipulated to show an effect of racial bias on mortgage lending (Perle et al 1994).

Lack of funds was not only an issue rooted in financial institution. The amount allocated from the national government to the federal government impacted the state of cities as well. During the presidency of both Kennedy and Johnson there were tons of assistance given to local governments, which continued into the Nixon era. In the 1970s, there were about 80% of local governments receiving aid. Governmental aid stopped due to a recession in 1974.  

By the late 70s and mid-80s, city spending dropped significantly. President Jimmy Carter set the tone for further policy by stating in the state of the union address that the “government can’t set out goals, it cannot define our vision. Government cannot eliminate poverty or provide bountiful economy or reduce inflation or save our cities or cure illiteracy or provide energy. This was a clear stance taken on the investment of cities: the government would no longer be providing the generous funding it had in the past. Instead, the government was looking to attract business investment and further promote economic growth” (Tabb 2016). In 1980, Ronald Reagan cut 9.7% of non-military spending and cut the Department of Housing and Urban Development’s budget by 40% (Moskowitz 40). In order to stimulate economic growth, the decision was to cut taxes, which ultimately took more funding away from cities and continuing the theme of disinvestment (Tabb 2016). A more comprehensive perspective of neighborhood investment, emerges from a focus on the specific dynamics within the Detroit Metropolitan Area.

Gentrification 

In the 1970s, Detroit was suffering from high unemployment, racial transition, and collapsing housing markets (Ryan 2014). This could be labeled as a period of disinvestment within the community, which could be attributed the factors outlined in the previous paragraphs. The era that followed the major shift in funding was an era of development. For Detroit this meant that mayors of the city passed the reins on to private developers to create new development programs (Ryan 2014). Attracting private developers is a form of promoting business investment, which was the goal of tax cuts in the 1980’s, but this investment came at a cost for those who were living in the city of Detroit. 

During the 1990s, developers began to create suburban-style developments within Detroit neighborhoods. One example of the transformation is Jefferson-Chalmers (Ryan 2014). One of the reasons why developers were able to create new neighborhoods was because of the urban renewal clearances. In the 1970s urban renewal was an initiative to restructure the city of Detroit (Ryan 2008). In order to restructure the city many of the building were demolished and not replaced (Ryan 2008). This provide space and lots for further development (Ryan 2014). In 1995, there were further demolitions of public housing units under the direction of the Hope IV created by Bill Clinton, which created more space for developers (Moskowitz 2017).  When the lots ran out, housing was condemned in order to meet the need of these new developments, and many low-income individuals were displaced from their homes (Ryan 2014).  The developers moving into Detroit was one of the beginning stages of gentrification. The real estate was cheap for developers to purchase and their plans were heavily subsidized by the local government of Detroit. 

Gentrification is defined as having four separate stages. Before the stages of gentrification are set in motion, the area must be gentrifiable, meaning that the real estate and the zoning laws must allow for individuals and businesses to come into the space (Moskowitz 2017). In the context of Detroit, the mayors supported private developers coming into Detroit (Ryan 2008).  In order to further entice developers and businesses, huge tax cuts are given in order to further built developments with ease (Moskowitz 2017). In the context of Detroit, huge subsidies were given to developers in order to build new neighborhoods in order to lower their cost (Ryan 2008). Currently, corporations like Rock Financial, government buildings, sports stadiums, restaurants, and retail are all growing in the downtown area of Detroit (Reese et al. 2017). The growth of these sectors was possibly because Detroit has cheap real estate, which makes it more profitable it is for developers, thus more gentrifiable (Moskowitz 2017). This is what attracted many businesses to Detroit, which is contributing to the so-called revitalization of the city that recently earned the city recognition.

In the beginning, gentrification is started by individuals moving into a poor neighborhood and began to renovate houses. An example of this is in the story A $500 Dollar House in Detroit by Drew Philp (2017), a college student who bought an abandoned house at an auction for $500 dollars. In his journey, he described an interest in bettering the community rather than displacing long-time residents like many of his white counterparts who participated in the gentrification of the city. While Philp was able to purchase a home for a cheap price and integrate himself into the community, the homes that were up for auction were sometimes still lived in or had sentimental value to the person who had to walk away from it. This significantly changed the dynamics of not only Detroit, but specific neighborhoods (Philp 2017). 

The second step to gentrification is when people outside of the community start to become aware of the existence of the neighborhood and begin to buy real estate in the area. For Detroit this meant that big business started to move into the area. Dan Gilbert, the owner of Quicken Loans, began buying real estate in Detroit and eventually set up headquarters in the city (Moskowitz 2017). Gilbert bought about 60 skyscrapers in Detroit (Philp 2017). Although not a realtor, he is involved in conversations about the redevelopment of Detroit and land development (Moskowitz 2017). This is a common theme found in the revitalization process of Detroit, non-city planners involved in planning the future of the city. For example, Gary Carley, who is the vice president of the Michigan-based Standard Federal Bank, suggested building single family homes on Detroit’s eastern riverfront. Carley had clear bias because his bank makes a profit off of mortgages, therefore if more homes get built then Carley makes more money. Carley became the lead proponent of the development, although he was not a developer (Ryan 2008).  This leads us directly into the third step of gentrification, increased power granted to the gentrifiers (Moskowitz 2017). 

The previous paragraph touches on the fact that big corporations with money begin to have more power in the city than local citizens do, because of the money that is brought in and the potential for revenue they can bring into the future. 

Lastly, gentrification leads to an increase in wealth of the neighborhood, but in order to achieve that wealth individuals are pushed out of the community. A more direct example of this is in 2010 when mayor Dave Bing wanted to change the borders of the Detroit area because he wanted to remove the parts are the city that were not as profitable and losing money (Moskowitz 2017). While this plan was not put into place, it is important to see in all four stages of gentrification that money is the main motivating source. In the process individuals get left out and displaced in order to make room for the wealthier and more profitable projects. 

In conclusion, housing policies in the 1910s left a lasting impact on major cities like Detroit. In the beginning, industry created a robust city whose population and economy grew rapidly. This quickly changed when deindustrialized and suburban housing developments encouraged white Americans to leave the city and transition into suburban neighborhoods. Ultimately, “White Flight” and reduction of governmental funding for local governments contributed to the decline of Detroit. Today, the cheap real estate is getting taken advantage of by developers. This stage of “revitalization” is not necessarily revitalizing because many locals are being pushed out of space they lived in for years. Detroit must wrestle figuring out how to bring change and progress without costing current citizens their homes. 

 

Works Cited

Boston, John, Leo C. Rigsby, and Mayer N. Zald. 1972. “The Impact of Race on Housing Markets: A Critical Review.” Social Problems 19(3):382-393.

Desmond, Matthew. 2016. Evicted. New York: Broadway Books.

Kiertzner, Jim. 2018. “FBI Says Detroit Is Second Most Dangerous City, Down From #1 In 2016.” WXYZ Detroit. Retrieved December 15, 2018.

Metcalfe, John. 2016. “Browse Thousands of Tear-Downs on the ‘Detroit Demolition Tracker.’” Citylab. Retrieved December 15, 2018.

Mohl, Raymond. 2001. “Race and Housing in The Postwar City: An Explosive History.” Journal of the Illinois State Historical Society 94(1).

Moskowitz, Peter. 2017. How to Kill A City: Gentrification, Inequality, And the Fight. New York, New York: Nation Books.

Perle, Eugene D., Kathryn Lynch, and Jeffrey Horner. 1994. “Perspectives on Mortgage Lending and Redlining.” Journal of the American Planning Association 60(3): 344-354.

Philp, Drew. 2017. A $500 Dollar House in Detroit. Scribner.

Reese, Laura, and Gary Sands. 2017. “Is Detroit Really Making A Comeback?.” Citylab. Retrieved December 15, 2018 (https://www.citylab.com/equity/2017/02/detroits-recovery-the-lass-is-half-full-at-most/517194/).

Rothstein, Richard. 2017. The Color of Law. Liveright Publishing Corporation.

Ryan, Brent D. 2008. “The Restructuring of Detroit: City Block Form Change in A Shrinking City, 1900–2000.” Urban Design International 13(3):156-168.

Ryan, Brent D. 2014. Design After Decline. University of Pennsylvania.

Tabb, William. 2016. “National Urban Policy and The Fate of Detroit.” Reinventing Detroit: The Politics of Possibility.

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