Property value drops exceed 30 percent in parts of SE Michigan
It might be only a slight exaggeration to say that as Southeast Michigan goes, so goes the state.
The region, with roughly 50 percent of the state population and the driver of half its economic activity, suffered the steepest drop in the state in total property value over the past five years. And though there are signs of statewide economic recovery, the depth of that loss may take years to recoup.
And that will have repercussions for Michigan as a whole.
“Southeast Michigan is extremely important to the state,” said Michigan State University economist Charles Ballard. “It always has been and probably will be for the future.”
Ballard foresees modest job growth for the state in 2013 and 2014 and expects the housing market to continue to recover.
But he also notes the southeast region, in particular, has much to overcome.
According to Treasury Department figures, the decline in total property value from 2007 to 2012 included a 21 percent fall in Monroe and Washtenaw counties, 28 percent in Livingston County, 31 percent in St. Clair County, 34 percent in Wayne and Oakland counties and 35 percent in Macomb County. The drop in residential value in the region ranged from a low of 30 percent in Livingston County to a high of 40 percent in Wayne County.
“That's pretty horrendous,” Ballard said.
Any loss like that in residential value holds back economic growth, Ballard said, as homeowners curtail spending or grow cautious about relocating to take another job.
For local government units that depend on property tax receipts, it has meant diminished revenues, budget cuts and layoffs.
“In so many households, the biggest part of their net worth is in their home. A huge amount of that got wiped out. You are more cautious about spending on things. If consumers are more cautious about spending, businesses are more cautious about spending,” Ballard said.
Detroit, once the source of Michigan's prosperity, continues to be a virtual black hole in the state economic universe. Its residential property value plunged by 47 percent from 2007 to 2012 and total value dropped by 33 percent. In a city that once had nearly 2 million residents, its population fell by 25 percent from 951,270 in 2000 to 713,777 in 2010.
Earlier this month, Gov. Rick Snyder named business restructuring specialist Kevyn Orr as emergency manager for the city. It has some $14 billion in long-term bond debt and retiree pension and health care benefits and is as much as $400 million in the hole in this year’s budget.
University of Michigan economist Donald Grimes said the evidence from cities like Chicago, Seattle and New York City suggests that a vibrant, dominant central city can be key to statewide economic health.
“It would certainly be easier and more consistent with what's happened elsewjere in the country to have a strong (Detroit).” Grimes said.
Ted Roelofs worked for the Grand Rapids Press for 30 years, where he covered everything from politics to social services to military affairs. He has earned numerous awards, including for work in Albania during the 1999 Kosovo refugee crisis.
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