While many of the 25 largest cities in the U.S. would be able to weather a recession similar to the 2008 recession, two may not be well prepared, according to Moody’s Investors Services. Moody’s rated six of the 25 cities as “stronger” relatively when it comes to recession preparation, Chicago and Detroit scored "weaker."
Meanwhile, Boston, Charlotte, Denver, San Antonio, San Francisco and Seattle scored "stronger.”
"A majority of local governments have used the broad economic expansion of the past decade to strengthen their finances," says Nicole Serrano, a Moody's VP-Senior Analyst. "Additionally, they have been able to keep their debt and related fixed costs in check."
Detroit, Moody’s notes, has taken considerable steps to improve since 2013, but there is still more to do.
“Detroit has taken steps to prepare for a potential downturn: establishing an irrevocable trust to smooth spikes in pension contributions, developing a capital improvement plan that identifies a variety of sources to finance capital investments, and continuing to increase its already strong reserves,” Moody’s researchers stated. “If these trends continue, Detroit’s overall preparedness for a future recession will be more in line with major city peers.”
Additionally, Detroit is seeing home prices increase. Jeanette Schneider, VP of Management Services for RE/MAX of Southeastern Michigan states that “Detroit home values are seeing dramatic increases over last year.”
“During the first half of the year, the median price for a home in the city of Detroit increased more than 20%,” Schneider said. “Driving the increase in home values is the demand for Detroit housing.”
“While some neighborhoods have seen skyrocketing prices, there are still affordable communities that offer the brick homes that people desire at affordable prices,” she added.
Detroit has recently seen significant investment from not only small investors, but large investors as well. Bank of America has announced that it will be investing $3 million in Detroit neighborhoods aimed at helping homeowners and small-business entrepreneurs, as well as another $2.5 million in support of Detroit’s neighborhoods.