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Monday, October 15, 2007

Ghost Town, could it happen here?

There is a site on the Web that tracks ghost towns in various states. If you Google ghost towns of Michigan it will be the top result. I’ve travel by some of these ghost towns, as well as through a number of towns that while not abandoned are certainly shadows of their former glory days (Calumet, for one), when my wife and I spent a week exploring the Upper Peninsula several years back. I got to thinking about it and wondered could it happen here? That’s one of the nice things about blogging – you can let your imagination loose a bit and then write about it.

Most of these ghost towns and near-ghost towns were once thriving towns (some even cities) whose local industries went away. Without their economic engines to bring in money the towns ceased to have a reason for existing and eventually faded away, some relatively rapidly. Most of these ghost towns in Michigan were dependent upon either forestry or mining (mostly copper) and when either the demand petered out or the market moved to closer suppliers for the products, the industries failed and so did the towns. There are a few towns Up North of course that hung on and are still there today. You can visit them (and tourist traffic is a significant part of their livelihood now) and still see the remnants of the grandeur that they once had.

I got to thinking; what would happen to Detroit and the surrounding area, if the automotive industry as we know it went away? Would Detroit become a ghost town? Not likely, but it certainly would change significantly. I suspect that 50-60% of the area’s economy (maybe more) is directly tied to the local auto industry – OEMs and suppliers. If that went away (or went south, as is more likely), maybe Detroit could survive on what’s left and on the gaming industry. Maybe we’d become like Atlantic City. Of course we also have Automation Alley – the 3-4 county combined effort to attract high-tech businesses to the area. Undoubtedly there would continue to be high-tech interest in the area. And, the Detroit area is still a major educational and medical hub for the state.

So, we are not likely to become another Calumet, one of the UP’s near-ghost towns; however, we are undergoing some dramatic and basic structural changes in the major industry that drives our local economy and much of the economy of the state. The issues caused by this disruptive change are not short term and will impact things in all sectors of the economy and in the housing industry for years to come. Right now the housing market is being driven by foreclosures and other distressed homes sales. Buyers are looking first for these bargains and the pressure of these sales is driving down sale prices throughout the market. That trend is likely short-term. We’ll burn through the foreclosed homes inventory fairly fast.

Longer term, the recent home devaluation is certainly a historical anomaly and certain to be reversed as soon as stability returns to the economy. And, the recent lack of buyers in the market, caused by job uncertainly locally, is sure to change and unleash a wave of pent-up demand upon the market. I’m starting to see some of that already (see my post of September 25 – Light at the end of the tunnel). So, I guess we won’t all have to get jobs as tour guides through the ghost town called Detroit, and there will likely be fewer of us left when all is said and done; however, we’ll still all live on our spectacular peninsula, with more blessings to count than most of our fellow countrymen. And, if we want to see a ghost town, we have our own in the UP, eh!

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