Detroit’s comeback after decades of decline could now be undermined by the impact of President Donald Trump’s tariffs on the American car manufacturing industry, experts warned.
“There are so many households here connected to the automotive industry in some way. If the tariffs result in the ‘Big Three’ and their suppliers laying off local employees, then that won’t net out positively for the home market activity this year,” Michigan-based Redfin agent Desiree Bourgeois told Newsweek.
Detroit’s Fall and Its Unexpected Resurgence
In the 1950s, when General Motors employed hundreds of thousands of Americans, Detroit grew to become the fifth largest in the country, with over 1.8 million residents. But by the 1970s, the U.S. auto industry and the so-called Big Three—General Motors, Ford, and Chrysler (now Stellantis)—were experiencing severe economic distress, as was the “Motor City.”
In the years that followed, growing foreign competition, a couple of oil crises, and economic recessions dealt a nearly fatal blow to the Midwestern city, which in 2013 became the largest city to declare bankruptcy in U.S. history.
But since the COVID-19 pandemic, Detroit has experienced an unexpected resurgence.
Many companies, including Ford Motor, Microsoft, Google, and Stellantis, have moved jobs and operations to the city, contributing to its revival. Demand for housing has seen a massive surge since the beginning of the pandemic, which in turn has brought up home prices and values.
Newsweek reached out to General Motors, Ford, and Stellantis via email for comment on Tuesday.
Both average and median home prices have risen in the city since 2020. A recent report by Mortgage Calculator listed Detroit as number two on its list of U.S. cities with a population of 200,000 or more that saw the highest increases in average home prices following the start of the pandemic.
Between March 2020 and October 2024, average home prices in the city increased from $46,586 to $80,127, a 72 percent rise. Prices are still rising: according to the latest Redfin data, the median sale price of a home was $87,500 in February, up 4.3 percent from a year earlier.
The city reported a net gain of 1,852 residents between July 2022 and July 2023, the first population uptick since the 1950s, according to the U.S. Census Bureau.
A Comeback Driven by New Investments and Rising Housing Demand
Detroit’s resurgence started before the pandemic struck, though it was initially circumscribed to downtown.
“Downtown Detroit had been experiencing a rebirth of big business investment and a general revival of the shopping and restaurant districts. New lofts, townhomes and condos were developing with luxury buyer price tags,” Redfin’s Desiree Bourgeois told Newsweek.
These new builds were mainly attracting buyers from the suburbs who were excited to try out the new downtown Detroit.
“There was somewhat of a boom or high interest to be in the city proper that had been building for a number of years. However, the other housing market—the expansive spread of neighborhoods surrounding the downtown area—continued to experience population loss and decreases in property values, which resulted in low home sale interest, on average,” Bourgeois said.
“In many neighborhoods, it wasn’t uncommon to find only one or two homes occupied on a block. All in all, the neighborhood market growth was declining to stagnant while the downtown areas were slowly growing, driven predominantly by buyers moving from the suburbs, or out-of-state corporate transplants.”
After the pandemic, the situation changed.
“We saw a couple of new groups enter the market—or enter in greater numbers than previously—that changed the landscape. More twenty-somethings found that the low interest rates gave them access to capital,” Bourgeois said.
These new demographics started transforming pocket neighborhoods into desirable areas to live, the Redfin agent said.
“It seemed like as the neighborhoods began to revive, the investors saw all the potential in the abandoned or land bank-owned homes they could purchase cheaply, flip and resell for a large profit,” she said.
“Investors came in from all over the country and started buying up houses or vacant land in big quantities to develop. Currently, it’s not uncommon to now have a bidding war or see a home sell for over list price.”
Relatively low housing prices, amid a nationwide affordability crisis, have helped drive more demand in the city, a beacon of hope for many struggling to get on the property ladder, as well as for investors.
“Demand for homes in the highly-affordable Detroit metro area picked up starting in mid-2020, and home prices climbed in response,” Realtor.com Senior Economic Research Analyst Hannah Jones told Newsweek.
“Prices peaked in June 2022 at $279,950, roughly $18,000 higher than in June 2019, before the pandemic. Controlling for home size, Detroit saw even more impressive price growth. The median listing price per square foot peaked at $185 per square foot in summer 2024, 31.9 percent higher than in summer 2019,” Jones said.
For locals, the boom in home prices has been both a boon and a burden. Home values have skyrocketed in recent years, giving homeowners more equity and access to new financial opportunities.
A recent study from the University of Michigan Poverty Solutions found that homeowners in the city gained $700 million in new home wealth in 2023. Detroit Mayor Mike Duggan said at a March press conference that homeowners had gained $4.6 billion from 2014 to 2023. Black homeowners benefited the most from this upswing, representing three-quarters of the total wealth gain.
But at the same time, “tax bills have gone up and many were caught unprepared for that,” Bourgeois said. “Rental prices have continued to increase as well, so for the renters, it’s also put a strain on their budget.”
While home prices continue to climb in Detroit, they are doing so at a much slower pace than in 2020 and 2021—possibly to the benefit of locals. However, inventory remains below pre-pandemic levels, which keeps upward pressure on prices.
The Threat of Trump’s Tariffs
The Trump administration has imposed a 25 percent tariff on all cars imported to the U.S. and certain car parts, as well as a 25 percent tariff on all imports of steel and aluminum.
According to Bourgeois, who has experienced this firsthand in the Michigan housing market, uncertainty over the impact of the tariffs is driving many potential buyers to reconsider purchasing a property this year.
“The constant back and forth of the tariff war has buyers and sellers questioning if it’s the right time to jump into the market or hang back to wait and see what happens,” she said.
This, in turn, could cool demand in Detroit, dampening its growth. But the tariffs could also affect the city at the heart of the American auto industry in a much more direct way.
“Tariffs on auto inputs such as steel, aluminum and auto parts translate to significantly higher costs for automakers. Higher input costs negatively impact auto companies by eating away at profit margins and/or flowing through to consumers, which can hurt demand,” Jones said.
Either way, Jones said, lower profits and lower demand can lead to layoffs and slowed production. “Should these large automakers find it necessary to cut jobs, the housing market will feel the effects,” she added.
“If the auto sector shrinks or becomes less stable, unemployment rises and income levels fall. Less income and less stable employment can deter buyers from getting into the housing market, which can lead to a build up in inventory and stalling, or falling, home prices,” she said.
“If job opportunities do not return to the area, then residents may look elsewhere to find stable employment, leading to out-migration.”
Pat Ryan, CEO of the car shopping app CoPilot, does not doubt that the Trump administration’s tariffs will result in higher costs for American automakers.
“Tariffs will push car prices up in the short term. In the long term, they will create a complicated, expensive process for automakers as they look to shift their entire production to the U.S.,” he told Newsweek.
“From a consumer standpoint, the tariffs exacerbate a years-long affordability problem in the car market,” Ryan said. During the COVID-19 pandemic, prices reached record highs due to supply chain bottlenecks, he explained. On average, a new car is nearly 30 percent more expensive than it was pre-pandemic, making a car purchase out of reach for many consumers.
“Even though prices are still near historical highs, we’re seeing consumers rush to buy in anticipation of tariffs potentially pushing costs even higher,” he said. “New car inventory, for instance, has fallen by 39 percent in the past two months alone. Moving forward, this gives dealers less of a cushion of existing inventory and will likely result in tariff-related price increases hitting the market sooner.”
Crucially, tariffs will also have a significant impact on the Big Three, major employers in Detroit that manufacture a number of models and auto parts outside the U.S. Nearly half of General Motors’ sales, for example, come from imported vehicles.
Detroit automakers are already operating most of their plants at full capacity, and they have no immediate plans of building new ones—which is not easy in the first place. Ford CEO Jim Farley recently said that his company will not be building new plants in the U.S. anytime soon, citing “a lot of costs, and a lot of chaos,” linked to Trump’s tariffs.
While General Motors said it will ramp up production in the U.S. of its range-topping pick-ups, Stellantis, on the other hand, said it will furlough 900 employees and pause production in several of its factories while it works out its approach to tariffs.
The domino effect from Trump’s tariffs could make Detroit’s resurgence topple.
“If the auto industry catches a cold, Detroit gets pneumonia,” auto industry expert John McElroy told Fox 2 Detroit last month. “We depend so heavily on the automotive industry that if it gets impacted, Detroit and Southeast Michigan feels it the most.”
From Bad To Worse
Things could get worse if countries impacted by Trump’s tariffs decide to impose their own levies against goods from the U.S.
“Since almost no car is made entirely in the U.S., automakers face cost increases across their entire supply chain—costs that will almost certainly be passed onto the consumer,” Ryan said.
“There are some carve-outs: for instance, Canada announced that automakers can bring in a number of U.S.-assembled cars without paying tariffs, as long as some vehicles are still manufactured in Canada.”
However, reworking operations and manufacturing to avoid tariff-hit countries “isn’t a quick fix,” Ryan said.
“This will be a years-long, complex overhaul. Some automakers have an advantage, particularly those who benefit from the USMCA free trade agreement between the U.S., Mexico, and Canada—which includes some Big Three vehicles,” he added.
“Under the terms of that agreement, the import tax is only applied to the proportion of non-American content in those cars. But it’s not enough to shield the market from broader pain.”
Should the U.S. enter a recession this year, as many experts have said is becoming more likely due to tariffs, all these issues would become even harder to solve.
“With tariffs set to drive car prices higher and economic uncertainty, consumers may feel pressured to buy both new and used vehicles sooner rather than later. If there’s an economic downturn, we could see a significant dip in car sales,” Ryan said.
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