Yes, I believe that housing in Detroit should be re-purposed for thing such as rehab. If the buildings are in good enough shape to turn them into something else, then why would the city tear them down to build something else? It is a waste of money to start for the bottom when you can start the middle.
Detroit is a city that needs a lot of help with regard to its housing situation along with its jobs and economy, so the existing housing needs to be rehabbed and repurposed rather than torn down. This will save more money than building new and yet will ensure that people have good places to live.
The housing situation in Detroit is out of control. Entire neighborhoods are abandoned. The only way for Detroit's housing market to begin healing is for supply and demand to come together. At the moment, supply is miles ahead of demand. Old and derelict housing needs to be destroyed so that the supply can fall back to where the demand is resting. Rather than spending resources on costly rehabilitation, it would be better to bring in demolition crews.
No, housing in Detroit should not be repurposed for other things such as rehab, rather than being torn down, because it would be cheaper to just start over. Also, people in Detroit do not need reminders of the tragedies that they have suffered in the past decades. A fresh start will help.