Report: Detroit home values increased nearly $4B since bankruptcy
In the years since the city of Detroit's municipal bankruptcy, home values grew by $3.9 billion and Black homeowners saw their housing wealth increase by $2.8 billion.
That's according to a report released Tuesday by the University of Michigan’s Poverty Solutions, which examined how much wealth Detroit homeowners accumulated since the city's bankruptcy and if that growth was equitable across neighborhoods beyond downtown and Midtown and if the generated wealth also benefited Black and Hispanic residents, alongside white Detroiters.
"Wealth has increased a lot and from what we can tell it's a fairly equitable increase. It's gone up for all racial and ethnic groups and it's dispersed throughout the city," said Jeffrey D. Morenoff, a professor and associate dean at the University of Michigan's Gerald R. Ford School of Public Policy and a professor in the sociology department and Population Studies Center.
Morenoff conducted the study with Kurt Metzger, a demographer and founder of Data Driven Detroit, and Christina Shaw, a financial analyst for the city of Detroit. The report examines changes in the city's housing values from 2014 to 2022, following Detroit's bankruptcy.
"Prior to 2014, the city was still reeling from the Great Recession, home sales had plummeted. There was a vicious cycle that was set in motion by the mortgage crisis. People were unable to get mortgages and mortgage lenders were not giving out mortgages because they didn't know how to price homes adequately, in part because the market was being flooded by a lot of distressed, abandoned properties," Morenoff said at a news conference on Tuesday. About 20% of Detroit's housing stock sat vacant and abandoned, according to the report.
Since the bankruptcy, there has been a "transformation" of the housing stock, through demolitions of blighted and abandoned properties and sales by the Detroit Land Bank Authority, Morenoff said. The housing market began to recover as home sales prices increased, the report notes.
Detroit Mayor Mike Duggan said Detroiters who decided to stay in the city are seeing the results in the form of billions of dollars in housing wealth.
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"This is how Detroit families built wealth," Duggan said. "They kept up their homes, they pass them down to the members of their family and it was built over generations. It's taken a long time to get it back but we're on the right track."
Here are the key findings from the report:
Neighborhoods with the lowest property values in 2014 increased by 299%, on average, by 2022. Neighborhoods with the highest poverty rates in 2014 saw home values go up an average of 277% — more than double the growth in property values compared with areas with the lowest poverty levels.
Home values went up by 75% in certain Detroit neighborhoods from 2014 to 2022 spread out across the city, Morenoff said. Parts of the Chadsey Condon neighborhood saw the median home sale value jump 853%, from $7,533 in 2014 to $71,760 in 2022.
The value of owner occupied homes increased 94%, from $4.2 billion in 2014 to $8.1 billion in 2022. Black homeowners accounted for the majority of this gain, with their property values growing 80%, increasing by $2.8 billion, from 2014 to 2022. During that time, white homeowners saw a 127% increase, a growth of $582 million, and Hispanic homeowners saw their housing wealth go up 181%, or by $298 million.
The U-M report takes into account the loss of wealth because of property tax foreclosures. Tens of thousands of overtaxed homes in Detroit were foreclosed since 2013, according to a Detroit News investigation. Detroit saw a drop in tax foreclosures of owner occupied homes from 4,984 in 2014 to 421 in 2022, the report found. Throughout the COVID-19 pandemic there were full and partial moratoriums on property tax foreclosures in Wayne County.
The report also notes that challenges remain, including housing affordability for Detroit renters and displacement of residents who can't maintain their older homes.
Duggan attributed the increase in housing wealth to neighborhood associations and block clubs and touted city home repair programs, removal of vacant homes, sales of side lots to homeowners and renovation of city parks and recreation centers.
The Rev. Wendell Anthony, Detroit Branch NAACP president, emphasized the importance of Detroiters not moving, but improving, where they reside.
"Homeownership creates opportunity, provides collateral, helps one to gain access to loans from financial institutions, gives a sense of pride, establishes a legacy for the future and leads to a pathway for wealth accumulation," Anthony said.
To read the full report, go to bit.ly/HousingWealthReport.
Contact Nushrat Rahman: nrahman@freepress.com; 313-348-7558. Follow her on X, formerly known as Twitter: @NushratR.
This article originally appeared on Detroit Free Press: Detroit home values increased nearly $4B since bankruptcy, report says
