Renting a home in Detroit should be a situation where most people can get a pretty good deal, and by deal I don’t mean a cheap price – I mean an affordable home worth the price.
After all this city is enormous, and there are more homes than people to live in them. which paints a profitable picture for those interested in real estate development or investing. Detroit has one of the most undervalued real estate markets in the county and not surprisingly this leads to one of the best markets for owning a rental.
From the renters side the data paints a darker picture (more details about data sources can be found at the bottom of this, and all, Outlier posts).
The majority of housing decisions in the Detroit housing market are not made on the basis of things like neighborhood, amenities, or architectural detail. Rather, the number one driver of where somebody in Detroit lives is money. The majority of Detroit renters are pretty financially constrained. The median annual income of a renter in the Detroit area is $25,000 and a full 33% of renters live below poverty level.
Housing in Detroit might be comparatively inexpensive with average rent for a 2 bedroom apartment is around $700, but it’s still unaffordable for a lot of residents. The general rule of thumb is that for housing to be considered “affordable”, a family should spend about one-third of their income on housing costs. In the Detroit area about half of families spend more than this. For people living in poverty, the amount of monthly income spent on housing is an unsustainable 88 percent.
So, as one ingredient in this stew of rental market mess we’ve got a lot of renters who need a deal. The other ingredient is housing stock with a lot of liabilities. The housing stock in Detroit is old, can have thousands of dollars in tax debt or back water bills, some are not even licensed rentals, and others haven’t been inspected recently. Worse, there is no way for a renter to find out what kind of legal or financial baggage a potential rental might have.
Landlords have access to a lot of information about their renters and they make decisions on who to rent to using that information. Renters should have more information about the places they want to rent in order to help them negotiate or make a decision. We’re rolling out a reporting project we hope might fill this information gap. Soon, anybody will be able to text the address of a place they’re thinking of renting in Detroit and get back a text report of the liabilities associated with that address including that data about inspections. They’ll also be able to text directly with a reporter if they have other information needs or have a story that could use following up.
*A note on data. Figures used here without hyperlinks are from the American Housing Survey, a survey done every two years by the Census. The figures are from the Detroit Metro area, and Outlier was told by census officials data could not easily be disaggregated in order to examine Detroit alone. It is likely, therefore, that the housing picture for renters is worse than presented here. I used tables from the Detroit Metro Metropolitan Area Survey C-01, C-07, C-09, and C-10, all from the RO-M, Detroit series. The tables have been updated with 2015 data.
For more on the difficulty of getting accurate data on rentals and renters, especially in lower-income markets, the notes section of Evicted by Matthew Desmond is incredibly informative. Desmond studied evictions in Milwaukee, Wisconsin and had to conduct his own large scale survey to get data reliable enough to use in his book.