Detroiters trying to sell their homes have had an easier time over the last decade because total sales and prices have gone up. That’s some of the findings from two new reports by economic think tank Detroit Future City, which paint a mostly rosy picture of the city’s housing market today.
There may be more cause for concern. Other parts of the reports show that, despite improvements to the city’s housing market, it still has a ways to go to be considered thriving.
The reports compared two years of home sales in the city, 2012 and 2021. One report analyzing general trends in the housing market found improvements across a range of metrics in the housing market: There were more mortgages and more homes being sold in more neighborhoods, not just the priciest and most stable.
The other report on Black homebuying found renewed interest among Black homebuyers to consider buying in Detroit, with mortgage applications more than doubling over the decade.
However, the reports also show there are still worrying vestiges of a broken housing ecosystem impacting buyers and sellers today. The most worrisome issue may be that much of the city’s homes were still being sold without warranty deeds, putting the new owners at risk of being defrauded.
“We’re excited that the number of market sales and their value have both gone up, but we still do see a number of distressed sales,” said Ashley Williams Clark, vice president of Detroit Future City and one of the report’s authors.
A “distressed” market
More than anything else, the report on home sales demonstrates just how bad Detroit’s housing market was in the early 2010s when tens of thousands of homeowners lost their homes to tax foreclosure. Property values plummeted. Homes were so cheap it was incredibly difficult for buyers to get mortgages, forcing people to pay in cash. Less than 20% of all homes sold in the city were done with a mortgage as recently as 2019. The number of mortgages issued in Detroit has steadily gone up but still lags behind other comparable cities.
Many of these challenges still exist, though to lesser degrees. Just 18% of sales from 2012 were for more than $20,000 and used a warranty deed.
In this kind of housing marketplace, quitclaim deeds are common and mortgages are not. Quitclaim deeds provide no guarantee that the seller actually has a legal title to the property. These kinds of deeds are sometimes used between people who trust each other and who don’t want to go through the expense and time of a more secure deed. They are also used to keep the cost of the transition to the seller down. Wayne County only uses quit claim deeds for tax auction properties, for example. Scammers who want to make a quick buck off unsavvy buyers also use quitclaims.
More than a decade after the housing crash, in 2021, these kinds of deeds still represented the majority of home sales in Detroit. It’s this figure that led the report authors to consider only one-fifth of the city “healthy,” where sales done on the open market exceeded these less regulated sales by a decent margin.
Even these numbers may even be artificially deflated. The Wayne County Treasurer’s Office has instituted several moratoriums on tax foreclosures, resulting in fewer distressed homes entering the market. Less than 1% of changes in property ownership were caused by foreclosures in 2021.
The federal government also flooded states with money to help with home stability during the pandemic. Michigan is spending $243 million of its allotment on mortgage and other forms of assistance to homeowners.
It’s also worth noting that in 2021, the city’s median sales price languished at $30,000, and was still at $58,000 when only market sales were considered.
That’s not to say meaningful progress hasn’t been made repairing the broken market. Tax foreclosures have likely been the biggest force depreciating values in Detroit’s neighborhoods, and those numbers have fallen drastically from their heights in the early 2010s, thanks to more payment plans and property tax exemption programs for low-income homeowners.
Comparing 2012 to 2021, several neighborhoods had average home prices increase more than 1,000%. One area in the North End and Milwaukee Junction neighborhoods saw a 3,398% increase.
A recovery for whom?
In a separate report, Detroit Future City looked at Black homebuying trends in the city over the last decade. The results were similarly mixed.
Detroit saw an exodus of Black residents, particularly those earning middle-class incomes, after the Great Recession. The report found mortgage applications among Black homebuyers increased 188%, including a 382% increase among middle- and upper-income buyers.
“Detroit returned to being the primary location for potential Black middle-class homebuyers when compared to any individual city across the region,” the report says.
Black potential homebuyers are still denied mortgages inside the city at a higher rate, likely pushing them to the suburbs when they would otherwise be willing to live in the city. Overall, Detroit represents just one-fifth of mortgages from Black buyers in the metro area.
“I think while we’ve seen this growing demand for mortgages and in a growing number of neighborhoods, that this demand is still low relative to Detroit’s population,” Williams Clark said.
Overall, Clark is positive on the trajectory of housing in the city, especially in areas and neighborhoods like Grandmont Rosedale, Bagley and East English Village. She also said the city needs more move-in ready homes, better access to mortgages and better schools before Detroit can have a truly healthy housing market.
“There’s still more that needs to be done to increase demand and to create these neighborhoods that both attract and retain homebuyers, especially Black homebuyers,” she said.