Every year, counties across Michigan auction off foreclosed properties whose owners have been delinquent on property taxes for three years. While it’s a state-mandated, quiet affair in most places, the Wayne County tax auction has drawn major attention and wrought enormous consequences in Detroit. Between 2011 and 2015, the county funneled more than 90,000 city properties through the tax auction, thousands of which were occupied homes.
By most measures the auction is causing less pain across Detroit than just a few years ago, with a little under 3,000 Detroit properties and about 950 occupied homes (both by owners and renters) reportedly ending up in the auction this month. The first round, where bidders must pay for properties’ back taxes, ended Tuesday; next month any unsold properties will be auctioned with bids starting at $500.
It’s hard to know exactly why foreclosure numbers have fallen so much, but it is likely a combination of factors: there are fewer eligible properties now that the Detroit Land Bank Authority holds almost 30,000 structures, the economy has improved and the Treasurer has moved more and more Detroiters onto payment plans for taxes they can’t afford. All that, and the unrelenting activism by a handful of community groups, the most steadfast being the United Community Housing Coalition, a nonprofit that helps Detroiters with a variety of housing needs. Every year, UCHC adjusts its auction tactics to try to help people stay in their homes.
For the past few years one of those tactics has been to place bids to try to win back the homes of tenants or land contract holders abandoned by unscrupulous landlords. In the best cases, they win, and a tenant goes from having an untrustworthy landlord to being a homeowner. But it doesn’t make the system seem any less illogical. Imagine it in any other service agency: caseworkers refreshing an online auction page and crossing their fingers they win as a strategy to keep their clients from being evicted.
This year, Michele Oberholtzer, who runs UCHC’s tax foreclosure prevention project, said the smaller auction means that home prices were way higher than in years past. The nonprofit only had the winning bid for one property out of about 30 they were trying to keep for clients. They were outbid by more than $10,000 for each home, far more than in previous years.
“It’s been really sad, telling people,” she said. “We have a lot of just really sad cases.”
Oberholtzer and UCHC were successful in keeping many more families from having to go through the auction process at all. In a program that’s new this year, the city is buying occupied, foreclosed homes before they go into the auction, then deeding them to UCHC.The city did this with 515 homes this summer, but many individuals didn’t hear about the program until it was too late.
So as the foreclosure free-for-all slowly fades, and the city’s housing market starts to tighten, in some ways it’s back to the drawing board for UCHC as they work to keep low-income tenants housed. Next year, Oberholtzer said, they may need to change tactics again and shift resources away from an auction buy-back program into helping residents avoid illegal eviction by new owners.
Keep reading: Detroit housing is supposed to be cheap, but poor residents struggle to afford rent. And take a closer look at the destructive cycle of speculators cashing in and checking out on Detroit properties, fueled by the auction.
By Sarah Alvarez, founder, Outlier Media.
This member-funded story comes to us through our partnership with Outlier Media, an innovative news startup that gets critical news to Detroit residents by text messages. Learn more about you can support original local journalism with a Detour membership by clicking here.
And sign up for the free Detour Detroit newsletter here