Detroit Mayor Mike Duggan had a “blight policy” in place before he even announced his 2013 candidacy. In May, Zillow visited the city on the latest stop of its Zillow Housing Roadmap tour to learn how Detroit’s policies and the work of lenders, nonprofits, the Detroit Land Bank Authority and others are starting to pull the city out of a housing disaster.
There are signs of hope, but the typical underwater homeowner in Detroit still owes 120 percent more than the value of their home. The typical underwater homeowner in comparable cities owes between 40 and 60 percent more than the value of their home. The vast majority of home sales in Detroit — 80 percent — are cash transactions.
Here’s a snapshot of what Zillow heard during panels led by Zillow Chief Economist Stan Humphries and Amy Haimerl of Crain’s Detroit Business:
- People want to live in Detroit. Demand is not a problem, Detroit experts agree. Finding move-in ready homes for sale or getting loans to buy and rehab distressed housing are roadblocks.
- The whole city can’t be helped at once. It sprawls for 139 square miles, and there aren’t enough resources to go around. Lenders, nonprofits and the Detroit Land Bank Authority are working first to bolster particular areas.
- Its private market remains broken. Reviving that market is the aim of the Land Bank, a quasi-governmental organization that is demolishing and auctioning off tens of thousands of homes in Detroit.
- Appraisals are a stumbling block. Twice as many people are denied loans for collateral as for bad credit, according to new research from Zillow. Lenders are working with the Land Bank, nonprofits and others to create solutions.
- Home buyers need more education, particularly about rehab costs. Some are buying distressed homes before understanding their true rehab costs and with little inkling of the trouble they might encounter qualifying for a loan.
Despite these growing pains, the resounding sentiment is that Detroit is coming back after decades of housing decline. We’re looking forward to watching the city continue along that upward trajectory.
For more information on Detroit’s housing market, visit Zillow Research.