Detroit property values are on the rise, reversing a nearly two decades-long slide, according to new data from the city.
Residential property values rose 12% citywide in 2018, according to an analysis of two years of real estate market data. About 90% of all neighborhoods saw home values increase, with the city’s downtown core and portions of southwest Detroit leading the way with 20%-plus increases.
Commercial properties saw even bigger gains, rising 35% in value in 2018.
Detroit Mayor Mike Duggan attributes the growth to neighborhood revitalization efforts, including blight removal, park improvements and investments in neighborhood commercial districts.
Detroit property values took a particularly steep dive starting in 2009, with the city ravaged by mortgage and property tax foreclosures in subsequent years. That drop now appears to have bottomed out in 2016, but the rebound has yet to bring property values back to 2009 levels.
Duggan admitted that some of the growth was to be expected after that bottoming-out.
“But it’s one thing to think it should be happening, and it’s another thing when the assessor walks into your office and shows you the map that it happened all across the city,” he said.
Duggan said that while most Detroit homeowners will soon receive updated, mostly higher assessments in the mail, they shouldn’t worry too much about a huge jump in their property tax bill. That’s because Michigan’s Headlee Amendment limits tax bills to a 1% annual increase until a property changes hands.
While resurgent property values are good news for Detroit homeowners, its impact is less clear on the city’s renters. The Great Recession and the waves of foreclosures dramatically lowered Detroit’s historically-high home ownership rate, meaning that just over half the city’s population is now made up of renters.
Duggan thinks that an upward trend in home values could reverse that trend by encouraging more landlords to sell rental properties.
“It was so profitable to rent, compared to the sales price, that way too many properties were being rented,” Duggan says. “Now I think you’re seeing it start to shift, and that’s good for everybody. Homeownership in neighborhoods has been the core of this city for most of my life, and I hope we get back to that.”
Pastor DaRell Reed, who lives in the MorningSideneighborhood on Detroit’s east side, says he sees hopeful signs in that area, which had been ravaged by foreclosures. He said it’s a good time for aspiring homebuyers in the city.
“By the time you finish painting and changing your locks, the property value may be double what is when you signed the paper,” Reed says. “And now we see that that’s true.”
