Detroit hits mortgage milestone as housing market gains momentum
For the past decade, it’s been almost impossible for aspiring Detroit homebuyers to get mortgages.
But that appears to be changing. The city notched a real estate milestone of sorts last year, recording more than 1,000 new home mortgages in 2018.
That’s according to the Detroit Land Bank Authority. Its data show that 1,221 homebuyers purchased homes with traditional mortgages last year.
The land bank’s Rob Linn says it’s the first time the city has reached more than 1,000 mortgages since the 2008 financial crisis.
Subsequent waves of mortgage and tax foreclosures decimated Detroit’s housing market and rendered traditional mortgages almost non-existent, with banks often refusing to lend even to qualified homebuyers.
But Linn says there’s been a steady upward trend in new mortgages since 2014, when the city recorded only 490. And this means more Detroiters should have access to a “powerful financial tool” that can generate wealth beyond homebuying.
“In the housing market, success begets more success. And I think that’s definitely true of mortgages,” Linn said. “When a resident lives in an area where there are mortgages, it becomes easier for them to get their own.”
Linn says another good sign is that mortgage-backed homebuying is spreading to more neighborhoods.
“When we first started looking at this, mortgages were really more or less tightly confined to the city’s most elite, strongest housing market,” he said. “I think over time, we’ve seen more and more neighborhoods sort of added to that group, it’s becoming much more sort of a widespread geographic distribution.”
Still, a number of Detroit neighborhoods remain mortgage deserts, and mortgages still accounted for only 27% of new home sales, with the rest being cash sales and a handful of land contracts.
Land bank data show that home sales prices are on the rise, too—jumping from around $33,000 in 2014 to more than $74,000 in 2018.