Once dominated by non-local LLCs exploiting the system for quick returns, new data suggests that fewer outside investors are “milking” the system, and more Detroiters are taking advantage of opportunities to participate in Detroit’s recovery.

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A new article entitled “Detroit’s Sweat Equity” from Alex Alsup, published in Substack newsletter The Chargeback, discusses the change from outside investors to residents purchasing and rehabbing homes from the tax foreclosure auction. Alsup says local buyers are flipping the script on the traditional narrative of Detroit real estate. By investing personal labor — or “sweat equity” — into rehabbing homes, they reduce the costs associated with renovation and create value in a way that large, outside investors can no longer exploit. 

Foreclosures are at their lowest since 2005, and new ownership trends show a citywide gain of about 9,000 re-occupied homes since the pandemic. The old “milking” model — where the value was in extracting rent from undervalued properties — doesn’t work anymore because Detroit’s homes have gained too much value. This lucrative foreclosure-rental-foreclosure pipeline is drying up, and Detroiters are stepping up to take advantage of the opportunity. 

Chase Cantrell, CEO of Building Community Value, a nonprofit that helps Detroiters become property owners and rehabbers, says that the Detroit Land Bank Authority now privileges local buyers, giving them a better chance to purchase and improve properties. 

Online bidding on properties in the Wayne County tax foreclosure auction begins September 11 and runs through September 18, 2024. There are 1,748 Detroit foreclosed properties listed on the Wayne County Treasurer’s auction site.

 Guests: 

• Alex Alsup is the Vice President of Research and Development for Regrid and the author of the Substack newsletter The Chargeback.
• Chase Cantrell is the CEO of Building Community Value, an organization that provides training and resources for Detroiters interested in small-scale real estate development.

Listen to Created Equal with host Stephen Henderson weekdays from 9-10 a.m. ET on Detroit Public Radio 101.9 WDET and streaming on-demand.

Back in April, the Michigan State Housing Development Authority (MSHDA) was granted the ability to use $60 million state funds to help increase housing in the state.

Gongwer News Services Alethia Kasben and Zach Gorchow chat with the MSHDA Executive Director, Amy Hovey, to discuss how the MI Neighborhood program can help build more housing and stabilize the market.

In this episode:

• MSHDA’s initiatives based on the MI Neighborhood program
• How Michigan businesses are affected by the housing crisis
• What’s needed to stabilize the housing market in the state

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Historically, MSHDA hasn’t received support from the state, but the $60 million in state funding is giving them resources to help more Michiganders.

Hovey explained that the state funding helps the agency use grants.

“We’re able to do grant programs, which make it easier for folks that aren’t typically in the housing development arena, [to] get involved in utilizing programs,” said Hovey.  

According to Hovey, local businesses were having a tough time with staffing because of the housing crisis in Michigan. They hired workers from out of state or someplace far from the company’s location that would require the employee to relocate. The lack of housing gave businesses a tough time to secure employees.

The funding from MI Neighborhood can change that.

“This state funding is immensely important to be able to meet that demand across the state for all different types of income levels,” said Hovey.

When it comes to the exact funds needed to solve Michigan’s housing crisis, Hovey doesn’t know what that number is, but says, “…without incomes going up, there’s always going to be a gap in what it costs to build versus what the average Michigan family can afford to purchase. So we do need to look at incomes at the same time as housing subsidy.”

More from WDET:

• MichMash: Whitmer announces energy and housing initiatives at Mackinac Policy Conference
• Detroit Council President Pro Tem James Tate talks affordable housing, 2024 agenda and more
• Detroit Evening Report: Bills to combat housing discrimination heading to Whitmer

The Michigan Supreme Court ruled this week that its 2020 decision — which held that former property owners were entitled to the profits of tax foreclosure sales — can apply retroactively.

That means the “windfall profits” generated by the foreclosing county treasurer would be returned to the previous landowners.

Since Detroit has a complicated history with homeownership, this ruling strikes at the heart of poverty and inequality in the city. Yet, it may not provide the intended restorative justice for Detroit residents. For example, landlords who bought a property through tax foreclosure but then lost it to the same process, could argue they are owed the windfall profits rather than the original owner. 

Alex Alsup, vice president of research and development for Regrid — a property data and location intelligence company — Detroit Free Press and BridgeDetroit reporter Nushrat Rahman, and United Community Housing Coalition Director Ted Phillips joined Created Equal on Wednesday to discuss what this new ruling means for homeowners, the government, and how it’ll affect issues like land speculation. 

Subscribe to Created Equal on Apple Podcasts, Spotify, Google Podcasts, NPR.org or wherever you get your podcasts.

Guests

Alex Alsup is vice president of Research and Development for Regrid, an intelligence company that specializes in gathering information about land parcels across the United States. He shares concerns about who this court decision actually benefits. 

“I think that the ruling in Rafaeli and the [one the] other day are cast as some sort of ‘justice’ for homeowners who lost their homes to tax foreclosure. [Though] there are enormous amounts of restorative justice that’s due to them, but I do not think these rulings amount to anything like that for Detroit homeowners,” he said.

Nushrat Rahman is an economic mobility reporter for the Detroit Free Press and BridgeDetroit. She says this ruling will also impact county coffers — where the excess profit is held after a house sells in auction. 

“I talked to the Michigan Association of Counties, and they said that they don’t know the fiscal impact at this point. They’ve advised their counties to prepare for this because [they] don’t know where the money’s coming from,” she said.

Ted Phillips is the director of the United Community Housing Coalition. He says the people who are going to most benefit from this ruling are investors.

“It seems ironic that if some of these investors did make a bad play on certain properties and lose them for more than what the taxes were, that they would now be able to recoup that money while skirting taxes for all these other years,” he said.

Listen to Created Equal with host Stephen Henderson weekdays from 9-10 a.m. ET on 101.9 WDET and streaming on-demand.

The Michigan Supreme Court said Monday its 2020 decision stopping local governments from keeping profits from the sale of foreclosed homes can be applied retroactively.

Subscribe to the Detroit Evening Report on Apple Podcasts, Spotify, NPR.org or wherever you get your podcasts.

The decision means anyone who lost their home due to unpaid taxes prior to 2020 — when the decision was made — could receive any money made by the county on the sale of their foreclosed home.

Previously, counties had been able to keep all money made from a foreclosure sale, even if the sale far exceeded the amount of unpaid property taxes.

Christina Martin, an attorney at the Pacific Legal Foundation who argued the case for former property owners, told the Associated Press that local governments were “essentially stealing from people.”

“It doesn’t matter if it’s going to be expensive to pay them back,” she said. “They have to pay them back.”

The Supreme Court in 2020 said the practice violated the Michigan Constitution.

Writing for the court, Justice Brian Zahra said the case “involves governmental violation of the constitutional rights of numerous individuals.”

He said “we are not without sympathy” toward communities that kept the surplus cash because state law had allowed it.

“Nonetheless, while the problem originated with the Legislature,” Zahra wrote, “at the foundation of our government is the precept that no state officer or local government can justify a constitutional violation on the basis of a statutory directive.”

The Michigan Municipal League, which represents local governments, says complying with the ruling could cost local governments hundreds of millions of dollars, and communities should not be penalized for following what was allowed under law. 

Associated Press reporter Ed White contributed to this report.

Other headlines for Tuesday, July 30, 2024:

• Leaders within the Asian American community are celebrating a $1 million investment into Detroit’s former Chinatown neighborhood.
• The Belle Isle Aquarium will have extended hours of operation during the month of August thanks to a $10,000 contribution from Comerica Bank.
• American Indian Health and Family Services is hosting a free traditional Native American powwow in Detroit this weekend, in collaboration with Wayne State University. 

Do you have a community story we should tell? Let us know in an email at detroiteveningreport@wdet.org.

The city of Detroit broke ground this week on the first phase of a new mixed-use housing development in North Corktown.

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The new development, called Preserve on Ash, will bring nearly 600 new and preserved units of affordable housing to Greater Corktown, according to the city, thanks in part to a $30 million Choice Neighborhoods grant from the U.S. Department of Housing and Urban Development.

“As Detroit comes back, we are building the city in a way that includes Detroiters of all income levels who stayed, rather than pushing them out,” said Mayor Mike Duggan in a statement about the project. “In the past five years, we have invested $1 billion in affordable housing, and the Preserve on Ash marks the beginning of the next $1 billion we will invest into more affordable housing over the next five years.”

The project, led by the nonprofit Community Builders, will include 69 total mixed income housing units across five buildings — 48 of which will be rent and income-restricted for renters. Another 22 units will have project-based vouchers from the Michigan State Housing Development Authority so that the rent payments will be based on household income.

Preserve on Ash phases II and III are expected to start construction next year.

Other headlines for Friday, July 26, 2024:

• More Rite Aid stores are closing in Michigan as the pharmacy chain goes through bankruptcy.
• Mosaic Youth Theatre of Detroit is holding its fourth annual New Voices: Detroit event from 7 to 9 p.m. Aug. 2, celebrating a new generation of artists, ambassadors and advocates in Detroit’s arts and culture scene.
• The Paris 2024 Olympics officially began on Friday with the opening ceremony. To celebrate, the Michigan Science Center is hosting an Olympics-themed event for individuals 21 and older called “After Dark: The Mi-Sci Games” from 6 to 11 p.m. this Saturday.

Do you have a community story we should tell? Let us know in an email at detroiteveningreport@wdet.org.