OPINION

Nancy Kaffer | Detroit Free Press

Detroit Free Press

The real estate market in Detroit is a study in extremes: In the city's most stable and prosperous neighborhoods, home values have skyrocketed beyond the wildest aspirations of most Detroiters; on the city's less-fortunate blocks, residents live with deterioration and blight.

But this week, there's good news for almost everyone.

Numbers released by Detroit Mayor Mike Duggan's office this week suggest that the city is starting to climb out of its long real estate decline. Residential property values have increased in more than 90 percent of the city's neighborhoods, at an average of 12 percent.

In some neighborhoods, those prosperous and stable ones, values have gone up by 20 percent. Property values have declined in just 16 city neighborhoods.

For Detroit homeowners, who've learned to treat both assessments and real estate booms with healthy skepticism, it's a welcome development.

The new assessment numbers are the result of a years-long citywide reassessment, prompted by a Detroit News investigation that found city properties were over-assessed by an average of 65 percent. Because of that investigation, the city assessor's office operated under state oversight until 2017.

Jessica J. Trevino, Jessica J. Trevino, Detroit Free

Detroit was hit hard by the 2009 housing crisis; property values, and the municipal tax base that's tied to them, plummeted. Because Michigan law caps increases in taxes levied on property values to the rate of inflation, cities have been slow to recoup the revenue lost during the recession, curtailing their ability to provide services like police and fire protection, code enforcement and snow removal.

In Detroit, where the real estate market was pummeled by both bank and tax foreclosures, property values have been so low that for many homeowners inclined to sell, the math just hasn't worked out.

And because banks' willingness to lend money is based on an assessment of similar, nearby home sales, it has been difficult for would-be Detroit homebuyers to obtain mortgages for home purchases, much less rehab expenses.

Real estate folks tell me buyers are expressing unprecedented interest in Detroit. Neighborhoods that relocating suburbanites wouldn't have considered five years ago are seeing sales pop, driven in part by skyrocketing home values.

Despite these promising numbers, Detroit remains an unusual real estate market. Most would-be home buyers in Detroit can't get mortgages. A Bridge Magazine investigation found that just 21 percent of Detroit home buyers in 2017 obtained mortgages (see: stable, prosperous neighborhoods). Nationally, it's about 77 percent.

And of the estimated 65,000 real estate transactions in Detroit over the last two years, Michigan Radio's Sarah Cwiek found, just 11,000 are mortgage sales, cash sales or registered land contracts that can be used to calculate assessments. The rest? They're less conventional transactions like quit-claim deeds or unregistered land contracts — mechanisms more likely to be used in the least prosperous neighborhoods, where buyers find it harder to obtain mortgages and property values haven't risen that much, if at all.

All of which is important context for this week's good news.

Things are getting better in Detroit, and they're getting better across the city, something Duggan — who's been dogged by the assertion that there are two Detroits, for two kinds of Detroiters — is justly proud to publicize. But, as always, it's complicated. And, as always, the city still has a long way to go.