Some southwest Detroiters see the downside to booming home prices

In 2016, Fritz McGirr and Shahar Ben-Josef began searching for a home in Detroit. The couple had been renting a loft in New Center while Ben-Josef, now 28, was in law school at Wayne State University.

After Ben-Josef graduated and took a job in the city, the couple decided the idea of buying a home seemed more practical. So they did.

"Rent prices were starting to get astronomical and we realized a mortgage would be cheaper monthly," McGirr, a musician from west Michigan, said last week while sitting in front of the yellow clapboard home the couple bought that spring in the Hubbard-Richard neighborhood of southwest Detroit.

"We'd actually end with some equity," he continued, "something that you own."

While McGirr said they have enjoyed their time in the quiet neighborhood just west of Corktown, behind the popular Honey Bee La Colmena, they put the house back on the market when Ben-Josef got a job in Boston this year.

The bungalow they purchased for $170,000 two years ago is now pending a sale for $239,000.

"Our agent from O'Connor (Real Estate) came up with a few figures based on what's been selling and how the neighborhood looks," McGirr said, adding that the jump in price for the three-bedroom, two-bathroom, 1,396-square-foot house feels satisfying.

"It makes our time here worthwhile, and what we've turned into a very comfortable home? I'm happy to see others see that value as well."

The 40% spike in price for 1438 Seventeenth St. could be surprising for some — especially since the home sold for just $39,000 in 2013, following a mortgage foreclosure.

The house is not particularly big. And it lacks historical charm — it was built in 2005 by Bagley Housing for low- to moderate-income families. But it's in a stable, densely populated neighborhood that's walking distance to a market and restaurants.

And the price rise reflects a growing trend.

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"Prices are functioning like most other cities," said Ryan Cooley, owner of O'Connor Real Estate in Corktown, "which is that it's most expensive downtown and then the prices (go) kind of lower as you move away from downtown." Palmer Woods and West Village are exceptions, he said.

Neighborhoods — specifically those closer to downtown, like southwest Detroit — have seen increased interest from buyers in recent years. And with the interest comes increased property values and sale prices.

"Home prices have risen at a pretty dramatic rate," said Greg Mangan, a real estate advocate at Southwest Detroit Business Association, who said proximity to downtown and Corktown, areas that have seen jumps in property values, plus a limited inventory of homes for sale have caused southwest Detroit's market to accelerate.

"We’ll see what happens with the Michigan Central Train Station," he continued, referring to Ford's plan to possibly purchase the abandoned depot that towers not far from the southwest neighborhoods of Hubbard-Richard, Hubbard Farms, Mexicantown, Vernor Junction, Delray and Springwells, as part of an expanding Ford campus in Corktown.

The purchase would "only put more ... pressure on housing prices," said Mangan. And that is not all good.

While rising property values are met with excitement from homeowners — especially those who have stuck it out during some tough years and now have a tangible value attached to their homes — there is also anxiety about how the changes will play out in the long run. What about those who grew up in southwest Detroit who want to buy there but now find the prices too high? How will rents be affected?

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Densely populated but neglected

On a cool spring day last week, Johnny Espino stood outside his family's home on Hubbard, pointing out houses on the block as his children appeared and disappeared back into the house. At 40, Espino rents a room in the house his mother owns in Hubbard Farms. He pays around $500 a month.

"That one sold for $110,000. I heard that's going for $177,000," he said about one house on the block. "The rich are coming back and buying homes for any price you put on it. We could probably put this house on the market for a quarter of a million and it would sell."

He may not be exaggerating. One street over, a house on Vinewood in the nearby historical Hubbard Farms is pending a sale for $300,000. That home was built in 1900. It's 2,879 square feet with four bedrooms, two baths.

Two houses down from Espino, Deb Sumner is excited.

For Sumner, who lives in the home that her husband grew up in, the fight for resources and recognition has been ongoing, and despite periods of abandonment and blight, southwest Detroit has remained densely populated.

She is known as the Mayor of Hubbard Farms by some on her block for pushing in 1993 to get a historic designation for the neighborhood bounded by Clark Street to the west, West Vernor Highway to the north, West Grand Boulevard to the east and West Lafayette to the south.

Unlike Hubbard-Richard, where many of the homes are newer, Hubbard Farms is speckled with spacious older homes — many built in the early 1900s — on wide leafy streets. Getting the historic designation, Sumner said, was a way to ensure resources for the community and also to save housing stock, which was being gobbled up by Manuel (Matty) Moroun, owner of the Ambassador Bridge, whose footprint displaced blocks of historic homes in the nearby neighborhoods.

"If you lose housing stock like other neighborhoods, then you don't have a neighborhood anymore and it looks decimated," Sumner said. "I've given my life, my heart, my soul to making our community a better quality of life, whether it was within Hubbard Farms or in a broader sense of southwest," she said. Sumner is a founding member of the Clark Park Coalition, an organization that with the help of former Detroit Tiger Hank Aguirre in 1991 got then-Mayor Coleman Young to let residents run Clark Park after the city had announced the park would close because of budget cuts.

The Clark Park recreation center had been a positive outlet for children in the community. Closing?

"I said absolutely not," Sumner said. "Today you know there is a difference when you drive by it. ... It's a premier park. Our presence ... there has brought millions of dollars of investment for infrastructure improvement projects."

On the day the Free Press popped in for a visit, the city had begun repaving sidewalks. Sumner welcomes the renewed interest and said it feels like a payoff after years of pushing for acknowledgment.

"I am so proud because I've been in the trenches and I've worked so hard no matter if it was small issues or big issues, whatever," she said. "So, I am so thrilled that the city proper is thriving and turning around and the neighborhoods as well."

The uptick in property values provides her and her husband with some relief as they get older and think about downsizing one day.

"We deserve to have a city that functions well and that people can get a decent price for their home if they need to move."

'It's getting ridiculous'

Not everyone is enjoying the sudden interest in the community.

Jose Franco has called southwest Detroit home since he was 3. The 30-year-old feels attached to the neighborhood. It's where he works as a social justice advocate with One Michigan, where he fights for immigrant rights.

Franco always assumed he'd buy a home where he grew up. Where his mom and cousins own homes. Where his family lives.

It's recently occurred to him that this may not be possible, especially on the salary of an organizer, which is low.

"I tear up a bit because it’s becoming harder for me to find something for myself, it’s getting ridiculous," said Franco. "We don't make crazy money. It's a struggle to balance."

And buy?

"It’s kind of heartbreaking," he said. "It’s getting hard to find affordable places to buy ... because outsiders are coming in and buying them up like candy almost," he said.

In the heyday of the Ford Rouge plant in Dearborn, the surrounding communities attracted immigrants from all over. Irishmen, Hungarians, Italians, to name a few.

Today, the area is home to a number of Latino families — the ZIP code 48209, which makes up the majority of southwest Detroit, was 70% Hispanic in 2010, according to Census data. Taquerias and super mercados dot Vernor, the main thoroughfare.

While the community has gone through economic ups and downs and boasts all sorts of ethnicities, Franco has a fear of gentrification displacing folks like himself.

And it's not just the housing prices. Franco sees a patchwork of changes coming that spell trouble.

Last week, the City of Detroit announced new amenities coming to Clark Park — a splash pad, a zocalo (or traditional Mexican public space) and other amenities — as part of a greater investment in the West Vernor corridor. The additions, which were suggested by the community, are exciting for some, but Franco has reservations.

"Clark Park is where I grew up. When I was young, I’d go play hockey and soccer there. To see it starting to get attention is great, but how is it getting fixed?" he asked. "Is it for long-term residents or to attract newcomers? That’s where it gets sketchier, figuring out, does this just invite more new folks into the community and make it easier for it to get more expensive to live?

"I feel that the immigrant population over the past 20-plus years has contributed to ... keeping southwest vibrant, and now suburban millennials that can't afford the American Dream of home ownership in the neighborhood they grew up in are buying up properties in southwest Detroit. ... I love southwest Detroit, but I am starting to feel like I don't even belong in the community I grew up in."

Keeping people in community

A big part of Mangan's work is trying to make sure folks like Franco can stay.

"There is such a tight supply (of housing), which is causing these price increases to go beyond normal market trends," Mangan said. "It's creating something that goes beyond the cost of living and what people can afford, so only people with ... more means from the outside can come in and purchase."

While home ownership is ideal, creating affordable rental options is the next choice, and the business association is working to help.

"There are a lot of Latino families in southwest Detroit who have been here for generations; it would be a shame if they got priced out and could no longer afford to live in the neighborhood where they grew up," he said.

His firm is working on a project with the Kresge Foundation to encourage business owners to renovate their second-floor spaces to turn them into rental units.

The business association and Kresge are offering grants of $8,000 for business owners to help defray the cost of fixing up the spaces. Mangan said rents are typically about $1 a square foot.

"The property owners we've been working with have been here a long time and are more sensitive to not accelerating rents," he said.

The City of Detroit also says it is focusing on affordability.

Arthur Jemison, director of housing and revitalization for the city, rattled off a list of affordable housing rental opportunities.

He said a request for proposals is about to go out for a development at 16th and Bagley in the Hubbard-Richard neighborhood. It will call for 20% of the units to be affordable for those making 80% of the Area Median Income (AMI). Jemison said he anticipates that developers would make units available for those with income levels even lower — 50% or 60% AMI.

There also is the Broderick, by Shelborne Development, which would be 50% affordable housing at a 50% AMI level, and Hubbard Vernor, an affordable housing development that proposed approximately 30% affordable housing. Jemison also mentioned two "smaller projects" that would have 20% affordable housing at 80% or below the AMI.

What complicates AMI in Detroit is the fact that the standard is computed including income from the suburbs. In the case of Detroit, the AMI is based on the Detroit-Warren-Livonia metropolitan statistical area. That results in inflated AMIs, which can hurt Detroiters. While the AMI of a single person is $48,000 in the Detroit AMI, the true median income in Detroit is $28,000.

Jemison stands by the metropolitan standard.

"I would say to live in a brand new unit in southwest that’s affordable and pay $750 a month when the other rents in that building will probably be $1,200 a month is a reasonable hypothesis," Jemison said. "There will always be people above or below."

He said initiatives are in place to help homeowners who might be afraid of rising property values affecting their property taxes. Homeowners in the city are protected by a 1.02% cap on property tax increases until a property changes hands.

"I still think there is room in southwest for people who were there and room for more people," said Jemison. "We’re not quite at the stage in southwest where we have to have displacement worries, but the government is taking action every day that we don’t get there."

Contact Allie Gross: AEGross@freepress.com. Follow her on Twitter @Allie_Elisabeth.