A Detroit Dreams Deferred: Thousands Mortgage Ready but Many Miss Out

In the period from 2015-2019, about 1500 Detroiters per year completed homebuyer education courses, but less than 300/year reported purchasing a home. During this same period, most neighborhoods in the City of Detroit had less than 20% of property sales using mortgages, with some neighborhoods with less than 10%. Also during this period only 3% of Michigan State Housing Development Authority down payment assistance loans were closed in the City of Detroit, the state’s largest city. Detroiters experience systems level lending and regulatory failures that serve to lock out most low-median income borrowers, and prevent them from obtaining mortgages. Solutions in 2022 and beyond: follow the data, and prioritize public dollars to be braided for maximum impact to benefit Detroiters seeking homeownership, similar to city government mobilizations in response to corporate economic development needs/demands in recent years. These public dollars include: homebuyer education programming, Proposal N bond dollars for home stabilization, one-time federal investments like the American Rescue Plan Act (ARPA), Detroit at Work (workforce development), and down payment assistance programs, etc. Systems level lending and regulatory failures also require a portfolio loan mortgage product specifically designed for low-median income Detroiters who complete homebuyer education programs. These system failures also support the creation of a single-family rehab housing fund, where Detroit-based nonprofit community development organizations can access the patient capital required to rehab and sell these homes to Detroiters, while training Detroiters for the high-demand occupations necessary to bring long-vacant homes back to life. Now is the time for the creation of both funds, leveraging public dollars, growing philanthropic interest in impact investing, community capital and a still ample supply of publicly owned single-family homes via the Detroit Land Bank Authority. With a majority of City Council in entering their freshman term of office, now is also the time to have a transparent public solutions-based discussion about how our city continues to grow: will we prioritize low-median income Detroiters, or will we use public dollars to benefit moneyed interests and market rate returns as current city policy heavily favors?

Report authors: David Palmer, MPA. DC Palmer LLC Trina Shanks, PhD. University of Michigan Center for Equitable Family & Community Well-Being Hector Hernandez. Southwest Economic Solutions

Research Team: University of Michigan Center for Equitable Family & Community Well-Being Patrick Meehan, PhD Lucine Jarrah, MSW Southwest Economic Solutions Alexandra Makohn