“In 2012, only 200 mortgages were made in the city, and the numbers have been steadily going up - albeit slowly - since then. “However, weak as the numbers are, they are an improvement,” he added. “There are large parts of the city - probably over half - that do not have a functioning real estate market,” said Alan Mallach, a New Jersey-based planner and author of the book “The Divided City,” who has worked frequently in Detroit.
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The lack of mortgages for thousands of home buyers in Detroit each year holds back Detroit’s full recovery.
For generations, getting a mortgage has been a ticket to a middle-class life and a brighter future. This lack of a robust mortgage market in Detroit creates a substantial drag on efforts to improve the financial life of residents. ► In a vivid illustration of that last point, just three of a total of 635 homes sold by the Detroit Land Bank Authority from November through February involved a traditional mortgage loan, said Reginald Scott, director of dispositions for the Land Bank.
► Black borrowers more often got government-backed mortgages under either FHA or VA programs, an indication that lenders found those clients less credit worthy or of a higher risk. White home buyers, on the other hand, tended to get conventional mortgages, made to those with good credit in stable neighborhoods. Finance experts estimate there may be 4,000 to 5,000 home sales in Detroit each year but up to 80 percent of those transactions were cash or some variation, like a land contract, lenders and civic leaders estimate. ► A lack of mortgage loans does not mean there are no home sales in the city. In 2017, just two suburbs, Southfield and Redford Township, accounted for more mortgage loans to black home buyers (747) than the mortgage loans made to black buyers in Detroit itself (461) when the race of the applicant was known. ► In part because mortgages are less readily available in the city, black home buyers may be more likely to buy in the suburbs than in the city. In those areas, poverty rates are well below the city’s average and income levels are higher. Tracts where mortgages were more readily available were in the city’s more upscale districts, including the east riverfront, the Palmer Woods area, and a handful of others. ► Only nine Census tracts out of the nearly 300 saw 20 or more mortgage loans made in 2017. ► The mortgage market doesn’t exist or barely exists in more than half the city. Of 297 Census tracts in Detroit, each tract measuring several square blocks, 139 tracts saw no mortgages at all in 2017, and another 91 saw just one to five mortgages. Of 1,072 mortgage loans made in Detroit in 2017, the most recent year for which full data are available, 442 went to white borrowers, 461 to black borrowers, and in the remainder the race of the applicant was not known, or, in a few cases, went to Asians or those of other ethnic groups. ► White borrowers got almost the same number of mortgages as black borrowers despite being a much smaller percentage of the city population. That data point and several more show that the mortgage market in Detroit, while improving in recent years, remains anemic at best and, at worst, nonexistent in many parts of the city.ĭata collected under the federal Home Mortgage Disclosure Act show: White people make up just 10 percent of Detroit’s population but got nearly half of the home mortgage loans made in 2017 for which the race of the applicant was known.